Wednesday, July 31, 2019

Trump Vows to At Least Quadruple US-Pakistan Trade

Talking with the media during Pakistan's Prime Minister Imran Khan's visit to the White House on July 22, 2019, US President Donald Trump said the United States “have a fantastic trade relationship (with Pakistan). I don’t mean we’ll increase it by 20 per cent. I mean, I think we can quadruple it. I think it could go — I mean, literally, it sounds crazy — you could go 10 times more. You could go 20 times more.” This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.

US-Pakistan Trade Volume:

So what is the current volume of bilateral US-Pakistan trade?  The United States is currently Pakistan's largest export market accounting for 16% of the country's exports. The United States Office of the Trade Representative (USTR) website says that "Pakistan is currently our 56th largest goods trading partner with $6.6 billion in total (two way) goods trade during 2018. Goods exports totaled $2.9 billion; goods imports totaled $3.7 billion. The U.S. goods trade deficit with Pakistan was $783 million in 2018."

Pakistan's Exports to US: 

Pakistan's major exports to the United States are made up of garments and other textiles. In aggregate the apparel and textile industries accounted for 37.8% and 35.1% respectively of all U.S. imports from Pakistan in the 12 months to May 31, according to S&P Global Market Intelligence. Given Pakistan accounted for just 1.7% of U.S. apparel imports and 8.4% of textiles there may well be room for increased market share, particularly in light of US-China trade tensions.

Pakistan's Exports to the United States. Source: Standard and Poor Global

Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb.  This double digit exports growth is being partly attributed to US President Donald's Trump ongoing trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness.

Textile Exports to United States. Source: Bloomberg

American buyers are diversifying their supplier base away from China, the No. 1 exporter of these goods to the U.S. Already, Bangladesh is close to snatching the trousers-to-towel crown, according to Bloomberg News. Pakistan, at No. 6 last year, has grown its own shipments to the U.S. by almost 12% this year. It may overtake India, which has seen virtually no improvement.

Major US Importers of Pakistani Apparel: 

Who are the largest American importers of apparel and textile products from Pakistan? The largest importer of apparel and textiles from Pakistan in the past 12 months, aside from trade finance houses, has been Levi Strauss with 1,682 TEUs (Twenty Foot Equivalent Unit Containers) shipped. That followed a 101.5% year over year surge in shipments in 2Q. Other importers have also already been expanding their shipments. That was followed by JC Penney with 991 TEUs shipped after a 13.3% rise in 2Q while Adidas shipped 641 TEUs and grew by 9.9%, according to Standard and Poor Global Market Intelligence.

Biggest Importers of Apparel From Pakistan. Source: Standard and Poor Global

Pakistani Apparel Exporters: 

Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.

Pakistani Export Competitiveness: 

Pakistani apparel exports are becoming more competitive in international markets because Pakistani rupee has declined by almost 25% recently. This has wiped out the currency’s overvaluation adjusted for inflation differences with trading partners, as estimated by the IMF.

Average Annual Cost of Manufacturing Worker in US$ in Asia. Source: JETRO

Textiles industry is just one the export industries seeing exodus of manufactures and buyers from China.  Electronics industry is seeing similar moves. Engadget is reporting that Google is moving production of its US-bound Nest thermostats and motherboards to Taiwan. The Wall Street Journal has reported that Nintendo is shifting at least some production of its Switch console to Southeast Asia.

Last November, Nomura Securities strategists had said they expected Malaysia, Japan and Pakistan  to be the top 3 beneficiaries of import substitution triggered by US-China trade war escalation. Nomura's analysis is based on detailed study of 7,705 items which will be subject to tariffs and counter tariffs by US and China if the stand-off continues. Nomura developed two indices as part of its research on the subject: NISI (Nomura Import Substitution Index) and NPRI (Nomura Production Relocation Index). This is good news for Pakistan which has seen its exports stalled over the last 5 years. This has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.

