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Pakistan's textile units are increasingly opting to relocate to other countries including Bangladesh in an effort to enhance their ability to meet delivery orders on time, as international buyers are offering better prices than existing deals on condition of meeting the delivery deadline.
"Most of the textile units, which have shifted to Bangladesh, were unable to meet orders on time due to gas curtailment which has destroyed the textile industry," said a Faisalabad based exporter. However, most of the textile units are not openly declaring relocation to other countries because they have taken loans from local banks.
Ministry of Textile Industry, now headed by Makhdoom Shahab-ud-Din, remains inactive in textile related issues as the sitting Minister, so alleged one exporter, has yet to hold a meeting with stakeholders in an effort to understand issues and formulate a strategy. "What I can say is that textile exports will decline to $9-10 billion this year from $14 billion in the outgoing fiscal year due to energy crisis," he added.
Last year, Pakistan's textile exports benefited from "an inordinate spike in prices" as per the Economic Survey 2010-11. This year the international price indicators for textiles are lower than the previous year. Trade Development Authority of Pakistan (TDAP) celebrated achievement of $25 billion exports, with the major role played by the exporters themselves.
Some of the textile manufacturers argue that the federal government is inactive and in effect punishing Faisalabad industry due to political reasons. So far 37 units from Faisalabad have shifted to Bangladesh or Dubai. When contacted Chairman, Pakistan Readymade Manufacturers and Exporters Association (PRGMEA), Ijaz Khokhar told Business Recorder that buyers are unsure of their orders being filled on time and are offering better rates to manufacturers and exporters on guaranteed delivery.
Most of the multi-national companies have wound up their warehouses and they get direct delivery at their stores from ports through clearing agents, he stated. That is why they are offering better prices than the deal on guaranteed delivery orders, he added.
Replying to a question, he said, power load shedding is not a big issue as almost all units have power generators, but the real challenge is supply of gas to the textile units. "White cloth cannot be printed until gas is available which prints the cloth and is the basic raw material for the value addition industry," Khokar maintained.
Textile exporters enjoy 13-14 per cent duty advantage because of Bangladesh's status of Least Developed Country (LDC), in addition to cheap labour, Khokhar added. The government's vision for the textile sector is not clear and the Textile Ministry is dead after Rana Muhammad Farooq Saeed Khan was removed from office, a man who fought for the textile sector at every forum. The incumbent Minister is not interested in running the Ministry while the Secretary is new and most of the experienced officers have been transferred to other Ministries.
Replying to another question, Ijaz Khokar said, presently, China has stopped procurement of cotton and yarn, which implies this year yarn will be consumed by the local industry. Bilal Mulla, a Karachi-based industrialist said that Pakistan industrialists are speedily shifting their manufacturing units to locations where infrastructure is available for smooth production and export.
The main motivation for Pakistani manufacturers relocating to other countries remains law and order issues, frequent strike action called by political parties, high utility rates, inconsistent energy supply, unskilled labour, travel advisories for Pakistan by US and European countries.

Copyright Business Recorder, 2011

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