Pakistan has a diverse economy that includes textiles, chemicals, leather products, food processing, financial services, telecommunications, retail, automobile manufacturing, light and heavy armaments, agriculture and other industries. It is the 45th largest economy in the world in terms of official exchange rates ($144b) and 25th largest based on purchasing power parity ($410b PPP). Its service sector accounts for more than half of its GDP.
Pakistan’s textile industry is a major contributor to the national economy in terms of exports and employment. Pakistan holds the distinction of being the world’s 4th largest producer of cotton as well as being the 3rd largest consumer of the same. In the period July 2007 - June 2008, textile exports were US$ 10.62 Billion and accounted for 55% of the total exports.
As the economies in the US and Europe slow down, Pakistan's key exports of textiles and leather products are experiencing a slowdown in growth as well. According to APTMA, textile exports have declined by about 20 percent in 2008. The industry is bracing for more trouble ahead with continuing crises of electricity and gas, international market access, global economic slow-down,and adverse travel advisories.
According to Pakistan textile industry association, 90 percent of Pakistan's textile industry is losing money losses and facing closure. More than two months of production has been lost due to power cuts and gas shortages.
APTMA, Pakistan's textile industry Association established for the promotion and protection of the textile industry, says that the high cost of finance because of the nation's tight monetary policy has added to their continuing woes.
In order to pave the way for the IMF bailout, Pakistan's central bank raised its bank lending rate in early November by 2 percentage points to 15 percent. Since 2004 interest rates have risen dramatically. Kibor (Karachi Inter-Bank Offered Rate) has surged 261 percent. Likewise, the bank spread, on a weighted average basis, rose from 2 percent to an excessive 7.75 percent. This size of bank spread is among the highest in the world. These high rates were allowed as a policy to restrict money supply to satisfy the IMF conditions.
Federal Textile Adviser Dr Mirza Ikhtiar Baig told the News that Pakistan has a very low share of the international textile market. China tops the US market with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20 per cent of the US market.
In the European market, China tops again with a share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only 1.5 per cent while the Philippines had lost 11 per cent of the market.
European buyers have told Baig that Pakistani garment manufacturers could cut their cost up to 45 per cent in sewing by improving efficiency.
“Labor productivity is very low,” said Baig. “Our regional competitors take 75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We also waste 30 per cent in finishing and 12 per cent in washing.”
According to a study of Pakistani textile and apparel sector conducted by Werner International, management consultants to the world textile, apparel & fashion industry, some of the garment units were over-staffed by 57 per cent. That was an internal negative factor whereas external factors included no duty-free market access to the EU and negative image and perception of Pakistan abroad.
Baig has asked Werner to submit a proposal for presenting a better image of the textile industry to global brands for achieving collaboration with them. In response, Werner is working on a three-year plan to help Pakistan garment manufacturers.
While Pakistan clearly needs to diversify and increase higher-value-added exports such as sophisticated machinery and high technology products and services, it is essential for it to maintain and enhance the current export levels of textiles, leather and other products for which there is an established export market. The export-oriented industries should get preferential treatment in getting access to necessary inputs of raw materials, financing and energy by government policies. Energy and communications infrastructure, in particular, need much greater focus to enable Pakistani exporters to continue to earn the much-needed hard currency.
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Here's a recent report in the News about the murder of a textile mill owner in Lahore by his workers:
Friday, August 07, 2009
By Mansoor Ahmad
The murder of a leading industrialist who was unable to pay his workers for the last three months due to slow business has sent a wave of terror among the entrepreneurs most of whom are not update on their dues.
Najeeb Zafar a leather factory owner in the suburb of Lahore was killed by his factor workers and the manufacturing facility was also torched after exchange of hot words over the delay in payment of the salaries of the workers.
Najeeb was the scion of a leading industrialist family that runs textile mills and leather factories.
What has terrorised the entrepreneurs is that almost all of them are in such a financial crisis that they have not been able to pay salaries to their employees on time.
