Zero. That’s the growth witnessed by Pakistan textile exports for both the month of October 18 as well as the Jul-Oct FY19 period on a yearly basis. Those relying on the sector to alleviate Pakistan’s current account woes will have to wait more to see if things take a turn for the better.
While cotton yarn registered a decrease of 35 percent in Oct-18 and cotton cloth witnessed negligible growth, even value added segments with the exception of knitwear failed to make any meaningful contribution in raising exports. This is despite a depreciation of more than 18 percent and 15 percent against the dollar and the euro respectively.
However, the quantity has indeed increased with knitwear exports recording the highest growth of almost 38 percent across all segments whereas other value added segments including towels and readymade garments registered an increase in quantity-wise.
Readymade garments saw negligible growth for the 4MFY while for Oct-18, the numbers were slightly optimistic with 8 percent growth on a yearly basis. Textile players attributed the lethargic performance to a variety of factors and believe that many of the actions that they have called for have only been taken recently by the government.
For instance the provision of cheaper gas at the cost of $6.5/mmbtu was only taken last month by the ECC whereas previously the Punjab based gas industry was getting expensive RLNG and only 28 percent system based gas. The promised relief in electricity tariffs to the sector is also pending but textile associations are positive it will happen soon. Duty drawback and sales tax refunds have also not been cleared which exporters complain are hampering liquidity for further order processing.
These issues aside, this column has also highlighted the need for the textile firms to invest in upgrading their plant and machinery to be able to compete with the BMR intensive textile industries of Bangladesh and Vietnam. Textile machinery imports have plunged sharply over the last few years and were only USD325 million in FY18 and are the lowest in the past decade. (Read: Textile machinery imports: steep decline)
There is also a strong need to tap in to non-traditional markets including Japan and South Korea. The government has already provided additional rebate incentives on exports to non-traditional markets so the textile industry should make the most of it.