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NEWS & VIEWS
Textile, clothing exports post impressive growth
Pakistan’s textile and clothing exports posted impressive growth in the first quarter of this year, increasing by 27.41 per cent to US$ 4.42 billion compared to US$ 3.46bn over the year, data released by the Pakistan Bureau of Statistics (PBS) showed recently.
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The growth momentum is steady in the export proceeds on the back of rising demand from global market coupled with massive depreciation of the rupee as exports posted a growth of over 25pc in September from a year ago.
It is believed that the easing of lockdown in North America and European countries — top markets for Pakistani textile goods — will help boost the exports. The demand for textiles collapsed during the first wave of the Covid-19 pandemic, but eventually recovered in the outgoing fiscal year.
In the last budget, the government had drastically reduced duty and taxes on imports of several hundred raw materials to bring down the input cost of exportable products. Liquidity issues were also resolved to a large extent by timely releasing refunds as well as payment of cash subsidies.
The government is also finalising a proposal to give subsidy on gas, LNG and electricity to the export-oriented industries. The PBS data showed readymade garments exports jumped by 22.77pc in value and in quantity by 19.76pc during July-Sept FY22, while those of knitwear edged up 32.97pc in value and 1.30pc in quantity, bed wear posted positive growth of 23.30pc in value and 23.41pc in quantity.
Towel exports were up by 17.94pc in value and 13.98pc in quantity, whereas those of cotton cloth rose by 21.88pc in value and dipped by 75.32pc in quantity.
Among primary commodities, cotton yarn exports surged by 69.30pc, while yarn other than cotton by 122.53pc.
The export of made-up articles — excluding towels — rose by 14.38pc, and tents, canvas and tarpaulin dipped by a massive 24.87pc during the months under review. The export of raw cotton declined by 100pc during the months under review.
The import of textile machinery increased by 144.53pc in July-Sept FY22 — a sign that expansion or modernisation projects were taken up by the textile industry during the months.
To bridge the shortfall in the domestic sector, the industry imported 166,524 tonnes of raw cotton in July-Sept FY22 against 131,360 tonnes last year, an increase of 26.77pc. Similarly, the import of synthetic fibre posted growth of 7.30pc as industry imported 133,902 tonnes this year as against 124,791 tonnes. The import of synthetic and artificial silk yarn stood at 118,287 tonnes this year as against 95,367 tonnes last year, a rise of 24.03pc.
US$ 5 billion investment in textiles to boost exports
Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood has welcomed the planned investment of US$ 5 billion in the textile sector of Pakistan aimed at establishing 100 new units.
“Our Make in Pakistan policy is beginning to bear fruit,” he said. “We have been informed that investment of
approximately US$ 5 billion is in the pipeline under which 100 new textile units are expected to be established.” He added that apart from enhancing the export capacity, the new units would jointly create around 500,000 jobs, he said. The government has reversed the de-industrialisation process in Pakistan and placed the country’s industrial sector on the path of sustainable growth, said Dawood.
Elaborating the “Make in Pakistan” policy, he emphasised that new investment under the initiative would steer a turnaround in Pakistan’s textile industry. “It will increase the number of textile units and reduce unemployment by creating around half a million employment opportunities,”
Pakistan’s monthly average domestic textile exports are anticipated to increase to USD 448.23 M by the second half of 2021.
In H2 FY2021, Pakistan’s monthly average clothing exports are anticipated to rise 13.44 percent to US$ 641.60 million, up from US$ 565.60 million in H1 FY 2021. Pakistan’s textile and apparel exports are anticipated to rise 9.12% from US$ 1237.55 million in the first half of fiscal year 2021 to US$ 1350.40 million in the second half of fiscal year 2021.
Pakistan’s monthly average textile exports were US$ 278.77 million in the first half of fiscal year 2021. In H2 FY2021, it is anticipated to decline 6.52 percent to US$ 260.58 million on a monthly average.