Pakistan's Stalled Exports. Source: Standard and Poor Global


President Donald Trump at his July 22, 2019 White House meeting with Prime Minister Imran Khan vowed to at least quadruple trade with Pakistan.  It means the bilateral trade between the two countries could grow from the current $6.6 billion to at least $26.4 billion.  Pakistan's garments exports to the United States have jumped 12% in first quarter of 2019 from the same period a year ago, according to USITC Dataweb.  This double digit exports growth is being partly attributed to US President Donald's Trump ongoing trade war with China with the US government imposing 10% to 25% tariffs on certain Chinese goods. Pakistani rupee devaluation has also contributed to the nation's overall competitiveness. This is good news for Pakistan which has seen its exports stalled over the last 5 years. It has created a serious balance of payments crisis forcing the country to seek yet another IMF bailout.  Pakistan's Interloop Limited based in Faisalabad is one of the largest manufacturers and exporters of apparel and textiles. The company recently raised nearly Rs. 5 billion on Karachi Stock Exchange to expand production of stitched denim designs for its clients including Levi’s and H&M. Interloop's major clients also include Nike, Reebok, Adidas, and Puma, as well as other major clothing retailers like Uniqlo and Target.

Here's a discussion recorded prior to the Trump-Imran Summit in Washington:

Related Links:

Haq's Musings

South Asia Investor Review

Can Pakistan Avoid Recurring Balance of Payment Crisis?

Pakistan Economy Hobbled By Underinvestment

Pakistan's IT Exports Surging

Can Indian Economy Survive Without Western Capital Inflows?

Pakistan-China-Russia Vs India-Japan-US

Chinese Yuan to Replace US $ as Reserve Currency?

Remittances From Overseas Pakistanis

Can Imran Khan Lead Pakistan to the Next Level?

China to Expand Manufacturing in Special Economic Zones


Riaz Haq said...

#China’s #Denim #Exports to US Slide, as Other Major Suppliers Gain Ground. Among the top 5 is #Pakistan, with its denim exports to US up 10.58% to $95.37 million. Pakistan’s market share is up 11.87% in the 12 months to 6.48%. via @SourcingJournal

It’s likely that no matter what happens with the Trump administration’s threat to impose stiff punitive tariffs on Chinese apparel imports, damage has already been done.

Many importers have clearly taken the risk of 25 percent duties on Chinese goods and decided to sew them into their sourcing strategies, limiting their exposure to the once-dominant Chinese market, even with the imposition of those tariffs now on hold. Supply chain diversification is in full effect and the latest data from the Commerce Department’s Office of Textiles & Apparel (OTEXA) reflects it.

“People are diversifying their denim sourcing locations. Some people are getting out of China and some people are staying in China,” Robert Antoshak, managing director at Olah Inc., said. “There is definitely confusion in the marketplace.”

The swing in production is most evident among the top suppliers of blue denim apparel, 97 percent of which are jeans. Denim apparel imports from China dropped 5.16 percent in value to $287.49 million in the year through May, compared to the same period in 2018. This brought China’s market share for jeans imports down 1.77 percent to 23.35 percent for the year.

The next four top suppliers all gained ground on China in the 12-month period, according to OTEXA.

In the second place spot, Mexico, which has had its own round of tariff threats from the White House, though they seem to have subsided for now, saw its jeans imports increase 17.61 percent in the first five months of the year to reach $332.43 million in value. Mexico’s market share rose 11.55 percent to 21.98 percent for the year.

Denim apparel imports from third-place supplier, Bangladesh, were up 6.26 percent year to date to $183.42 million, as the country’s market share advanced 7.61 percent to 14.62 percent. Vietnam’s jeans shipments to the U.S. jumped 35 percent to $105.07 million in the first five months of the year, compared to the year-ago period. This lifted Vietnam’s market share 40.49 percent to 8.2 percent.

Rounding out the top five was Pakistan, with its shipments to the U.S. increasing 10.58 percent to $95.37 million. Pakistan’s market share was up 11.87 percent in the 12 months to 6.48 percent.

