Pakistan fails to improve textile’s growth on GSP Plus

KARACHI: Pakistan has failed to improve growth rate of textile sector under the European Union’s GSP Plus status because of lack of planning, a garments business leader said.
Chairman Pakistan Readymade Garments Manufactures and Exporters Association (PRGMEA) Ijaz Khokhar told The News that no proper marketing plan was prepared to get the benefit of generalised scheme of preferences (GSP) plus.
“We failed to make any plan at the early stage,” Khokhar said, adding that they have received benefit of around $300 million in apparel sector.
“It was not a remarkable achievement. We already record two to four percent growth every year without GSP Plus,” he said.
Chairman PRGMEA said textile policy was announced with a delay of around seven months. It was due in July last year but arrived this year. Besides, there was a rift between commerce and textile ministries. “They (government) do not want to promote textile any further,” he said.
Domestic support was also not given to the textile sector. Processing mills in the Punjab received gas only three days of a week, resulting in delay in the production, which affected the shipment and buyer preferred Bangladesh and India over Pakistan. Textile sector’s Rs110 billion are stuck with the Federal Board of Revenue as sales tax refund and there is financial crunch in the industry.
“If these dues had been released on time along with an aggressive marketing plan, it could have benefited the sector,” he said. “Despite lack of power, gas potential is still there, which has not been cashed properly.”
Textile exports reported a dismal trend in February 2015. The country’s exports fell three percent year on year to around $1.09 billion during the month as against $1.12 billion. For eight months of FY15, textile exports remained flat at $9.2 billion as against $9.1 billion in the same period a year ago, posting a nominal increase of 0.5 percent year on year.
Value-added textile categories, such as knitwear, bed-wear, garments and home textiles posted decent growth during 8MFY15, increasing by 5.0 percent to 14 percent, while non-value added items raw cotton, yarn and cotton cloth posted double digit declines over the same period, keeping the overall exports in check.
Analyst Jehanzaib Zafar at BMA Capital said they expect the exports of value-added segment to remain robust as seasonal uptick in demand was recorded during the second half of FY15. The yarn margins have remained flat as the yarn prices have stabilised around Rs1,311/kilogram in the local market.
Mian Muhammad Adrees, president of Federation of Pakistan Chambers of Commerce and Industry showed a deep concern over the continuous fall of exports, including of textile exports.
Adrees indicated that it is not only a failure of the business but also of administrative measures for the smooth functioning of economy.
He added that textile sector has been facing several issues for the last few years, which resulted in low textile exports, despite Pakistan received GSP plus status from the European Union.
The business leader said the business community is keen to enhance the country’s exports by $1 billion annually but various issues, such as unreleased refunds, power and gas shortages faced by export-oriented industries, including textiles, if not resolved, will hamper growth in exports.
Non-release of refunds has created severe liquidity problems and consequently businessmen are forced to arrange working capital from the expensive sources which ultimately hurt their competitiveness in international market and ability to make timely exports. “It is one of the major causes of declining exports,” Adress said.