A large number of them are regularly liquidating their personal assets to keep the factories running. Many have reached the stage where they are left with no assets and have closed down after defaulting on all their liabilities including the salaries of their workers.
The wave of unemployment in the country is such that the workers tolerate long delays in their salaries in the hope that some payments would be received as the alternate is to leave the job and sit at home. New jobs are not available in the market.
The business activities in the city remained dull throughout the week.
The textile sector is eagerly awaiting the announcement of Pakistanís first textile policy which was expected in the first week of August.
The surviving textile units are pinning high hopes on the textile policy as after the closure of almost 35 per cent of the industry even the most efficient mills are finding it hard to pull on without some relief which they expect in the textile policy.
Trade bodiesí elections are on card and the activities in this regard have started. The elections of the Lahore Chamber of commerce and Industry are scheduled next month.
Rival groups are active in mustering support of LCCI members. They have now started visiting various markets and industrial concerns with the ruling alliance still commanding confidence of the members.
The engineering sector is busy gathering the details of the trade policy that has provided various incentives to this sector.
They are demanding that the execution of the facilities announced should be through the Engineering Development Board instead of Trade development Authority of Pakistan because the EDB have relevant engineering experts that the TDAP lacks.
Soaring rates of edibles two weeks ahead of the fasting month of Ramadan are indicators of another wave of inflation in the coming month.
The vegetable rates have already shot up to their historic high and are still rising. The sugar rates have touched Rs50 per kg, wheat flour rates have increased by another Rs15 per 20 kg bag.
There is pressure on milk rates. The rates of gram pulses are on the rise. The provincial and city district governments are planning to establish large number of Ramadan bazaars where they would try to ensure availability of essential daily use items at lower rates. The success of this exercise would depend on the governmentís ability to arrange more supplies than demand. No government in the past ten years has succeeded in this regard.
Last time when the rates in Ramadan were brought under firm control was in 1998 during the first tenure of the present chief minister Punjab. The intensity of load shedding remains the same, forcing most of the traders to install diesel generators that can be seen outside almost every shop in the shopping centres. These diesel run generators do illuminate the shops but cause pollution around the markets.
mansoor.malhr@gmail.com
Here's a report in the News about declining exports of readymade garments:
The value added textile sector fears that export of readymade garments may decline by around $300 million owing to shortage of yarn in the local market.
Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Mohsin Ayub Mirza told The News that in the value added textile sector they sell their products 120 days in advance but due to shortage of yarn, no orders were received for February 2010.
He said that owing to shortage of yarn around 20 per cent fall in export of knitwear and 10 per cent in woven garments is feared. If the situation persists there would be a decline of around $100 million in export of woven garments, $140 million in knitwear and $60 million in towels.
Export of cotton and cotton yarn increased by more than 30 and 23 per cent respectively in September and October. Export of cotton cloth, bedwear, towel and tents also recorded a significant growth whereas export of knitwear and readymade clothes slightly decreased in this period.
Raw cotton recorded export of 25.72 million kilograms in October against 17.92 million kilograms in September while cotton yarn export increased to 73.36 million kilograms in October against 56.18 million kilograms in September.
All Pakistan Textile Mills Association Chairman Anwar Ahmed Tata said the spinning industry was facing shortage of raw cotton but they had never demanded a ban on export of cotton and it was expected that about one million bales or 8.5 per cent of total production of cotton would be exported this year.
He said that the government has earmarked more than 90 per cent out of the Rs40 billion incentive package in the textile policy for the value added sector.
The APTMA chairman demanded the government not to intervene and take any short-term measures because the consequences would not only hurt the spinning industry but also the value added sector and the whole economy.
All Pakistan Textile Mills Association (APTMA) Chairman for Sindh-Balochistan Region M Yasin Siddik said it was time that our value added sector realised that Pakistan was not only competing on the basis of prices but also on the basis of quality, especially in products which were made from coarse counts yarn like denim, bed ware, cotton cloth and towels.
