KARACHI: Pakistan’s overall exports are unlikely to achieve the target of $27 billion, as the perennial issues plaguing the sector remain largely unaddressed, where lack of availability of system gas and costlier RLNG have forced several smaller mills to close operations, another negative for textile exports for the year.
Pakistan’s textile and clothing exports recorded 8.16 percent year-on-year surge to $1.167 billion in January 2019, taking the seven-month (July-January FY19) exports to $7.81 billion up 1.19 percent, as eased duties on imported provided some impetus to the industry.
On month-on-month basis, textile sector exports recorded a growth of 2.46 percent in January compared with $1.139 billion recorded in December 2018, the Pakistan Bureau of Statistics (PBS) reported.
Senior Vice President FPCCI Mirza Ikhtiyar Baig said the rupee devaluation and reduced duties on imported raw material would enable overall exports to reach at most $25 billion, “There is no way that the target of $27 billion could be achieved for the current fiscal year.”
He said according to central bank private sector credit stood at Rs570 billion, of which Rs470 billion was working capital, which was usually invested in real estate and stock market. “Only Rs100 billion would be spent on import of plant and machinery. Having said that, with 14 percent markup and US dollar hedging at over Rs150, import of plant and machinery is not feasible at all.”
It may be mentioned here that textile machinery imports in January 2019 declined 1.36 percent to $55.93 million, while the imports of textile machinery declined 10.64 percent to $308.608 million in seven months of the current fiscal year.
In January, cotton yarn exports increased 11.33 percent year-on-year to $86.614 million; knitwear exports rose 16.25 percent to $248.58 million; bedwear exports increased 6.69 percent to $193.30 million; readymade garments exports surged 9.94 percent to $256.31 million while cotton cloth fetched $181.369 million in January, down 0.59 percent over the same month a year earlier.
An industrialist said Pakistan’s exports were largely dependent on imported inputs. “Fluctuation in rupee value and costlier utilities rendered Pakistan’s products uncompetitive in the international markets.”
“We expect the performance of textile sector to remain upbeat in the coming months owing to government’s commitment towards the improvement of the sector. The decrease in duties on raw material, concessionary gas and electricity prices along with the withdrawal of duties on imported cotton would likely to have positive impact on country’s textile exports,” Taimor Asif at Pearl Securities said.
Furthermore, analysts expect the impact of rupee depreciation to start reflecting in 2HFY19 as the its impact usually comes with a lag. Furthermore, as per news flows Pakistani firms received good response at recently held Heimtextil 2019, as the sector related developments have enhanced competitiveness of Pakistani products internationally.