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Textile exporters fail to rise to the challenge despite incentives

KARACHI: Without producing even a single cotton flower, Bangladesh has left Pakistan far behind on the list of textile-exporting countries.

Pakistan is the fourth largest cotton producer in the world while Bangladesh is one of the biggest textile exporters globally.

Incentive-hungry textile exporters in Pakistan failed to fully utilise even the most favourable trade package offered by the European Union. In contrast, their Bangladeshi counterparts availed a similar package by the EU to the fullest.

In July-December of the current fiscal year, Pakistan exported textile products worth $1.365 billion while Bangladesh fetched $8.041bn during the same period. Pakistan’s exports were just 17 per cent of the exports by Bangladesh.

Bangladesh left behind other textile-exporting countries in the region, including India and Vietnam. India exported textile products worth $2.4bn to the EU while Vietnamese exports amounted to $1.78bn in the same period.

Exports by the textile sector of Pakistan, which is able to buy cheap cotton produced within the country, have been in decline, although they still constitute about 58pc of the country’s total exports.

Despite the sector’s overall poor performance, the State Bank of Pakistan (SBP) recently appreciated its slight improvement, which was a result of higher prices of cotton products in the global market.

Pakistan’s exports have been declining for several years. The Ministry of Commerce failed to bring any improvement in the situation. Neither any incentive nor the commerce minister’s frequent visits to world capitals could bring any positive change in this regard.

The SBP report said Pakistan mainly exports readymade garments, knitwear and bed-wear to the EU, which has the highest share in the country’s textile exports.

Pakistan successfully increased exports to the EU despite a decline in the imports of the European bloc. Only Pakistan, Bangladesh and Vietnam increased exports while India and China registered a decline in exports.

Surprisingly, the SBP said Pakistani exporters are effectively using the duty-free access to the EU that Pakistan enjoys under the current GSP+ scheme.

Data shows that five countries, including China, Bangladesh, India, Vietnam and Pakistan, collectively exported textile products worth $46.5bn to the EU in July-Dec. Pakistan’s share in these exports was just 2.8pc.

Textile exports of Bangladesh constitute 82pc of its exports and 20pc of its GDP. Textiles made it the fastest-growing developing country, which achieved GDP growth rate of more than 6.5pc. Bangladesh has set a target of $50bn exports for 2021. Its exports are expected to surpass $40bn in 2020.

Data shows Pakistan’s overall exports of textile products registered a decline in July-Feb, which fell $377m to $8.244bn.

Prime Minister Nawaz Sharif in January announced the Rs180bn incentive package to boost exports. Easygoing textile exporters like to export cotton, cotton yarn and gray cloth, which are considered semi raw materials.

Data shows Pakistan exported cotton worth $2.289bn in July-Feb, which is slightly lower than last year.

Courtesy : Dawn News

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