“There’s no doubt that the trade war between the U.S. and China has resulted in production being spread out across Asia and being a Pakistan manufacturer, we have benefited,” Ebru Ozaydin, senior vice president of sales and marketing at Artistic Milliners, said at last month’s Kingpins New York show.

The Western Hemisphere, led by Mexico, Nicaragua and Guatemala, continued to increase its denim production, too.

Imports from the region rose 14.83 percent year to date through May to $414.07 million. This gave the Western Hemisphere a 27.64 percent market share, with a 10.4 percent gain for the year.

Riaz Haq said...

#India registers strong protest over #US military sale worth $125 million for #Pakistan’s F-16s via @htTweets

India has registered a strong protest over the US approving a proposed military sale worth $125 million for Pakistan’s F-16 combat jet fleet, calling in the American envoy in New Delhi to convey its “grave concern”.

Days after the meeting between Pakistan Prime Minister Imran Khan and US President Donald Trump, the Pentagon announced on July 26 that the state department had approved the proposed deal for “24/7 end-use monitoring” of the F-16s.

“We have taken up the matter with the US ambassador in Delhi, as well as with the US government in Washington through our ambassador. We have expressed grave concern over US military assistance to Pakistan,” external affairs ministry spokesperson Raveesh Kumar told a regular news briefing on Thursday.

People familiar with developments said the US envoy was called in to the external affairs ministry for lodging a strong protest.

In response, Kumar said, the US side had informed India the “proposed sale does not indicate any change in the US policy of maintaining a freeze in military assistance to Pakistan”.

“The US has publicly stated the proposed sale is intended to enable the US to continue technical and logistics support services to assist in the oversight of the operations of F-16 aircraft in Pakistan’s inventory,” he said.

Trump snapped military and security aid for Pakistan in January last year after accusing Islamabad of resorting to “lies and deceit” in return for billions of dollars of assistance over the past two decades.

However, the warmth displayed by Trump during his first meeting with Khan last month and the US reliance on Pakistan’s support for pushing forward talks with the Afghan Taliban had led observers to conclude that Washington might resume military aid for Islamabad.

The Pentagon statement announcing the proposed sale had said it was cleared after Pakistan requested a “continuation of technical support services; US Government and contractor technical and logistics support services; and other related elements of logistics support to assist in the oversight” of the F-16s. It had added that the proposed sale “will not alter the basic military balance in the region”

Skeptic said...

I think Riaz Huq sahib have been writing about Pakistan economy for many years. His economic comentry has always been a balanced view. His amazing research encompass various data backed information. I think writers like him should be celebrated and Govt of Pakistan should announce some award for him instead of Lifafa writers.

Above all he is Pakistani at heart.

Falcon said...

What we really need to do is to grab USA software and maintenance outsourcing jobs. Right now Indians have almost complete control over it. Export of services from Pakistan can generate tremendous high dollar value .

Ja**ar said...

I agree with Skeptic. It is high time we recognize Riaz sb with some kind of civilian honor in Pakistan. I will do my part and put in a word with Team IK. He has single handedly managed the narrative in favor of CPEC and highlighted the immense contribution from our forces. He has called out the bluff by Hindus and Jewish lobby time and again.

Riaz Haq said...

8 #Chinese firms keen to invest in #Pakistan #textile sector. A delegation from these firms led by Huang Weiguo, chairman of Shanghai Yuanyi Industry called on #ImranKhanPrimeMinister in #Islamabad recently. #China #Investment

Eight Chinese textile companies evinced keen interest in investing in Pakistan's textile sector when a delegation from those firms led by Huang Weiguo, chairman of Shanghai Yuanyi Industry, called on Prime Minister Imran Khan in Islamabad recently. Khan highlighted Pakistan’ strategic location, a large market and cost-effective and skilled labour.

The delegation also met minister for industry, trade, information and culture of Punjab province Mian Aslam Iqbal, who said China can help raise Pakistan’s exports by relocating export-oriented industries and initiating joint ventures in various fields, according to Pakistani media reports.