Pakistan Apparel Forum Chairman Jawed Bilwani demanding capping of yarn export said: “Our competing countries like India, Bangladesh, and China were also signatories of WTO, yet they were conscious of the importance of their value added textile sector and its exports and had been taking bold steps to protect this sector.”
India, WTO member since 1995, imposed quantitative capping of exports of cotton yarn from 1993 to 2002 besides imposing quotas on cotton yarn exports, Bilwani said.
Bangladesh, WTO member since 1995, slapped a ban on exports of jute on 7th December 2009 to protect the local spinners converting jute by way of value addition.
China, WTO member since 2005, increased export duties of 74 textile categories including Flax Single Yarn in 2005 and in addition to this it is giving subsidy in the form of 16 per cent export rebate for labour intensive textile and garment industries.
Bilwani said even Pakistan from 1988 to 1995 imposed export tax on raw cotton for development of cotton yarn industry. The aim was to reduce price of cotton fibre. The scheme was successful and from 1988 cotton export decreased substantially while production and export of yarn increased.
He said that now it is time to go one step forward to next level in value addition and impose restriction on exports of cotton yarn for development of the value added textile industries.
Production of cotton in the world is less than the last year except India, which has 3 million bales surplus than its requirement. Cotton price in the local market has increased by 31 percent to Rs4,500 per maund from Rs3,400 in two months only.
European textile firms are protesting EU trade concession for Pakistani textile imports to help Pakistan after the massive floods. Here's a Wall Street Journal story on it:
European Union trade concessions for flood-ravaged Pakistan have triggered a backlash among European manufacturers, led by an EU textile sector already imperiled by Chinese imports.
The tensions show how the economic downturn is increasing anxieties over trade to the point where even targeted humanitarian efforts to lower tariff barriers are called into question.
The European Commission, the EU's executive, Wednesday approved tariff waivers on 75 categories of imports from Pakistan for up to three years. The gesture followed an order by EU leaders eager to show they're helping some 10 million Pakistanis left without shelter after violent flooding this summer.
Pakistan isn't a big exporter to the EU, shipping only $4.2 billion worth of goods to the bloc last year. It ranked a distant 46th among EU trading partners, between the United Arab Emirates and Serbia.
However, more than 75% of those exports are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.
That's a problem for European textile manufacturers, mostly located in Europe's southern rim, from Portugal to Italy to Romania. Thousands of small shops and their workers have been getting crushed ever since China joined the World Trade Organization in 2001, partially opening up European textile markets. Some of these European economies are suffering slow growth because of the euro zone's debt problems.
After agriculture, textile sector is the second largest employer in India. Here are excerpts from a NY Times report on how the situation is changing in Coimbatore, a big textile center in Tamil Nadu:
The clear losers of India’s currency approach right now are garment makers. From April to August, exports were down 6.4 percent from a year earlier in the $10 billion Indian clothing industry. Although it represents only about 1 percent of the nation’s economy, the garment industry is India’s largest employer after agriculture.
“All the other countries are protecting their currencies, so why are we not?” said Premal Udani, chairman of India’s Apparel Export Promotion Council.
Indian policy makers are eager enough for foreign investment that, for now at least, they are willing to endure the damage a stronger rupee inflicts on exports, especially for lower-value goods like clothes. Exports of other Indian goods and services, like software and pharmaceuticals, have not been as hard hit because they are not as price-sensitive.
India also places a premium on the higher-value jobs that are fueled by foreign investment. Not far from where that old textile mill once stood, the German engineering company Bosch and the American software concern Perot Systems have opened offices in a new technology park.
The influx of capital has helped fuel a nearly 9 percent annual growth rate for India’s economy. It has also powered the Indian stock market to near record highs. A big beneficiary of the stock rally has been the government, which is selling shares in state-owned firms like Coal India, the world’s largest coal miner.
