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NEWS & VIEWS
Pakistan exports of readymade garments in 2022
Pakistan’s textile exports surged to an all-time high as they surged by 25 percent to US$11 billion during the first seven months of the current fiscal year compared to US$8.76 billion in the same period last year, according to the Pakistan Bureau of Statistics (PBS). The key export driver during the last seven months was value-added exports where the knitwear segment contributed the most, as it increased by 33 percent year-on-year (YoY) to US$2.9 billion followed by ready-made garments 22 percent to US$2.2 billion and bedwear by 19 percent to US$1.9 billion exports, the data shows.
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The data shows that on a month-onmonth (MoM) basis, Pakistan’s textile exports were down 4 percent to US$1.5 billion in January 2022, led by lower value-added exports segments mainly in knitwear down 12 percent MoM and ready-made garments down 4 percent MoM respectively.
As compared to the last year, Pakistan’s textile exports remained up by 17 percent on yearly basis on January 22 led by significant recovery witnessed in value-added segments, largely in knitwear up by 19 percent YoY, readymade up by 17 percent YoY, and bedwear 21 percent YoY. It is expected that Pakistani exporters will touch US$18 to US$19 billion at the end of the fiscal year.
The federal cabinet on 15 February 2022 finally approved the Textile and Apparel Policy 2020-25 after the Ministry of Commerce submitted the revised draft of the textile policy to the Economic Coordination Committee (ECC) incorporating a few amendments. The key reason behind the late approval was the dispute between the Commerce Ministry and the Energy Ministry on the issue of Energy Tariffs (RLNG and Electricity).According to a report by Topline Securities, the updated draft stated that Energy Tariffs will be provided to the textiles and apparel industry at regionally competitive rates during the policy years. For this, the tariff will be reviewed and announced in the federal budget by Finance Division.As per the Pakistan Institute of Development Economics (PIDE), the average regional electricity tariff rate stood at 7.4 cents per kWh in March 2021 which, as believed, has increased since then. Pakistan’s current electricity tariff is around nine cents per kWh.
In the case of RLNG, the average regional RLNG rate stood at US$4 per MMBTU as per PIDE vs Pakistan’s tariff rate at US$6.5 per MMBTU. It is believed that the above-stated textile policy will have a neutral impact on the sector. Given, Pakistan is already offering subsidized energy and RLNG tariffs to textile players and Pakistan is part of an IMF [International Monetary Fund] program, a further reduction from the current levels is highly unlikely.
The RLNG tariff is expected to remain intact at US$6.5 per MMBTU level although the regional average is comparatively low. It is to note that RLNG is currently being provided at US$9 per MMBTU to the textile sector till March 2022 due to supply issues.
Millers incur heavy demurrages as cotton deliveries get stuck at port
Textile mills have to pay millions of rupees in demurrages due to the delay in clearance and offloading of cotton consignments at the Karachi Port by the Plant Protection Department, a letter written by All Pakistan Textile Mills Association (APTMA) revealed recently.
“Textile sector that over-performed with US$20.5 billion exports in the first eight months of the current financial year is facing massive delay in importing cotton as their containers are not being allowed to get cleared and offloaded on time at the Karachi Port,” the letter read. Resultantly, textile mills were being forced to pay millions of rupees in the shape of demurrages, APTMA letter written to secretary of Ministry of National Food Security and Research added.
Containers carrying imported cotton take more than a month to get offloaded and returned in Pakistan, whereas in other countries such as Bangladesh and India, containers get returned in four days at the most. The hurdles by the Department of Plant Protection, Karachi were not only causing delay in materialising the arrival of imported cotton in textile mills, but also impacting the pace of Pakistan’s textile exports, it said.
Since Pakistan was cotton deficient, textile industry had no choice but to import raw material from various countries to meet export targets, but since there were delays at the port, “even shipping lines were becoming evasive about bringing imported raw material to Pakistan,” one of the top men of a textile unit said.
APTMA has urged the Ministry of National Food Security and Research and Plant Protection Department, director general, Karachi to effectively play their role in getting containers offloaded and returned on time. As many as 25 textile mills have faced these issues at the port. Out of these, 22 mills managed to get their containers offloaded after a lapse of many times. However, three mills were still running pillar to post because of the delay in getting their containers having 1,988 bales of cotton cleared and offloaded.
According to the letters of APTMA, the three mills were NP Cotton Mills Limited Karachi, Fazal Cloth Mills Limited Multan, and Sapphire Textile Mills Limited, Karachi.
Over 7.4 M Cotton Bales Reach Ginneries Across Pakistan
Seed cotton (Phutti) equivalent to over 7.4 million or exactly 74,41,833 bales have reached ginning factories across the country till March 1, 2022, registering increase of 32 per cent as compared to corresponding period of last year. According to a fortnightly report of Pakistan Cotton Ginners Association (PCGA) released recently, over 7.4 million or 74,40,568 bales have undergone the ginning process i.e. converted into bales.
Cotton arrivals in Punjab were recorded at over 3.9 million or 39,28,690 bales, registering a surplus of 12.20 percent as compared to corresponding period of last year when arrivals were recorded at 35,01,580 bales. Sindh generated over 3.5 million or 35,13,139 bales, registering an increase of 64.46pc as compared to corresponding period of last year when arrivals were recorded at 21,36,169 bales. Textile mills bought 73,32,000 bales while exporters purchased 16,000 bales and Trading Corporation of Pakistan (TCP) didn’t buy during the cotton season 2021-22.
