KARACHI: Leading textile exporters have welcomed the 4% increase in exports in the recently-concluded fiscal year but also warned the government to improve energy and security situation in the country if they want to see growth in the next 12 months.
According to officials of the textile ministry, exports in fiscal year 2014 reached $13.8 billion, up around 4% from $13.3 billion in the previous fiscal year.
The official figures are yet to come but the preliminary picture reveals that textile exports to the European Union (EU) have jumped by a significant 18% to $5 billion this year that actually helped the sector’s overall exports. Otherwise, the exports to the rest of the world declined by 3.5%.
“It’s difficult to predict next year’s increase in exports due to the energy crisis, which is badly hampering the industry’s growth,” All Pakistan Textile Mills Association (APTMA) – country’s biggest lobbying group for the textile sector – Chairman Yasin Siddik told The Express Tribune.
However, he added that the country’s exports to the EU may increase due to the benefits of Generalised Scheme of Preferences (GSP) Plus scheme. The EU had granted the GSP Plus scheme to Pakistan along with nine other countries on January 1, 2014 under which these countries can export their products to the EU on duty free or concessional duty rates.
According to Siddik, the biggest challenge before this government is to control the energy crisis, which along with security challenges, is shattering any hopes of growth in the textile exports over the next five years.
APTMA, in its statement issued on Friday, said the increase in exports could have been higher by at least 10% if the effect of massive revaluation of rupee against the dollar and other foreign currencies was translated into decrease in cost of production, especially electricity and gas tariffs.
Citing the example, Siddik said that to facilitate the industry to combat shortage of energy, the new Indian government has provided a 10-year tax holiday to new investors, who begin generation, distribution and transmission of power by March 31, 2017.
Leading exporters of home textiles and other textile products also share the same concerns.
“It’s good to see that exports to the EU markets have helped support overall textile exports, but I believe exports to the EU will drop in the ongoing fiscal year,” said the country’s leading exporter of finished textile goods.
Analysts also believe that exports to the EU may increase in coming months but the structural challenges like security and energy crisis will continue to pull back overall textile exports.
Published in The Express Tribune, July 19th, 2014.