The government, which has a large budget deficit, plans to raise $9 billion in the current fiscal year from share sales and spend the money on jobs for the rural poor and other welfare programs. A stronger rupee also reduces India’s bill for commodities, like oil, that it needs to import.
“If India is to sustain 8 percent growth or 9 percent growth, the only constraint on that can be capital,” said Nikhil Chaturvedi, managing director of Prozone, the Indian real estate firm that is building the Alliance Mall development. “Free flow of capital should be allowed in all sectors” of the economy, he said.
Mr. Chaturvedi, whose joint venture partner in the Alliance Mall is the London-based Capital Shopping Centers, said an appreciating rupee must be tolerated as an unpleasant side effect of the flow of foreign capital.
After agriculture, textile sector is the second largest employer in India, according to fiber2fashion.com :
The Textile Sector in India ranks next to Agriculture. Textile is one of India’s oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture.
About 27% of India's foreign exchange earnings are on account of export of textiles and clothing alone. The textiles and clothing sector contributes about 14% to the industrial production and 3% to the gross domestic product of the country. Around 8% of the total excise revenue collection is contributed by the textile industry. So much so, the textile industry accounts for as large as 21% of the total employment generated in the economy. Around 35 million people are directly employed in the textile manufacturing activities. Indirect employment including the manpower engaged in agricultural based raw-material production like cotton and related trade and handling could be stated to be around another 60 million.
Here are excerpts from a NY Times report on how the situation is changing in Coimbatore, a big textile center in Tamil Nadu:
The clear losers of India’s currency approach right now are garment makers. From April to August, exports were down 6.4 percent from a year earlier in the $10 billion Indian clothing industry. Although it represents only about 1 percent of the nation’s economy, the garment industry is India’s largest employer after agriculture.
“All the other countries are protecting their currencies, so why are we not?” said Premal Udani, chairman of India’s Apparel Export Promotion Council.
Indian policy makers are eager enough for foreign investment that, for now at least, they are willing to endure the damage a stronger rupee inflicts on exports, especially for lower-value goods like clothes. Exports of other Indian goods and services, like software and pharmaceuticals, have not been as hard hit because they are not as price-sensitive.
India also places a premium on the higher-value jobs that are fueled by foreign investment. Not far from where that old textile mill once stood, the German engineering company Bosch and the American software concern Perot Systems have opened offices in a new technology park.
The influx of capital has helped fuel a nearly 9 percent annual growth rate for India’s economy. It has also powered the Indian stock market to near record highs. A big beneficiary of the stock rally has been the government, which is selling shares in state-owned firms like Coal India, the world’s largest coal miner.
The government, which has a large budget deficit, plans to raise $9 billion in the current fiscal year from share sales and spend the money on jobs for the rural poor and other welfare programs. A stronger rupee also reduces India’s bill for commodities, like oil, that it needs to import.
“If India is to sustain 8 percent growth or 9 percent growth, the only constraint on that can be capital,” said Nikhil Chaturvedi, managing director of Prozone, the Indian real estate firm that is building the Alliance Mall development. “Free flow of capital should be allowed in all sectors” of the economy, he said.
Here's a 2009 SF Chronicle report about the impact of textile downturn in India:
Coimbatore, India — The trouble began far away from the leaky concrete house and stand of banana trees that Sakunthala Radhakrishnan calls home.
In 19 years as a textile worker in southern India, Radhakrishnan saved enough to buy gold jewelry. She sent money to her parents and fattened up her skinny daughter with fancy energy drinks. And she secured for her child a gift she herself never received: an English-language education.
But seven months ago, the better life her family was crawling toward got yanked out of reach. After the U.S. financial crisis erupted thousands of miles away, the textile factory where she and her husband worked closed because orders dried up and credit tightened.
"It's a distant dream since I lost my job," she said. "I suffer mental depression."
