Textile sector facing raw material shortage as imports from China halted
KARACHI: The textile sector, which is getting export orders diverted from China, is facing shortage of raw materials as import consignments are stuck at Chinese ports and prices of locally available goods have shot up.
“Everyone is talking about increasing exports from the country, but the fact is that production cannot be undertaken in the absence of raw material,” Patron SITE Association of Industry Zubair Motiwala said.
Pakistan’s textile sector relies on imports to meet around 70 percent of its input. Pakistan’s annual imports from China are around $12 billion and mostly comprise of dyes and chemicals, which are basic raw material for textile sector.
Industrialists have appealed the government to allow early clearance of imports consignments containing dyes and chemicals, from China.
Motiwala said consignments were stuck up at Chinese ports and other alternative suppliers such as Korea, Taiwan and India had either stopped supplying or quoting 30 to 35 percent higher prices. “It is becoming difficult to continue production activities due to shortage of raw material, while prices in the local market have gone up by 50-100 percent”.
“Value-added textile sector requires ample quantity of dyes and chemicals. It is obvious that no one keeps the inventory for more than 1 or 2 months due to cash flow constraints as large amounts of exporters are stuck up in sales tax refunds”.
Former Senior Vice President FPCCI Mirza Ikhtiyar Baig said production halts and export delays from China had provided an opportunity for Pakistani exporters to capture a fair share of US and EU markets. “However, this would only be possible of local manufacturers met timelines and rates offered by China.”
He said the international buyers were not actually switching to Pakistan and other countries, “In fact these are spillover orders due to production constraints in China. These spillover orders can be turned into long-term trade relationship if the government facilitates the local exporters through reducing cost of doing business.”
Baig informed that Governor Punjab had also advised Prime Minister not to increase gas and electricity prices so as to support industry and increase exports.
Chairman Pakistan Apparel Forum Javed Bilwani said additional orders were coming from US and other countries, as China was battling with the deadly Coronavirus. “But, there are many other issues which need to be addressed immediately.
Textile exports could be doubled over the next five year if the government overcame the high energy pricing, gas connection and tax refund issues.
SITE Association in a statement noted country would not be able to capitalize on this opportunity if the price hike of raw material continued and consignments were not timely cleared. “Production would suffer and industries would not be able to complete their orders on time and as per commitment.”
Zubair Motiwala urged the authorities to take urgent measures, as import consignments were lying on Chinese ports. “If the situation prevails, other countries would increase raw material prices further. The government should immediately withdraw all the levies and front loading with immediate effect so that there should be minimum burden of cost escalation.”