Last Tuesday the Prime Minister Nawaz Sharif announced a Rs 180 billion package of incentives for the sagging export sector which is expected to give a large boost to the country's competitiveness and revival by pushing up the output and exports, including the cotton economy. For the past few years, raw cotton and its manufactures have been facing a crippling decline in their output and sales, leading to a sizeable decrease in exports due to a high cost of doing business.
Traders said that the large burden on the domestic textile industry compared to its regional competitors because of high cost of doing business had hampered the cotton growers, ginners, spinners, value-added garments producers and exporters in a big way.
The package announced to boost exports envisages duty drawback at seven percent for the garments, six percent for textile madeups, five percent for processed fabrics, while it would be four percent for yarns and grey fabrics. Furthermore, according to the export incentive package, import duty on raw cotton has been abolished. Reports added that custom duty on manmade fibers other than polyester and sales tax on the import of textile machinery has also been removed.
As a result, the All Pakistan Textile Mills Association (APTMA) has welcomed the Rs 180 billion package for the revival of textile industry and exports as it will assist in achievement of export targets of ten percent of the Gross Domestic Product (GDP). As a result of the upbeat sentiment in the cotton market, the prices of seed cotton (Kapas/Phutti) of lower grades have gone up by Rs 200 to Rs 300 per 40 Kgs, while the price of higher quality seed cotton is reported to have gained by Rs 50 to Rs 100 per 40 Kilogrammes. Lower quality lint prices have gone up by Rs 200 to Rs 300 per maund (37.32 Kgs), while the prices of higher quality of lint are reported to the gone up by Rs 100 per maund.
Thus on Thursday, the price of seed cotton ranged from Rs 3000 to Rs 3300 per 40 Kgs in Sindh, while in the Punjab it reportedly ranged from Rs 3200 to Rs 3500 per maund in a tight market. Lint prices in Sindh are said to have ranged from Rs 6200 to Rs 6700 per maund while in the Punjab they ranged from Rs 6000 to Rs 6600 per maund, in a tight market.
The current cotton crop in Pakistan (2016/2017) is expected to be about 10.8 million bales (155 Kgs) wherefrom the domestic mills may consume 14/14.5 million bales. Mills imports may be about three million bales, while the exporters may ship about 1.5 to two million bales. Traders said that there would be increased sowing of cotton next season (2017/2018) because of better demand from the domestic mills. Presently, cotton rates in New York and China are said to be steady, while in India the cotton prices are said to be on the tight side.
In ready cotton sales reported on Thursday, 1000 bales from Sanghar in Sindh sold at Rs 6025 per maund (37.32 Kgs), 1000 bales from Pano Aqil sold at Rs 6700 per maund, 400 bales from Chistian in Punjab sold at Rs 6300 per maund, 200 bales from Bahawalpur sold at Rs 6450 per maund, 700 bales from Sadiqabad sold at Rs 6650 per maund and 1600 bales from Lodharan sold at Rs 6700 per maund in a rising market
On the global economic and financial front, it was initially believed that with the induction of Donald Trump as president next week, the equity, commodity and other markets would plump precariously. However, equity, crude oil, ores and other markets moved up steadily. In fact, some markets have gone berserk like iron ore and steel, base metals and copper. Some analysts believe that there are other reasons which could undo prevailing global economic order.
In a report by Danish Siddiqui/Reuters, "The biggest risks to doing business world-wide do not involve Brexit, terrorism or populism". As reported in the global Risk Report 2017, "the greatest risks are posed by unemployment or underemployment, energy price shock, deflation, fiscal crises and assets bubbles in the main economies".
In another observation, reports from Geneva indicate that according to the World Economic Forum stated that the foremost risk to global economy during 2017 is the rising income inequality. This necessitates that reforms be initiated to market capitalism in order to forestall a populist backlash. Experts are reported to have said that reforms to market capitalism are "increasingly viewed as necessary to ward off a populist backlash". The World Economic Forum (WEF) in its Global Risks Report prepared for the political and business bigwigs who are gathering at Davos have been advised that "rising income and wealth disparity will be the most important trend in determining global developments over the next ten years".
The WEF has also cited British voters who voted to leave the European Union and "the election of political outsider Donald Trump as U.S. president as public dissatisfaction and as instances of public preference for changing the status quo. These problems exhibit a widespread disquiet amongst the public on a wide scale around the world. A new U.S. intelligence report titled "Global Trends: Paradox of Progress" issued by the National.
Intelligence Council" in Washington D.C. fears that incoming president Donald Trump's "administration faces a world of greater risk, slower growth and more anti-democratic pressures than ever since the Cold War". The report continues to say that "U.S. leadership is ebbing amid shifts in economic, political and technological power, deep changes in the landscape that portend a dark and difficult near future".
The report predicts that the next five years will see rising tensions within and between countries. The report concludes that "For better or worse, the emerging global landscape is drawing to a close an era of American dominance following the Cold war." This is a fearful scenario which does not bode well for the world at large.