The much awaited unilateral tariff concession to Pakistan proposed by European Union (EU) is unlikely to benefit the country’s exports as its production of textile made-ups has badly affected by the present energy crisis. As the production has reduced drastically due to the electricity and gas shortages the EU package which is likely to be discussed at World Trade Organisation on February 1, would also not be able to change the downward trend of textile exports. Talking to Profit, Mohsin Aziz, Chairman All Pakistan Textile Mills Association said that the in view of the acute energy crisis country’s exports would be reduced by over $2 billion during the current financial year. The current negative growth against the expected $14 billion worth exports would also cause reduction in overall exports.
The export of textile, in terms of quantity, has been reduced by at least 38 per cent during the couple of months. Last month exports were declined from $1.12 billion to $900 million with the reduction of $2.5 million. During November and December 2011, there was a decline of at least $400 million.
Keeping in view the current downward trend and massive energy crisis, PTMA forecasts that the country would hardly reach the $12 billion worth exports by the end of the financial year 2011-2012 against the previous figure of $14 billion. He said negative growth in textile sector was alarming and this trend is likely to continue in future unless energy and interest rate issues for the textile industry are addressed.
The textile exports, in terms of value, he claimed, were better during July and August of the current fiscal year, but the decline in quantity terms was started from October after the days’ long gas end electricity breakdowns especially to the industrial sector of Punjab. Another factor of decline in exports, what he said, was the high interest rate which was affecting both production and expansion of the industry. According to him, a reduction of 150 basis points in rates to produce export surplus has failed to push credit off-take, which means the interest rate is still on the higher side and both commercial and industrial borrowers are reluctant on further financing.
Talking about EU trade concessions package of 75 items to Pakistan, the chairman APTMA hoped that the draft waiver sent by EU to Council of Trade and Goods of WTO would be passed unanimously next months. However, he said, until the energy issue, which has paralysed the country’s industries, is resolved besides taking other measure for growth of production and exports, the EU package would not be fruitful to the country.