Radhakrishnan, 34, and her husband found new jobs as day laborers - she at a smaller textile factory and he as a welder. But their family income has plunged by nearly half, from $160 to $90 a month. Now they could lose their home and have to rely on the government for food.
For years, textile jobs helped tens of millions of Indians like Radhakrishnan clamber onto the bottom rungs of the nation's fast-expanding middle class. Textiles are India's second-largest source of employment, after agriculture, accounting for over 35 million jobs - far more than the 2.2 million in India's high-profile information technology sector.
Now, the global economic meltdown is pushing Radhakrishnan and many others back.
The IMF estimates that the slowdown has already driven more than 50 million people globally into extreme poverty. In India, slowing growth means at least three million people won't be lifted out of poverty this year, and some of the 200 million who live just above the official poverty line could slip below it, according to the U.N. Development Program.
Experts warn the social damage could be long-lasting, as parents scrimp on medical care and pull their children from school.
"This will affect a generation," said Ajay Chhibber, assistant secretary general of the U.N. Development Program in New York. "A girl who drops out of school will be an illiterate mother the rest of her life. ... You had a financial crisis. It's now become an economic crisis. The next phase of this in 2009 will be a social crisis."
Many in the textile belt of south India's Tamil Nadu state have seen their incomes roughly halved, to about $1.50 a day, as factories hit by declining exports and tight credit cut production, are forced to reduce payrolls and eventually close down. Distribution of government subsidized food in the area has shot up, and people are taking out loans and hocking jewelry to meet expenses.
India's public schools are notoriously poor, and many parents work hard to send their children to low-cost private schools that teach English. Now they are pulling them out, cutting off the next generation from what has been the surest ticket to a better life in India: the English language.
During the boom years, textile factories in Tamil Nadu's Coimbatore region could not get enough workers. They sent buses to nearby villages, picking up workers for thrice-daily shifts. In 2005, mills began holding recruitment fairs hundreds of miles away, in Tamil Nadu's impoverished south. Laborers poured in from poor states like Bihar and Orissa. Even on $3 or $4 a day, many built houses and put their children in private English-language schools.
Pakistan is seeking to lower US import tariffs on its textiles, according to Washington Post:
FAISALABAD, PAKISTAN - The United States has spent billions of aid dollars on Pakistan, but more than nine years after Islamabad joined the global fight against terrorism, the U.S. government remains unable to provide its strategic ally with one thing it really craves: easier access to the U.S. market for its T-shirts, towels and socks.
Pakistani leaders have long sought trade concessions from their U.S. counterparts in recognition of Pakistan's efforts to root out insurgent groups on its soil, but the calls for lower tariffs have intensified since this summer's floods, which displaced millions and destroyed much of the country's cotton crop.
Lifting tariffs on Pakistan's textile products would undoubtedly boost the country's economy. The textile sector employs nearly 40 percent of Pakistan's industrial labor force and accounts for 60 percent of its exports, and the United States is already one of Pakistan's biggest markets.
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The House last year passed a narrowly focused bill designed to promote export industries in Afghanistan and specific zones primarily in Pakistan's northwestern border region, but a corresponding bill has been stalled in the Senate. Separately, the U.S. textile industry has made clear it would strongly oppose any legislation that is more ambitious than the bill being considered, saying it would put American jobs at risk.
Pakistani officials and business leaders say they understand that U.S. lawmakers have to answer to their constituencies, but they insist that increased bilateral trade would benefit both countries.
"We do not want aid. We want trade," said Salamat Ali, chairman of Tauseef Enterprises, a garment company based in this Punjab province city that is home to hundreds of thousands of textile workers and 300,000 power looms. "It's better for America and for other allies if Pakistan stabilizes."
Seeking a wider agreement
Pakistan typically exports about $10 billion of textile products each year, with about a quarter of that amount going to U.S. retailers. Waqar Masood Khan, secretary of the Textile Industry Ministry, said that if the United States and Europe lifted trade restrictions, it would result in a $3 billion increase in exports in the short term.
