Textile exports stagnate despite incentivesArchive
KARACHI: The slump in Pakistan’s exports continued in May on the back of overall slowdown in the country’s manufacturing and agriculture sectors.
Data published by the Pakistan Bureau of Statistics (PBS) on Monday showed that the country’s cumulative exports in the first 11 months of the current fiscal year fell by marginal 0.29 per cent to $21.267 billion compared to $21.329bn during the same period last year.
Food, textile, and other manufacturing sectors all declined during the cumulative period despite a massive fall in the rupee’s value against the US dollar.
The government had set an ambitious exports target for FY19, but year-end figures have revealed a major failure to achieve the targets despite extension of the tax benefits to the export-oriented sectors.
However, month-on-month exports during May grew by 0.42pc to $2.10bn — second highest in the ongoing fiscal year.
Almost all export groups — barring petroleum — posted negative growth during the cumulative period as outbound shipments in the food, textile and other manufacturing goods fell by 4.61pc, 0.09pc and 0.45pc to $4.272bn, $12.315bn and $3.108bn respectively.
The decline in the textile sector exports came amid a massive slump in exports of non-value added segments including raw cotton which declined by 67.19pc to $18.876 million, cotton yarn by 16pc to $1.048bn, and cotton cloth 3.65pc to $1.94bn.
On the other hand, value-added segment posted 5pc growth during the cumulative period as exports of knitwear grew by 9pc to $2.45bn, bed wear by 2pc to $2.08bn, readymade by 4pc to $2.44bn whereas exports in the towels fell by 1pc to $731m and tents and canvas by 3pc to $78m.
However, overall textile exports during May grew by 4pc month-on-month led by a 7pc jump in exports of value added segment.
However, the government introduced several measures in the budget for the next fiscal year which is likely to stall growth in the textile sector.
The government’s imposition of the 10pc sales tax on local ginned cotton, followed by a 17pc sales tax on other raw materials and 17pc increase in the minimum wage rate is likely to increase the sector’s cost of doing business.
“Textile sector is expected to bear the negative consequences of the budget which would increase the cost of doing business along with liquidity constraints due to higher working capital requirements,” said BIPLS research in an analysis of the country’s textile exports. “However, currency depreciation and timely issuance of promissory notes would serve as a saving grace for the sector.”
Exports in the petroleum sector managed to help arrest the decline in other sectors as it grew by a massive 20pc during the cumulative period reaching $451.645m compared to $377.117m during the same period last year.
Major contribution in the sector came from crude and top naphtha segments which grew by 40pc and 28.45pc to $266.634m and $61.592m respectively.
Published in Dawn, July 2nd, 2019