A garment city spread over 400 acres is being established at Kasur Road and China Railway will invest $500 million there to generate 3000 employment opportunities, Iqbal added. (DS)

Riaz Haq said...

#Tech #Investments Put #Pakistan’s #Karachi based Denim Manufacturer Siddiqsons Back on Track to Regain Global Marketshare in Jeans. #garments – Sourcing Journal

It’s never too late to teach an old dog new tricks—including legacy denim manufacturers.

Siddiqsons Group is rebooting its denim business with major investments in sustainable innovation, including adopting Archroma’s aniline-free indigo across its entire production, and becoming the first fully-operational Jeanologia 5.0 laundry in Pakistan.

The vertical company helped lay the framework for denim manufacturing in the country, setting up a spinning unit in 1982 and its first denim fabric unit in 1989. Knit and garment units followed with success, leading the company to diversify into other industries including real estate, construction and energy. However, with large investments and success in other sectors, Siddiqsons’ footprint in denim manufacturing started to diminish—and it’s rebuilding that business today through strategic investments and supply chain commitments.

"They made a decision that they wanted to regain market share and to become relevant in the world today,” said Matthew Fuhr, a consultant brought on by the firm to help kickstart its denim business for the next generation of brands and consumers. Siddiqsons, he said, is making investments in areas that will put the business “ahead of the curve of what’s happening in the marketplace.” The company plans to use those investments to rebuild the relationships they previously enjoyed in the U.S. market.

Each investment, Fuhr said, be it in spinning, finishing or garment processing, is a step closer to transparency and sustainability.

“They have to go hand in hand because people talk about being sustainable, but they’re not willing to share what they’re doing or how they can validate it,” he said.

The roll-out of Archroma’s aniline-free denim indigo dye timed well with Siddiqsons’s renewed focus on denim and its expiring contract with Dystar. The mill, Fuhr said, contemplated shifting a portion of its production to Archroma, but after a series of wash down tests with the aniline-free dye, they were satisfied with the results.

“We looked at all of our shades that we were running and how we were doing our product development and we figured out that we could make more of a commitment to the transition of a new dyestuff,” Fuhr said.

The decision to be sustainable across the entire supply chain led the vertical operation to adopt Jeanologia 5.0 for laundry, and the laundry will be operational in Q3 2019.

“Our intent is to produce a large percentage of our internal fabric capacity into garments,” Fuhr said.

To reduce the time and cost of sampling, Fuhr said Siddiqsons is developing fabrics that are conducive to the technology of 5.0, including no stones, ozone, laser and limited chemicals.

“You can develop the fabric so that is reacts in an appropriate manner,” he said. “We can manage the expectation of what design wants and what the production team

Up next, the company is planning to set up a lab in the United States in 2020 to give its brand partners a place where their design and merchandising teams can gather and innovate with the Siddiqsons team.

“The way our technology is set up, you can develop something in the U.S. and it can be transferred to a production unit anywhere in the world,” Fuhr said. The lab, he added, will help the company have an “upper end” research development environment, which could bring better business to Pakistan for production purposes.

These investments, Fuhr added, have been made knowing Pakistan is viewed as a lower cost producer.

“We have to engineer the plant and make our investments knowing that it’s always going to be a place where people are looking for an inexpensive product,” he said. “With that being said, based on the technology and the investments, we are able to offer a more premium product at a more affordable price.”

Riaz Haq said...

A Denim Factory Could Hold the Key to Reviving Pakistan’s Exports

KARACHI, Pakistan — A denim factory in Karachi could hold the key to reviving Pakistan’s ailing exports.

With many retailers shifting textile orders to cheaper and more timely suppliers in rival Bangladesh and Vietnam, Pakistan’s manufacturers have long-suffered from power cuts, an expensive exchange rate and what they claim is government indifference. Yet while hundreds of factories have shut down in recent years, shedding more than half a million jobs, Artistic Denim Mills Ltd., which operates as a one-stop shop turning cotton into jeans, is doubling production and has built a new factory in Pakistan’s financial hub.

