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FAISALABAD: Pakistan Textile Exporters Association (PTEA) has sought government’s immediate intervention as textile export industry, the key contributor to export revenues, is continuously facing negative trajectory; textile exports are on drastic downfall because of disadvantage in respect of production costs and scarcity of funds.

Expressing deep concerns on continuous downward trajectory in textile exports, PTEA’s spokesperson, in a statement here on Friday, said that the economic slowdown pulled textile exports down and experienced a troubling trend of negative growth right from the beginning of the ongoing fiscal year except for a slight increase in October 2023.

Terming high production cost and scarcity of funds as the major factors behind this decline, he said that due to inefficient and unfriendly socio-economic environment, the cost of doing business in Pakistan has escalated enormously due to intermittent raise in energy inputs and raw materials rendering our exports uncompetitive in international market.

High priced energy, which accounts for approximately 30-40% of production expenses, has immensely damaged the export growth and adversely impacted the textile industry.

Giving details, he expressed that current power tariffs are almost twice the average faced by competing economies like India, Bangladesh and Vietnam. Economic inefficiencies like cross subsidies and stranded costs embedded in power tariffs cannot be passed on to international consumers.

The Government must review power tariff policies to reverse the further catastrophe. Power tariffs must be re-assessed and revised to an economically optimal level for export-oriented sectors which are already facing a serious blow of non-viability.

Terming scarcity of funds another stumbling block in export growth, PTEA underlined that unnecessary delay in payment of exporters’ tax refunds is a major issue. Outstanding sales tax refunds volume has crossed billions and exporters are facing severe financial hardship leading to a disruption in export production, he said.

Textile exporters are stranded in the middle of nowhere and cannot decide about the future of their businesses in a scenario when new avenues of global trade are emerging.

Textile industry is already under pressure in the current uncertain times and delay in payment of tax refunds is making the matters worse.

Government must take stock of the situation and disburse all outstanding refunds because further delay would dent the liquidity of textile exporters, which would disturb the flow of working capital.

He claimed that textile industry is the major economic driver accounting for 8.5% to the GDP; however in November 2023, textile exports experienced a concerning 7.21% year-on-year decrease.

The 5-month period of FY2024 also shows an overall decline of 6.5% year-on-year. The sector’s drop is a concerning indicator for the economy, which is already confronted with a number of issues, including high inflation, a growing current account deficit, and an economic uncertainty.

Government must take cognizance of serious matter and step up to save industrial sector from disaster as high production cost is holding it back from growing up to full potential.

Taking advantage, rival countries are creeping into our traditional markets, he lamented. With Government support, they have accelerated export growth and have increased their market share in global trade.

He said Government must take cognizance of serious matter to safeguard country’s exports and employment. Textile industry is the only hope for revival of country’s economy which is currently jolted by high cost of doing business.

Copyright Business Recorder, 2023

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