Pakistan succeeded recently in securing trade relief from the European Union, which agreed to waive tariffs on certain textile products from Pakistan for up to three years, starting in January. Pakistanis welcomed the concession but said the waivers, which exclude some finished goods, are unlikely to result in any significant increase in trade.
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David Trumbull, vice president for international trade at the Boston-based National Textile Association, also said that too often it is the textile industry that has borne the brunt of U.S. trade concessions.
But Pakistani textile factory owners say substantial trade relief is essential at a time when their industry is facing all sorts of challenges.
Because of security concerns, prospective foreign buyers are reluctant to visit Pakistan. High cotton and polyester prices and general inflation have increased production costs significantly.
More crippling, though, are electricity and gas shortages. Some factory owners use more costly generators and wood furnaces to compensate, but many just choose to leave power looms idle and let workers go.
"The Christmas and New Year orders are coming now, and this is the time to ship them," said Waheed Khaliq Raamay, owner of a weaving factory in Faisalabad. "Because of the gas shortage, we are losing customers - and we are losing our faith as well."
With rising cotton and yarn prices, Pakistan has the potential to export $50 billion in textiles, according to a report in Gulf Today:
KARACHI: Pakistan has a potential of at least $50 billion in value-added textile exports if human resource in this sector is fully developed, said Textile Commissioner Muhammad Idrees.
Addressing the closing ceremony of 9th round of apparel manufacturing and management training programme at the Readymade Garments Technical Training Institute, the official said that the present volume of exports was not at all satisfactory.
The stakeholders could easily double this volume by improving skills of workers and through compliance with the standards of buyers, he added.
The skills development programme comprised one-month training, which covered cutting, sewing, production management, industrial engineering and quality control. Experts and consultants from Technopak, a world renowned consultancy firm, were hired for the training.
Thirty-one master trainers or middle management professionals from Artistic Milliners, Naz Textiles, Rajby Industries and Selimpex International and Soorty Enterprises attended the ninth round of training project.
The training project has so far been successfully implemented in 30 factories in Sindh and has trained 279 master trainers/middle management professionals and 3,693 workers.
The project delivered complete training system, course curriculum, manuals and consulting guidelines to the factories. Training manuals are also translated into Urdu language to transfer appropriate knowledge and skills to workers.
Pakistan’s textile sector is optimistic about meeting the annual export target, as high cotton prices in domestic and international markets have caused an increase in prices of value-added textile products, industry people say.
The government had fixed the textile export target at $14 billion for the current fiscal year. Members of the textile sector are of the view that achieving the target is possible, as exports of highly value-added items such as knitwear and garments have increased in terms of value.
Statistics released by the Federal Bureau of Statistics (FBS) show the textile sector has performed well in the first half (July to December) of the current fiscal year, as its exports increased by 25.79 per cent as compared to the corresponding period of the previous year.
The industry, however, believes they would need to import up to five million bales of cotton because the 11 million bales produced so far in the country will not meet the requirements as some of the crop has been destroyed by flood.
The industrialists also expressed reservations about gas shortage in the country that has already caused a huge loss to the industry, particularly in Punjab. All Pakistan Textile Processing Mills Association Chairman Maqsood Ahmad Butt stressed that cotton prices reached Rs13,000 per maund (37.324 kg) and the sector may face a shortage of cotton in June if India did not lift the ban on exports.
“There is a possibility that exports will cross $14 billion target if cotton shortages are met and gas supply is restored,” he opined.
Here's a Dawn-AFP story about a modest job recovery in Pakistan's textile sector with rising exports:
KARACHI: After a year of unemployment and wondering if his family would be better off if he died, Pakistani textile worker Murad Ali has got the spring back in his step.
One of thousands laid off by textile bosses last year, the father of four is now back at work and one of those to benefit from a surge in Pakistani exports in the current fiscal year, which ends on June 30.