In the first half of 2021, Bangladesh, the United States, Turkey, Italy, and Sri Lanka were the top five buyers of Pakistani fabrics, accounting for around 46.64 percent of the country’s total fabric exports. In the first half of 2021, China, Bangladesh, Portugal, the United States, and Turkey were the top five customers for Pakistani textile yarns, accounting for about 85.63 percent of the country’s total textile yarn exports.
Pakistan’s monthly average domestic textile exports are anticipated to increase from US$ 393.22 million in the second fiscal year of 2021 to US$ 448.23 million in the second fiscal year of 2021.
To boost the crop, Pakistan plans to establish cotton cluster villages, said Syed Fakhar Imam, Federal Minister for National Food Security and Research. According to Imam, Cotton has helped Pakistan economy and provided work opportunities for millions of people. He stated that one million bales contributed approximately Rs97.5 billion in revenue, and that the government had set a target of 10 million bales for the current season.
Pakistan used to export textile products worth over US$ 15 billion annually. Last year, the country had to import 4.5 million bales of cotton for the local industry. The government is paying keen attention to white gold (cotton) and hopefully cotton would become a strategic crop in the future, he stated. He said modern farming techniques would be introduced to motivate other farmers. The minister said that the government was striving to enhance cotton production by focusing on the seed quality, enhancing sowing area, mechanization and upgrading the research institutes.
Pak-China cooperation to revive cotton fields in Pakistan
Last season, Pakistan harvested 5.6 million bales of cotton, which is the lowest point in the past 30 years. Meanwhile, Pak-China cotton-related cooperation is in full swing. “We are mixing the advantages of China cotton and Pakistan cotton to create new cotton varieties,” said Shahid Iqbal, PhD scholar of Cotton Research Institute in Henan, China.
This is one of the microcosms of the ongoing China-Pakistan cotton collaboration. “Last year, we had to import more than 50% of cotton,” said Muhammad Abdullah, executive director of Sapphire Fiber, one of the largest textile companies in Pakistan.
He complained that low production and quality force the local industry to choose imports. “Presently, the domestic consumption of cotton is 14 million bales. However, Pakistan harvested 5.6 million bales of cotton in the last season only.” He added.
Cotton production in Pakistan is in a vicious circle. According to the research of Central Cotton Research Institute (CCRI), low production of cotton lead to the low profitability of cotton planting. Cotton farmers turn to grow sugarcane in cotton-growing areas for better income. Sugarcane plants robbed water from cotton plants and humidified the whole area.
The high humidity leads to more insects which are deadly to the cotton plants and farmers have no technology to deal with them. What makes it worse is the climate change in the past few years, which is also weakening cotton’s strength and staple elongation. Another quality problem is the impurity which is caused by 100% manual picking.
To break the vicious circle of low cotton production, higher quality seed is the top demand, which can also help in quality improvement.
“The heat resistance of Pakistani cotton is excellent. The high-yield and high-quality traits of Chinese cotton are also what Pakistan seeds need. The germplasm resources of China and Pakistan are complementary,” said Shahid Iqbal, the guy who appeared at the beginning of the article, who used to be a scientific officer of Cotton Research Institute in Multan. ” We have a plan to send new cotton seeds to Pakistan next year for adaptability test and select the best ones and use them for production..”
Xinjiang Agricultural University and University of Agriculture Faisalabad (UAF) have also been cooperating in cotton cultivation for a few years. They have experimental fields in Faisalabad and plans to test mechanical picking in Pakistan.
Textile industry needs digitisation
Pakistan’s textile industry is lagging behind in adoption of digitisation compared to other sectors which is driving inefficiency and low productivity among units, said Employers’ Federation of Pakistan (EFP) former president Majyd Aziz. Majyd Aziz, EFP former president
Addressing a session on the textile industry, he stressed that the textile sector must embrace digital transformation to channelise its potential. “To be digital or not to be digital is no longer an option,” he said.
