Ready cotton prices have conceded at least Rs 100 per maund (37.32 kgs) since the beginning of this week due to a plethora of problems being faced by the domestic textile industry and overall manufacturing and trading activity in Pakistan.
While the army in the Northern Areas including the Swat valley has gained grip against the Taliban and the related insurgents and it seems they will cleanse these territories in the foreseeable future totally, incessant and unannounced power shortages from time to time and paucity of credit in the markets has hit trading and industrial activity in the country hard.
To compound the worries of the businessmen and industrialists, government has announced plans to tax equity markets, agriculture, real estate and the service sectors in the next budget, which had hitherto remained mostly untaxed. In itself these proposals merit attention of the tax collectors, but the present time when the country faces several other grave economic and political problems, the timing of imposing these taxes appear inopportune.
The federal budget is due for announcement in Pakistan on the sixth or the thirteenth of June, 2009. Therefore, the overall economic activity in Pakistan has become somewhat cautious and thus tends to veer on the bearish side.
No doubt Pakistan is receiving sizeable amounts of aids and credits to restore its economy and to put it back on the rails and gain the desired momentum, but more consistent and regular help from the friends and well-wishers of Pakistan will be required to counter the ill effects resulting from the raging insurgencies in the Northern Areas, because fighting the terrorists remains a global hazard.
Cotton and textile industries comprising the leading economic sector of Pakistan, it requires special and sustained attention to bring it out of its current quandary. Moreover, as rightly pointed out recently by the Chief Justice of the Pakistan Supreme Court, Justice Iftikhar Mohammad Chaudhary, taxation measures should essentially have long term effect and implications and they should be clear enough for the average tax payers to comprehend.
It is hoped that the taxation proposals in the forthcoming federal budget would be simple for the tax payers to understand and will thus be enabled to pay their dues accordingly.
On the plus side, it is good to hear from the official quarters that due to melting of the glaciers in the northern areas on a large scale, the water levels in the major rivers has risen and thus is filling the large reservoirs like Mangla and Tarbela which will ensure adequate irrigation water to the cotton and other kharif crops.
Thus it is being reported that meager quantities of the new cotton crop (2009-2010) from the early sown areas will start arriving in the local markets or the ginning factories shortly in such precincts like Badin in Sindh and Mian Channu in Punjab.
However, these arrivals will only be symptomatic. Later, some more seedcotton (kapas / phutti) may start arriving by the middle of June, 2009 in a few factories to commence the new season (August 2009 - July 2010). More commercial and sustained arrivals must wait for another two or three months to materialise, even that if no floods, rains or pests inflict injury to the standing crops at an economic level.
There were also reports in the market that small areas of cotton crop saw resowing as the small plants in some fields had withered due to scorching heat prevalent almost throughout Pakistan during the last couple of weeks. It was reported in the afternoon that cotton prices continued to face pressure as some ginners became keen sellers in a bid to reduce their inventory in the face of the upcoming new cotton crop (2009-2010) and relative decline in demand.
Riots broke out again last week complaining about power shortages in the country. In fact, they reportedly turned ugly in Pakistan's premier finance and industrial centre Karachi and the leading textile and engineering centre of Faisalabad in Punjab. Thus the power load shedding in the country, besides discomforting the populace at large, is hitting the business and industrial activity hard.
Global equities continued to rise in several sessions last week due to presumption in certain private and official circles that the global financial meltdown and the nearly two year old recession are reinventing and restructuring themselves so that the industrial and commercial decline and downturn has bottomed out.
Be that as it may, further bad news from several and sundry business, banking and industrial organisations around the world continued to report their losses and closures ad infinitum. To this roster of financial and economic misery may be added non-economic factors which are also adding difficulties to the deep global recession unmistakably.
Recent economic events of economic import which are worsening the global downturn include the fall in Japanese economic activity by an unprecedented four percent over the last quarter. One year long recession in Germany has been described as being the biggest blow to its economy over the past forty years. The European Union recession has slumped by a record 2.5 percent in the first quarter which is even more than the economic misery prevailing in the United States of America.
The worst hit by the global recession are the poor people in the emerging and developing economies. According to the United Nations body International Strategy for Disaster Management (ISDR), at least one billion people live in hazard-prone slums and shanty towns. Furthermore, disasters like cyclones, tsunamis and frequent floods threaten their economic stability and security.
These calamitous times have given rise to widespread protests in the United States, Germany, Japan, the United Kingdom, Ireland, Australia, India, Pakistan, Spain, France and almost everywhere as deprived humanity is clamouring for jobs, food, shelter, viz. decent living.
To add to these problems, states like California in the USA, the world's eight largest economy, are facing unmaintainable budget deficits, its total liability having risen to US Dollars Twenty One billions this year; the credit card industry faces proper regulations by the government in America, where the bank bailout plans are also being questioned regarding their propriety and are thus facing scrutiny.
In these miserable times, General Motors and Chrysler Corporation are said to be shedding about two thousand two hundred dealerships which should lay off more than one hundred thousand workers. Head upon heels after the Sony Corporation downswing in Japan, now consumer electronic giant Panasonic is struggling to maintain its usual activities. In the midst of this unprecedented prevailing financial and economic fiasco facing the world, we now have several parliamentarians in the House of Commons in the United Kingdom who are being accused of misappropriating their expense allowances.
The alleged moral turpitude of the British Lawmakers has led to the resignation of the Speaker of the House of Commons, Michael Martin, who is relinquishing his office on June 21, 2009, the first Speaker to do so in the United Kingdom after 300 years.
It is now generally accepted that these are devilish and depraved times which have inflicted untold misery around the world. However, instead of getting together to seek necessary solution to the world's problems and bring solace to the people, the leaders around the globe are bickering around in utter disharmony.
In the evening the brokers at Karachi reported that the sentiment in the cotton market was quiet with lint prices remaining under pressure. With the new round of power supply curtailment in the country and the annual federal budget announcement being around the corner, trade activity including the cotton business has reduced compared to the previous several weeks. The ready prices of cotton in both Sindh and Punjab reportedly ranged from Rs 3,400 to Rs 3,700 per maund (37.32 kgs) according to the quality.