Chief Executive Officer Faisal Ahmed is bullish and supplies retailers such as Zaraand Next Plc. He points to one key decision — unlike most industrialists, Artistic Denim started by making garments about 25 years ago instead of just shipping spun yarn or fabric. Now “we have been able to get many orders that used to go to Turkey earlier,” he said at his office in an industrial area.

The move shows a rare sign of promise in a stagnant industry that has been part of Pakistan’s economic backbone for decades. Pakistan is among the top five growers globally and cultivated has been cultivated on these lands for at least 5,000 years. Typically Pakistan has been mostly converting cotton into thread and fabric that is shipped East to other Asian countries, which then manufacture the final garment.

Homegrown Cotton


Pakistan has lost market share with exports growing 27 percent during 2005 to 2016, falling behind Bangladesh’s 276 percent increase and 445 percent in Vietnam, according to World Bank data. India is the second-largest apparel exporter in South Asia after Bangladesh. Nonetheless, Pakistan still has the advantage of homegrown cotton that it can capitalize on, unlike Bangladesh and Vietnam.

Pakistan's textile industry is key as it accounts for more than half of all overseas shipments.

Pakistan is targeting its first export jump this financial year after giving tax breaks to exporters, in a bid to reverse a three year slump with value added products like denim getting the biggest incentives, Mohammad Younus Dagha, secretary at the Commerce Ministry, said in an November interview.

Textile industrialists have continually lobbied the government for subsidies and incentives. Yet despite last year’s measures, Prime Minister Shahid Khaqan Abbasi said in an interview this month that no further giveaways to the industry were likely before the elections.

“Bangladesh and Vietnam governments are giving huge support to industries, unlike ours,” said Ahmed Lakhani, analyst at Karachi-based JS Global Capital Ltd. “The tax breaks are a good step, but we need to decrease electricity tariffs and keep a check on wages. I don’t think we will give all those incentives and compete globally.”


“About 95 percent of Pakistani exporters mentality is waiting for a customer rather than going out and finding them,” said Majyd Aziz, president of MHG Group of Companies in Karachi. “In the global world, you need integration and economies of scale, if you do that, you make money.”

Artistic Denim is one of them. It has chased premium brands in Los Angeles that pay more for smaller deliveries to keep changing designs rather than bulk orders. The company said this will help revenues reach as much as eight billion rupees ($72 million) in year ending June with new garment production capacity increasing sales.

“Pakistan’s denim is on an upward trend, despite the larger textile industry being in trouble,” said Ahmed. “Pakistan has a tremendous opportunity.”

Riaz Haq said...

#India's #textile industry alarmed over consistent fall in cotton yarn exports in last 3 months due to sharp decline in demand in importing countries such as #China, #Bangladesh and #SouthKorea, and duty-free access given by China to #Pakistan. #trade

Our Bureau

The textile industry has voiced alarm over the consistent fall in cotton yarn exports in the last three months due to sharp decline in demand in importing countries such as China, Bangladesh and South Korea, besides duty-free access given by China to competing Pakistan.

Steep fall in exports
Cotton yarn export in June has more than halved to 59 million kg (mkg) in June from 120 mkg in the same period last year. In fact, the level of 59 mkg of exports logged in June was the lowest monthly export in the last five years.

In May, yarn export was down 30 per cent to 77 mkg (111 mkg) while in April it dipped 16 per cent to 90 mkg.

Overall, export of cotton yarn from India in the first quarter of the financial year ended June was down 33 per cent to 226 mkg (338 mkg).

Considering the large-scale investment in the spinning sector and sluggish demand in the domestic markets, exports are the only avenue to ensure uninterrupted production and capacity utilisation, it said.

The cotton yarn sector has been one of the pillars of the Indian textile industry and is also highly modernised. Driven by technology, it provides sustainable income to farmers.

