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Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,072
6824hr
Pakistan Cases
1,218,749
2,92824hr
5.08% positivity
Sindh
448,658
Punjab
419,423
Balochistan
32,707
Islamabad
103,720
KPK
170,391

If anyone had posed the question “What is the surest way to increase textile exports” a year back, most industry players would have cited rupee devaluation. Yet the rupee has devalued and even more than many had hoped for (30 percent CYTD) but the promised surge still eludes us.

The latest numbers by the Pakistan Bureau of Statistics show overall textile exports showed zero growth in the 5MFY19 period on a yearly basis while the performance for Nov-18 also remained sub par.
Knitwear continues to be the star performer of the textile group in terms of growth and registered an increase of 11 percent in the 5MFY19 period and managed to post decent growth in Nov-18 as well. But that is where the growth story ends.

Broad based growth remains elusive with lesser value added segments which mainly include cotton yarn and cotton cloth witnessing lower international demand particularly from China. The trade war between the US and China has affected Pakistan’s yarn exports to China which has led to cotton yarn exports nose diving by 30 percent in Nov-18 while the first five months saw a dip of 15 percent on a year-on-year basis.

But that is not the only way the global trade environment is having an impact on Pakistan’s textile exports. The global apparel market has become a buyer’s market and this shows when one compares the export volumes to value. For example, readymade garments witnessed a surge of 20 percent on a quantity basis in the 5MFY19 period but the value registered negligible growth during the same period.

Local players are picking prices at lower orders to compete with Bangladesh and Vietnam firms where the influx of American companies who are looking to shift production is increasing due to the trade tensions between the US and China.

The focus on value added segments is there but in order to fetch more value for exports, Pakistan textile exporters also need to enhance the quality of their products. While for bigger players this might not be an issue, the SME segment certainly needs to add more value to their current product offerings.

The exchange rate volatility has also rendered exporters unable to quote a yearly price for products as given the current currency predicament it is hard enough to even give prices for the next three months to foreign buyers.

There is also the fact that most value added segments utilise a large proportion of imported raw materials in their due to higher input costs but the rupee devaluation also means that export prices also fall. Add to this, the cut throat competition in the global apparel markets and the result is a fierce battle to boost volumes to gain market share.

Copyright Business Recorder, 2018

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