According to him, some of the reasons hindering digitisation in the textile sector included the nebulous nature of the industry, lack of awareness of digital tools and absence of a proper business environment to enable the digital transformation.
He was of the view that modern technologies not only aid the establishment of new business models by responding to changing customers’ needs but also enhance working conditions and production processes. “They ensure better management of hazardous stock, safer working environment, better workforce coordination and improved equipment monitoring,” he said.
Aziz directed the garment manufacturers of the Asia-Pacific region to share better practices and display unity despite the intense intra-regional competition and race to grab large chunks of global market share.
Citing examples of Association of Southeast Asian Nations (ASEAN) and South Asian Association for Regional Cooperation (SAARC) nations, he emphasised the need to establish a shared platform to promote, protect and project common interests. According to him, it would ensure sustainability, resilience and productivity of the industry.
The import of worn clothing recorded a growth of 219 pc to 266,747 tonnes this year as against 83,552 tonnes last year. The overall country’s exports posted a growth of over 27.87pc year-on-year to US$ 6.996bn in July-Sept FY22 compared to US$ 5,471bn in the corresponding period last year.
Cotton stockpiling surges 159pc by mid Sept
Cotton buying in local market increased 159 percent by mid-September, raising hopes of a harvest of around 9.0 million bales this season, traders said.
According to the fortnightly cotton arrival report of the Pakistan Cotton Ginners Association (PCGA), cotton arrivals were recorded at 2.68 million bales, higher by 1.65 million bales against last year’s 1.035 million bales.
Out of arrivals, only 1,000 bales were exported against 10,800 bales of the previous year. Around 2.35 million bales were sold to the mills, higher by 1.52 million bales, compared with 0.82 million bales of the last year.
Fortnightly flow remained at 895,412 bales, down by 139,782 bales to last year’s fortnightly arrivals of 1.03 million bales.
During this period, cotton production in Sindh was recorded at 1.72 million bales, up over one million bales compared with 0.7 million last year. Cotton production in Punjab came at 0.96 million bales, up 0.62 million, compared with 0.33 million bales of the last year.
On the other hand, prices in the local market remained stable during the outgoing week, as mills remained cautious while buying in the oversold market.
Stable prices in the local market are a reason for an increase in the value of the US dollar against rupee, as import of cotton becomes expensive compared with the local lint and as a result import
orders decreased. However, traders said import orders for 3.0 million bales had been finalised.
“The local mills have to import at least 6.5 million bales, as consumption demand is around 16 million bales while cotton production, according to the government estimates, would be around 8.5 million bales,” They said.
However, independent analysts said if weather conditions remained favourable with no more rains and proper sprays were adopted over pests, the production could reach 9.5 million bales.
APBUMA calls for permitting cotton, yarn import from Turkey, India, and Uzbekistan
All Pakistan Bedsheets and Upholstery Manufacturer Association (ABPUMA) appealed to the government to permit cotton import and yarn from India, Uzbekistan and Turkey through land routes in wake of raw material shortage.
Ex-chairman APBUMA, Syed Asim Shah, while briefing media has said that value added garments and home textile exporters were facing the shortage of cotton yarn which was basic raw material.
Flanked by Vice Chairman, Ghalib Haider Qureshi and Executive body member, Tariq Sajid, Shah informed that the association’s chairman, Arif Ehsan Malik had written a letter to the advisor to PM on Commerce and investment, Abdul Razak Dawood, in this connection. Cotton yarn prices have increased approximately 40 to 70 percent for different yarn counts 20/s and 30/s etc., he said and regretted that even at these exorbitant rates it was unavailable. The situation has compelled the exports not to take new orders which will divert these orders from Pakistan to other regional countries.
Additionally, high sea freight rates and shortage of containers have added to the miseries of the exporters by multiplying deliveries time from 45 to 90 days, Shah disclosed. He requested the govt to support garments and home textile exporters about the growing crisis of unavailability of containers and vessels on war footings.
