Chairman All Pakistan Textile Mills Association (APTMA), Mohsin Aziz has said massive decline in textile exports in the month of October, both in value and quantity terms, is alarming and this trend is likely to continue in the month of November. He cited that IMF’s latest report has also endorsed APTMA concerns regarding sluggish economic trends, particularly rising trade deficit amidst dwindling exports. He said exports may drop further in coming months due to unfavourable circumstances.
According to him, textile exports despite having increased in value terms during last four months of current fiscal year, still declined in quantity terms in October. Exports of cotton yarn, cotton cloth, knitwear, bed wear, towel and readymade garments have registered decline by 26 per cent, 32 per cent, 26 per cent, 28 per cent, 12 per cent and 14 per cent respectively, he added. Chairman APTMA said short supply of energy was the major reason behind drop in exports, as textile industry has been denied gas supply for 120 days during 2011 against much lesser days during previous year. Further, he said, high interest rate was restricting industry expansion. According to him, a reduction of 150 basis points to produce export surplus has failed in pushing credit off-take, which means interest rate is still on higher side and both commercial and industrial borrowers are reluctant for further financing.
Chairman APTMA said interest rate the world over ranges between zero to one per cent and the discount or policy rate is not more than 8.5 per cent in the regional economies against Pakistan, where it is still in the double digits; 12 per cent. He said IMF is also of the opinion that improvement in employment and living standards is not achievable unless economic reforms take place by ensuring industrial expansion and new set ups with reduction in interest rates. He said SBP should reduce discount rate by 250 basis points in upcoming monetary policy on November 30th to ensure single digit mark up in the country. According to him, curbing inflation should be the priority of government but still it should not be at the cost of industrial growth; as reduction in discount or policy rate would not affect inflation and instead it would be helpful in creating new jobs. Chairman APTMA has urged government to ensure uninterrupted energy supply to industry forthwith, besides reducing mark up to single digit to let industry expand and perform to contribute in national economy.
