KARACHI: Pakistan’s textile and clothing exports recorded 2.9 percent year-on-year surge to $1.090 billion in February 2019, taking the eight-month (July-February FY19) exports to $8.9 billion up 1.38 percent, as eased duties on imported raw materials provided some relief to the industry.
On month-on-month basis, textile sector exports recorded a decline of 6.63 percent in February compared with $1.167 billion recorded in January 2019, the Pakistan Bureau of Statistics (PBS) reported.[the_ad id=”32940″]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.
He said due to unfavorable policies of the government and high handedness of the tax authority, the industrialists were reluctant to take out their money and invest in expansion.
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 February 2019 declined 20.75 percent to $29.308 million, while the imports of textile machinery declined 11.52 percent to $338.298 million in eight months of the current fiscal year. Textile exports constitute over 50 percent of the country’s overall exports.
In February, cotton yarn exports decreased 10 percent year-on-year to $108.36 million; knitwear exports rose 11.45 percent to $215.396 million; bedwear exports increased 1.92 percent to $175.405 million; readymade garments exports surged 5.93 percent to $225.89 million while cotton cloth fetched $177.051 million in February, up 0.43 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.”
Furthermore, 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.
“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.