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Web Exclusive | July 2017

Trade policies behind Pak’s export woes

Pakistan has lost its textile export share in global market by 23 per cent from 2.2 per cent to 1.7 per cent raising questions on economic and trade policies of government functionaries, unfolds the latest presentation on restoration of viability and growth of textile industry prepared by the All Pakistan Textile Mills Association (APTMA). “The investment in textile and clothing massively declined by 44 per cent in 2016-17 on account of which, the country’s textile production capacity has got impaired by 30-35 per cent owing to which 150 industrial units have become non-functional resulting in 30 per cent unemployment. More shockingly, the textile industry of Pakistan lost 15 per cent technological edge advantage over competitors.” 

Following the non-performance of the textile sector on account of highest cost of doing business in the region, Pakistan is now facing the highest ever trade deficit of $35.609 billion and external deficit has swelled to $16.305 billion. 

The APTMA presentation also mentions as to how the other competitive countries have performed far more better than Pakistan showing that Vietnam is the country that ranked first showing 107 per cent in growth in textile and clothing exports followed by Bangladesh with growth of 64 per cent in exports of the said items, India with 31 per cent, Sri Lanka 20 per cent growth whereas Pakistan stayed in the red zone with negative growth of 11 per cent. APTMA also came down heavily on the government saying that the bilateral trade agreements meaning by that free trade agreements (FTAs) finalised with various countries are faulty and failed to provide the level playing field to the real stake holders, export- oriented industrial sector. 

The country’s perception stagmatised with law and order situation owing to which the militants activities has resulted in barring the investors from traveling to Pakistan through travel adviseries. Though the situation has improved on account of military operations against militants, but there is a need to launch the drive on part of the government to change the country’s perception so that the existing reluctance between the buyers and investors. The presentation also reveals that prime minister’s export led growth package has got reversed as despite the shortage of cotton-- 3.8 million bales, 4 per cent customs duty and 5 per cent sales tax has been re-imposed. It also mentions that energy cost is more than 30 per cent of the total conversion cost in spinning, weaving and processing industries. And the industrial gas tariff of Pakistan is 100 per cent whereas electricity tariff is 50 per cent higher than the regional competitors. 
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