Experts say rising global commodity prices, a government decision to prioritise power supply to industry and currency devaluation that has made Pakistani products more competitive, have fired an export boom.
Compared with the same period last year, the Trade Development Authority of Pakistan says textile exports such as silk rose 25.8 per cent and agricultural produce, such as basmati, rose 6.2 per cent from July to February 7, 2011.
The textiles sector is one of the key drivers of the Pakistani economy, accounting for 55 per cent of all exports and 38 per cent of the workforce, according to official figures.
Bosses have rehired staff who were laid off, but Ali is only getting a third of the salary as a skilled garment worker that he used to command.
“I’m earning less than last year. It is difficult to live a better life due to price rises, but I’m happy,” Ali said.
He has re-enrolled his sons at school but his wife will continue to work as a maid. Money is too tight for her to go back to being a housewife.
“The situation has drastically changed in the favour of the country’s economy,” said textile tycoon Mirza Ikhtiar Baig, who employs more than 2,000 workers and predicts exports will rise 10 per cent for the fiscal year 2010 to 2011.
“Now with demand for Pakistani products rising internationally we are employing more workers.
“Our exports are getting healthier because of an increase in international commodity prices and the government’s will to give top priority to the country’s economy,” said Baig, an advisor to Prime Minister Yousuf Raza Gilani.
The Asian Development Bank forecasts GDP growth for Pakistan of 2.5 per cent for fiscal year 2011 despite pressures from unprecedented floods in 2010, with a relatively modest rebound to 3.7 per cent for fiscal year 2012.
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Pakistan suffers from a profound electricity crisis that restricts production to around 80 per cent of its needs — a situation that will only worsen as the temperatures crawl higher in the coming months.
The budget deficit has grown to 5.5 per cent of GDP, above a 4.9 per cent target for the current fiscal year to June 30.
To fund the shortfall, the government borrowed $4.4 billion from the central bank from July 1 to February 28, a move that worsened inflation, rather than raise taxes and cut spending as the IMF and World Bank would like.
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Mohammad Sohail, head of the Karachi-based Topline Securities research and brokerage house, said the export boom would contribute to economic recovery, yet warned the gains were minimal.
“It is very fragile because the fiscal deficit is much higher than the target of 5.3 per cent because of the government’s heavy borrowing from the central bank,” he said.
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“Furthermore, the overall security situation in Pakistan is very uncertain, which is making the foreigners and local investors wary all the time.” Independent economist A.B. Shahid said rising international oil prices had hit the country’s economy hard, adding $4 billion to the oil bill.
Pakistan could have benefited more from 8-9 per cent export growth, he said, by exporting cloth in its value-added forms rather than raw cotton and yarn.
While Ali is content with life, he is also wary of uncertainties ahead.
“Life has become too insecure. Everyone is ill at ease. Let’s just wait and see.” – AFP
Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.
http://www.riazhaq.com/2011/09/pakistan-tops-south-asia-jobs-growth.html
Pakistani textile industry moving to Bangladesh, according to News reports:
Pakistani entrepreneurs plan to relocate their textile manufacturing units to Bangladesh in a bid to reap advantages given to least developed countries (LDC) of duty-free markets in the European Union.
clearpxl
The manufacturers blame Pakistan for rising costs of production, power shortages, higher taxes and poor market access to developed countries, former textile minister Mushtaq Ali Cheema told Pakistan's Daily Times newspaper.
Bangladesh offered lucrative incentives, including uninterrupted power supply and tax-free status for the first 10 years and tariff-free access to markets in the European Union.
In September, a Pakistan business delegation held parleys with Bangladesh trade bodies and expressed their eagerness to relocate their textile industries to Bangladesh.
The exporters and manufacturers are disappointed with the Pakistan government for its poor business vision, which left the Pakistan textile industry in tatters, said Cheema.
Cheema said the cost of textile production is very high in Pakistan, while labor costs in Bangladesh are cheaper and the workers are more efficient.