In view of the existing scenario, it is important to explore and use the shortest possible routes to import cotton and yarn and possible land routes are from India, Uzbekistan and Turkey, he stated and added that estimated time for ECO freight time to travel from Islamabad to Turkey is ten days.
Similarly, it takes about 3 days for transportation by road from Pakistan to Turkey while 2 days for Uzbekistan from our country, he explained. The textile sector contributes to more than 60 percent share in the total national exports and earns the highest foreign exchange, Shah maintained.
GDP likely to surpass 5pc growth due to higher cotton output
The All Pakistan Textile Manufacturing Association (APTMA) has said due to higher cotton output, the country’s gross domestic product (GDP) growth rate was set to surpass the 5% mark during fiscal year 2021-22.
“Cotton arrivals up by 100% to 3.8m bales,” the Association said in a statement, adding that this could not only help Pakistan achieve more than 5% GDP growth but would also increase the exports significantly.
By October 2021 over 3.846 million bales had arrived in local markets as
compared to the arrival of 1.907 million bales of corresponding period of last year.
According to an APTMA official, over 100 new state of the art textile mills are expected to be established in the country under the new Textile Policy which would help raising the country’s exports by over US$ 20 billion.
The new industrial units in textile industry would also help attracting foreign investment of over US$ 5 billion besides providing more than 500,000 jobs to the local people, the APTMA official said.
Meanwhile, according to latest data released by Pakistan Bureau of Statistics (PBS), the exports of textile commodities surged by 28.67 percent during the first two months of the current fiscal year as compared to the corresponding period of last year and surged by 45.19 percent on year-on-year basis (YoY).
The textile exports were recorded at US$ 2.934 billion in July-August (202122) against the exports of US$ 2.28 billion in July-August (2020-21), showing growth of 28.67 percent.
The textile commodities that contributed in trade growth included cotton yarn, the exports of which increased from US$ 115.136 million last year to US$ 193.389 million during the current year, showing growth of 67.97 percent.
Likewise, the exports of yarn cotton cloth increased by 24.74 percent, from US$ 294.724 million to US$ 367.624 million whereas, exports of cotton (carded of combed) increased by 100 percent to 0.770 million.
The exports of towels during the period under review increased by 20.67 percent, from US$ 133.104 million to US$ 160.612 million, readymade garments by 22.57 percent, from US$ 477.216 million to US$ 584.913 million, art, silk and synthetic textile by 34.08 percent, from US$ 51.613 million to US$ 69.202 million, made up articles (excluding towels and bed wear) by 21.26 percent from US$ 109.846 million to US$ 133.194 million whereas exports of other textile materials increased by 37.44 million, form US$ 86.743 million to US$ 119.222 million.
Pakistan’s exports to China have shown impressive double-digit growth in the fiscal year 2021, going above US$ 2 billion. Impact of the FTA phase 2 between the two iron brothers is evident from the fact that Pakistan’s exports to China are continuously surging despite the pandemic and there is still huge potential to be explored.
“Pakistan largely drives its competitiveness from home grown cotton. Unfortunately local cotton production is declining and has to rely on imported cotton, says a report published by Gwadar Pro on Friday.
Hopefully, with Chinese intervention in agriculture R&D, technology and machinery, we will be competing all again,” Mr. Engn: Bilal Jamil, Senior Vice President, APBUMA said in an interview with Gwadar Pro.
Pakistan’s home textile sector largely comprises of SMEs and is directly dependent on local cotton yarn supply which relies on local cotton production.
Engn: Bilal Jamil explained that Pakistan’s cotton production has steeply declined over the past years. “A sustainable cotton production is imperative to the competitive advantage of textile industry.
Last year, yarn price steadily increased due to shrieked cotton production and increases yarn demand which hampered home textile sector.
