Textile exports down 1.42pc in FY19

KARACHI: The country’s overall textile sector exports declined 1.42 percent to $13.329 billion in the fiscal year ended June 30, 2019, as high cost of doing business kept the sector under pressure, latest government data showed.

“With the government withdrawing zero-rated status of the five export-oriented sectors along with hefty amount of refunds yet to be distributed by the Federal Board of Revenue (FBR), growth in exports is anticipated to remain modest, despite hefty rupee devaluation,” an analyst at Pearl Securities said.

“However, we highlight recently negotiated CPFTA-II with China as an important development, which has the potential to enhance the country’s exports over the course of next year,” he said.

Textile exports fell 15 percent in June 2019 to $1.01 billion as against $1.19 billion in the same month of the last year, data released by the Pakistan Bureau of Statistics (PBS) suggests.

Exporters said uncertainty in exchange rate and budgetary measures negatively impacted exports, as the cost of raw material surged, while non-issuance of stuck-up refunds aggravated the liquidity crunch.

Knitwear exports grew seven percent to $2.89 billion during the fiscal year 2018/19, compared with $2.711 billion in the preceding fiscal year.

Similarly, the exports of readymade garments exhibited three percent growth to $2.65 billion during the year as against $2.577 billion in the preceding year.

The exports of raw cotton and cotton yarn witnessed decline of 65 percent and 18 percent during the comparative fiscal years, respectively.

However, bedwear exports remained flat at $2.262 billion in the fiscal year 2018/19.

“Although textile exporters have increased volumes, tough international competition has made it highly difficult to maintain prices,” Ahmed Lakhani at JS Global Capital said.

The State Bank of Pakistan (SBP) in its third quarterly report on Pakistan Economy said the stagnation in overall textile exports stem med from a slowdown in export growth (in value terms) of readymade garments and knitwear items, and Year-on-Year (YoY) declines in cotton fabric and yarn exports.

Except for yarn, export values of all these major products suffered from a drop in unit prices, as quantum exports grew appreciably.

The drop in dollar-based unit prices was mainly owed to exchange rate adjustments, as exports rose significantly in rupee terms, the State Bank of Pakistan said.

In the rupee term, textile exports registered 22 percent growth during 2018/19, compared with the preceding fiscal year.