Already several Pakistani entrepreneurs have invested in composite textile units in Bangladesh. The entrepreneurs argue that several facilities give way to profit margins an average 30 percent higher for textile exporters than in Pakistan, Cheema added.
International buyers and retail giants are reluctant to place orders with exporters because of unpredictable breakdowns in the supply chain, said the official.
Read more: http://www.allheadlinenews.com/articles/90064529?Pakistan%20textile%20producers%20to%20relocate%20in%20Bangladesh#ixzz1dQ40f67l
Here's a report on Huntsman's investment in dye and chemicals plant in Pakistan:
Huntsman Textile Effects, a Singapore-based global provider of high-quality dyes and chemicals to the textile and related industries, has opened its 13th Formulation & Distribution Center, in Karachi, Pakistan.
The 43,000-square-foot facility boasts state-of-the-art equipment and new technology to bolster Huntsman TE’s competitiveness and presence in the Pakistan market. The center is located at the Landhi Industrial Area. Pakistan represents a fast-growing market of increasing importance for Huntsman TE and the launch of this facility strengthens the firm’s commitment to it.
“With the opening of our new, low-cost production facility for formulated chemicals in Karachi to meet increasing local demand, we will considerably increase our competitiveness and flexibility in textile chemicals in this key Asian textile market,” said Paul Hulme, president of Huntsman TE. “Our well-established partner, Swisstex, will continue to provide enhanced sales activities, enabling us to concentrate on all formulation and production aspects using our cutting-edge technology to develop innovative products and technologies, market solutions with intelligent effects to this growing market."
Huntsman specializes in products and technologies with intelligent effects, such as built-in freshness, sun protection or dyes to reduce water and energy consumption. It has operations in 110 countries. The company had 2010 revenues of more than $9 billion.
http://www.wwd.com/markets-news/textiles/huntsman-textiles-opens-pakistan-facility-5398415
Huntsman Textile Effects (TE) opened its 13th new 4,000-square-meter Formulation and Distribution Center (FDC) in Karachi, Pakistan, according to Specialty Fabrics Review:
The facility, located at the Landhi Industrial Area, provides a production platform in one of the pioneer industrial states in Pakistan and gives Huntsman further competitive advantage through convenient access and infrastructure. Pakistan represents a fast-growing, dynamic market of increasing importance for Textile Effects, and the launch of this FDC strengthens TE’s commitment to this textile market.
“With the opening of our new, low-cost production facility in Karachi for formulated chemicals, we will considerably increase our competitiveness and flexibility in textile chemicals in this key Asian textile market,” said Mr. Paul Hulme, president of Huntsman Textile Effects. “Our well-established partner, Swisstex, will continue to provide enhanced sales activities enabling us to concentrate on all formulation and production aspects, using our cutting-edge technology to develop innovative products and technologies.”
With Swisstex as its sole distributor, Huntsman Textile Effects has been aggressively extending its global reach in Pakistan to support the challenges facing the textile industry and to be the driving force for the fourth largest cotton producer of the world.
Huntsman Textile Effects is developing more competitive, locally sourced, formulated products for the local market, and will work with distributor partner Swisstex in order to maximize growth with key textile customers, especially in the home textiles and specialty chemicals areas.
Huntsman Textile Effects is a global provider of high-quality dyes and chemicals to textile and related industries. It operates in 110 countries and 14 primary manufacturing facilities in 12 countries (China, Columbia, Germany, Guatemala, India, Indonesia, Mexico, Pakistan, Switzerland, Thailand, Turkey, USA).
Huntsman is a global manufacturer and marketer of differentiated chemicals. Its operating companies manufacture products for a variety of global industries including chemicals, plastics, automotive, aviation, textiles, footwear, paints and coatings, construction, technology, agriculture, health care, detergent, personal care, furniture, appliances and packaging.
http://specialtyfabricsreview.com/articles/121911_huntsman_textiles.html
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