Disappointed with PTI government’s failure in taking any concrete measures in the first 100 days to facilitate industry and increase exports, the business community is left with no option but to adopt ‘wait and see’ approach.
An industrialist said textile sector was sailing in trouble waters for some times and there were lay-offs and closures. However, the process of downsizing and industrial contraction sped up in the last quarter; even big banners were shedding staff.
Downsizing in textile sector is already going on, while industry experts are expecting similar spree in other sectors including banking, engineering and services sectors as overall corporate profitability is declining with no turnover in sight.
“KSE-100 index profitability recorded a meager 0.1 percent increase during FY18, as profitability from major sectors like banks (-13.1 percent), cement (-2.3 percent) and refining (-82.5 percent) declined,” a report issued by Arif Habib Limited said.
Overall textile exports remained flat at $4.4 billion in four months (July-October 2018) despite 3.4 percent jump in value added products’ export on the back of Christmas demand. However, the combination of export package and rupee depreciation failed to increase textile exports as higher cost of doing business kept exporters on back-foot.
An office bearer of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said 100 days was a very little time, not enough for a turnaround. “We are willing to give more time and see if they could come up with a workable plan, a clear direction,” the business leader said.
While opposition parties are terming the 100-day performance of the government as “unimpressive, ridiculous and full of lies and U-turns,” the ruling party leaders are boasting the period with “remarkable achievements”, claiming that the country has been put on the right track.
According to S.M Muneer Patron in Chief Korangi Association of Trade Industry (KATI), over 80 percent industrial units had closed in Faisalabad alone as the higher cost of doing business had left local production uncompetitive in the international market. On the other hand, local produce cannot compete even in the local market against cheap Chinese goods.
President KATI Danish Khan maintained that numerous export opportunities were missed due to higher cost of doing business and surging production cost. “We are lagging behind in exports competitiveness to our neighboring countries. Government must make efforts to bring down production cost alongside strengthening foreign trade relations”.
FPCCI office bearer said there had been some short-term measures facilitating a niche of industry, “We cannot see a clear direction yet as there have been no word on reducing cost of doing business and improving ease of doing business.”
“Pakistan textile exporters are expecting sales to pick-up on the back of recently introduced incentives i.e. reduced electricity and gas rates for the sector, coupled with rupee devaluation as well as improved access to international markets like China,” Ayesha Ahmed at Taurus Securities said.
Talking about new investment in the country’s industrial sector, SVP FPCCI said that business community had adopted ‘wait and see’ policy for the time being. “Not even the local investors are considering expansions and investments at the moment because of the uncertainty on all fronts that prevails,” he said adding, “First, local businessmen invest and then we can expect foreign investment.”
He also criticized secrecy on part of government regarding special economic zones under China Pakistan Economic Corridor (CPEC). “Unless business community is aware of the policy regarding these special zones, there will be no investment and expansion plan.”
Country’s imports, which were $4.46 billion in August 2018, stood at $4.72 billion in October 2018; exports that were recorded at $2.09 billion in August slipped a bit to $2.06 billion in October 2018; CPI inflation surge to 6.8 percent in October compared with 5.8 percent in August; while rupee-dollar parity clocked in at Rs134/dollar in October as against Rs124.04/dollar in August 2018.
Chairman Pakistan Apparel Forum Jawed Bilwani said government should take measures to facilitate and support export-oriented industry. “Although things have not improved much in the last 100 days, but we hope things would get better going forward.”
The Pakistan Business Council (PBC) believes that the government has got off to a good start, given the challenges it inherited in the economy. However, there is much scope to do better.