Pakistan - News and Discussion -7

[Naresh]

<b>Falling textile imports to hurt export growth</b> <!--emo&:flush--><img src='style_emoticons/<#EMO_DIR#>/Flush.gif' border='0' style='vertical-align:middle' alt='Flush.gif' /><!--endemo-->

KARACHI: Signs of strong growth in textile exports are not very encouraging as falling imports of textile machinery during the 2005-06 financial year point to a reduction in the rate of the industry’s expansion, according to textile sector analysts and industrialists.

They attributed the growth in textile exports in the last fiscal year to the implementation of the Balancing Modernising and Revamping (BMR) strategy undertaken by the textile industry in previous years which resulted in a 17 percent increase in textile exports. The majority of investment went into the spinning and processing sector contributing to a 35 percent increase in exports of cotton yarn and a 38 percent increase in exports of Bedwear, which was recorded in the last fiscal year.

However, BMR in the industry slowed down in the last fiscal year due to a host of factors mainly the high cost of doing business, which is making the country’s textile products uncompetitive in the international market. “The decline in textile machinery imports puts a big question mark on the future growth of textile exports”, a leading textile industrialist remarked.

Final trade figures released by the Federal Bureau of Statistics indicate that the import of textile machinery, which is necessary for the production of Pakistan’s major manufactured exports, is only 3 percent of the total $28.5bn import bill.

The total imports of textile machinery stood at $ 771.46 million in the previous financial year, registering a decline of almost 17 percent compared with the $928.6 million in textile machinery imported in the 2004-05 financial year. According to an analyst at InvestCap, textile machinery, is very important for a country like Pakistan, which depends on textiles for a major component of its forex needs. However, all doesn’t seem well on this front, as a fall of 17 percent is a crucial point to consider.

“When we claim that the deficit has risen due to an increase in machinery imports, we should know what kind of machinery is being imported. As we can see, the only machinery being used to create exportable surplus for the country is textile machinery. Unfortunately it has not seen a very good year,” he pointed out.

This points us to the notion, the analyst stated, that our economy has become quite consumption oriented and therefore is not able to produce according to its needs.

All Pakistan Textile Mills Association (APTMA) Vice Chairman Mushtaq Vohra when contacted about the decline in textile machinery imports during the last fiscal year remarked that nobody would enter into low return projects. “The high cost of doing business is rendering the textile sector uncompetitive. In this situation who will go for expansion when there are only meager prospects of returns on this investment”, he added.

Vohra agreed with the notion that the implementation of the BMR strategy in textile sector had slowed down, which is evident from the decline in imports of textile machinery. “If you import textile machinery, it means it will result in more value-addition and will result in more revenue from exports, but when we are importing more automobiles and consumer goods, it means we are also adding more liabilities in the shape of more oil for automobiles and more power for air-conditioners and other goods”, he contended.

The share of major textile groups in total exports during the last financial year was 60 percent followed by nine percent by primary commodities, 21 percent from other manufacturing sectors and 10 percent from other miscellaneous commodities.

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