FAISALABAD: Textile export industry is highly concerned over continuous downfall in exports. Inconsistent policies, the highest production cost, currency devaluation and economic meltdown have contributed to the deteriorating exports.
Expressing deep concern over the ongoing economic uncertainty, PTEA’s spokesperson, in a statement here on Monday, has said that the economic slowdown has pulled country’s exports down and experienced a troubling trend of negative growth right from the beginning of the ongoing fiscal year, except for a slight increase in October 2023.
Terming policy reversals as major factors behind this decline, he said that several incentive schemes including provision Technology Up-gradation Fund (TUF). Mark up support facility were announced in the textile policy 2020-25 to boost the textile industry especially the export sector; however could not be implemented in true spirit.
Regionally Competitive Energy Tariffs have also been stopped and the consequences of non-provision of competitive tariffs have resulted in substantial decrease in industrial activities and further depletion of our vital export revenue stream, he added.
Furthermore, several concessionary finance schemes were introduced by the SBP during COVID-19 times to keep stable the economy; however, the same have also been discontinued.
All these contributed in steep export fall, he said. Undue delay in payment of exporters’ refunds and issuance of unwarranted tax notices has also adversely impacted the export cycle as exporters’ liquidity have already taken a strong negative hit from adverse impacts of global recession.
He urged that instead of putting additional burden of taxes on existing taxpayers, necessary steps should be taken to facilitate the export sectors.
He explained that country’s economy has been in crisis for months; inflation is backbreaking, the rupee’s value has fallen sharply and its foreign reserves have now dropped to the precariously low level.
The key crisis in the domestic economy is the fall of the country’s foreign exchange reserves to the alarming level; whereas the rest of the crisis included a 49-year high inflation rate of 37%, a 23-year high key policy rate at 22%, a steep fall in exports, increased rate of taxes and highest devaluation of the domestic currency.
Country’s leading export sector is also passing through challenging times as it is operating under capacity utilization across the country.
He appreciated Government’s positive approach for overcoming the economic challenges and hoped that structural reforms will be undertaken for stable and sustained economic progress. He briefed that textile export industry is facing a serious blow of non-viability due to the high cost of doing business and at a comparative disadvantage in respect of production cost in the region.
Countries that compete with Pakistan in global textile exports including Bangladesh, India, China and Vietnam are quoting reduced prices of up to 15% to foreign buyers as compared to those given by Pakistan. In contrast, exporters in Pakistan are battling hard to survive and compete on a very low profit margin.
Consistent export fall is proving that Pakistan’s economy is consistently shrinking. This indicates that meeting the export goal will be more difficult which will lead to further income cuts for the country. Worsening international economic situation has negatively affected the already inefficient supply chains of the country.
Pakistan is passing through difficult times and an increase in export proceeds can lift the economy. PTEA stressed for taking stock of serious situation and identify the real challenges in export growth, resolve them on priority to accelerate the growth rate.
Copyright Business Recorder, 2023