Sanghar district of Sindh topped with cotton arrival figure of 13,19,844 bales followed by Bahawalnagar district of Punjab with 11,32,157 bales. Total eight ginning factories were operational in the country. Exactly 93,833 cotton bales unsold stock was available in ginning factories.
Pakistan’s exports reached US$100 million per day in February, which is an impressive record for the economy. This was stated by Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood while presiding over a consultative meeting to discuss the trade trends for the financial year 2021-22.
The adviser was informed that according to the provisional figures compiled by the Pakistan Bureau of Statistics (PBS) exports from Pakistan during February 2022 grew by 7.9 percent to US$2.820 billion as compared to US$2.614 billion in January 2022. They increased by 36.4 percent as compared to US$2.068 billion in February 2021. He was informed that for the first time, export reached US$100 million per day in February 2022.
He was informed that there were indications that the growth in imports has started to decline. The imports in February 2022 decreased by 2.14 percent to US$5.907 billion as compared to US$6.036 million in January 2022.
He was briefed that important exports commodities showed substantial doubledigit growth in February 2022 over February 2021. These included knitwear (grew by 57 percent), readymade garments (64 percent), bed wear (43 percent), cotton cloth (73 percent), nonbasmati rice (51 percent), cotton yarn (17 percent), towels (44 percent), rice basmati (67 percent), made-ups excl. towels & bedwear (22 percent) and plastic materials by 119 percent.
Dawood expressed his satisfaction with the growth of exports and advised the officials of the Ministry of Commerce to monitor export growth so that the momentum is maintained and necessary interventions are made if and when necessary.
Pakistan to launch BWP for textile, apparel sector
Pakistan is all set to launch the Better Work Program (BWP) soon which will enable the country in achieving decent work standards, especially in the exportoriented Textiles and Apparel sector, said a report issued by the Ministry of Commerce recently.
The report “GSP+ Insights Pakistan” further revealed that the country is cofunding ILO BWP through Export Development Fund, with support from European Commission.
According to the statistics mentioned in a report, Pakistan’s exports to the EU have increased from 3.56 billion Euros in 2013 to 6.64 billion Euros in 2021, registering an increase of 86%.
While Pakistan’s imports from the EU member states have also increased from 3.31 billion Euros in 2013 to 5.59 billion Euros in 2021, which represents an increase of 69%.
To note, EU GSP Plus is a mutually beneficial arrangement leading to exports increase for both Pakistan and the EU.
GSP Plus has played an important role in the expansion of bilateral trade. Meanwhile, this increased bilateral trade led to more jobs, better working conditions, promotion of sustainable policies overall improvement of macroeconomic indicators for Pakistan.
In terms of country-wise exports to EU member states, there are 12 EU Member states in which Pakistan’s exports have increased by more than 100% including Poland, Hungary, Bulgaria, Denmark, Ireland, Cyprus, Spain, Netherlands, etc.
GSP Plus played a key role in Pakistan’s trajectory to a greener future. It led to devising legislative instruments and taking policy actions for a greener and cleaner Pakistan. The report stated that the country has achieved SDG 13
‘Climate Action’ target 10 years ahead of time. The environmental protection bill has been passed.
Highlighting Pakistan’s commitment to zero carbon emissions, the report stated that 20 textile and apparel companies are leading Pakistan’s firstever net-zero coalition to reach zero net carbon emissions by 2050.
GSP Plus has strengthened Pakistan’s commitment to further improve decent work standards and labour rights. In 2021, the Government of Punjab increased the minimum wage by 10% while the KP government raised it by 20%, the report noted.
US, EU countries top importers of Pakistani goods
United States of America, United Kingdom, Spain, Germany, Netherlands, and Italy remained top importers of Pakistani goods in the month of February, the Ministry of Commerce data showed recently.
Pakistan’s exports to US and European nations grew in February, when Pakistan’s relations with US and European nations ran into trouble after Islamabad’s neutral stance on RussiaUkraine conflict.
Exporters however pointed out that February’s exports to these countries were based on the orders received some five to six months ago. About the future prospects of Pakistan’s exports to US and European countries in the current situation, exporters do not see any threat from these nations.
“Why should Pakistani exports suffer when Pakistan didn’t side with any one camp in the Russia-Ukraine conflict,” Khurram Mukhtar, Patron-inChief of Pakistan Textile Exporters Association (PTEA) said, adding that Pakistan was not the only country to hold a neutral stance on the issue.
According to the figures of the Ministry of Commerce, Pakistani exports to US grew 25 percent to US$ 473 million in February this fiscal compared to US$ 379 million in the same month last fiscal.
This was followed by United Arab Emirates, where Pakistan exported US$164 million worth of goods against US$ 75 million exported in the same month last year, showing 118 percent growth.
Exports to Italy grew 102 percent to US$123 million, compared to US$ 61 million last fiscal, whereas exports to Spain increased 90 percent to US$121 million from US$ 64 million in the same month last fiscal. In the month under review, exports to UK increased 27 percent to US$199 million compared to US$156 million in the previous year’s February. Similarly, exports to China climbed up 17 percent to US$ 284 million against US$ 243 million; Bangladesh rose 62 percent to US$ 80 million compared to US$ 50 million, and exports to Turkey increased 157 percent to US$43 million against US$16 million in February of last fiscal.
About the reasons behind growth of exports, Khurram said that Pakistan was competitive and did not face supply chain disruptions. Its track record concerning delivery security has been excellent when compared to regional countries.