KV Srinivasan, Chairman, Texprocil, said even though cotton yarn is a value-added product, it has been excluded from the export benefits such as interest subvention, MEIS (Merchandise Exports from India Scheme) and the ROSCTL (Rebate of State and central taxes and levies) schemes.

If the current trends of declining exports continue into the next quarter, it will lead to closure of several spinning units in the near future, resulting in layoffs, he said.

Appeal to govt
Texprocil has appealed to the government to include cotton yarn in the interest subvention scheme and also rebate the embedded taxes such as agricultural cess, mandi tax, power and fuel surcharge which incurred in the production process.

The ROSCTL scheme which rebates these levies should be extended to cotton yarn sector at the earliest, it said. This move will ensure that the industry exports only products and not the taxes, it added.

Riaz Haq said...

#India's #exports fall for first time in nine months amid trade tensions. Exports fell 9.71% in June, while imports declined 9.06% as #US-#China #TradeWars hurt India’s #trade prospects

Exports fell 9.71% in June, while imports declined 9.06% as US-China trade row hurt India’s trade prospects
DURING June, petroleum exports fell 33% as Jamnagar, Mangalore refineries shut temporarily
India’s merchandise exports contracted for the first time in nine months in June while imports shrank first time in four months, signalling that rising protectionism and trade tensions between the US and China are impacting India’s trade prospects as well.

Data released by the commerce ministry showed exports in June fell 9.71% to $25.01 billion while imports dipped 9.06% to $40.29 billion, leaving behind a trade deficit of $15.28 billion during the month.

Comparatively, China’s exports in June fell 1.3%, while imports shrank 7.3%, leading to a trade surplus of $50.98 billion, significantly higher than what analysts projected.

Commerce secretary Anup Wadhawan said the temporary shutdown of ONGC Mangalore Petrochemical Ltd and Jamnagar refinery for maintenance in June adversely impacted exports of petroleum products.

“The shutdown of Jamnagar refinery is likely to abate by mid-July. The fall in the global Brent price by 15.6% in June is also a factor in the declining value of petroleum product exports," he added.

During June, petroleum exports declined 33% while non-oil, non-gems and jewellery exports contracted by 4.86%.

Among other major items, exports of gems and jewellery (10.7%), readymade garments (-9.18%), chemicals (-8.17%) and engineering goods (-2.65%) also contracted.

“The negative growth in June is also consistent with certain global trends, which have impacted India’s exports in recent months. We expect exports growth to revive to the trend growth rate of 2-3% in coming months," Wadhawan said.

The World Bank in its Global Economic Prospects released in June has projected weakening of global trade in 2019.

Global trade is projected to grow at 2.6% this year—a full percentage point below its own previous forecast.

Aditi Nayar, principal economist at Icra Ltd, said lower crude oil prices explain a portion of the contraction in the absolute level of exports and imports.

“Nevertheless, the contraction in imports of items such as transport equipment, machinery and fertilisers should be viewed with caution, as they suggest that the underlying demand dynamics are weak.

Riaz Haq said...

#India’s rich party under a growing cloud of gloom. India’s #gdp growth has slowed for 4 quarters in a row and shows little sign of picking. “I’ve been working for 35 years. I’ve never seen so much gloom and despair,” #Modi #economy up. via @financialtimes

The recent suicide of India’s “coffee king”, VG Siddhartha, was seen by many in the business world as symptomatic of a wider malaise. “If you look at India Inc, they are not in an ebullient mood. They are concerned. Alarm bells are ringing. We need to hear them,” Mrs Shaw says. 

After Mr Modi’s landslide re-election victory in May, some Indian industrialists were cautiously optimistic that the prime minister would turn his attention to reviving an economy showing signs of trouble. 

That hope was not realised. Instead of new stimulus measures or a fresh wave of bold structural reforms, the new government’s first budget in July set an aggressive target of increasing tax collections by 20 per cent. Businesses fear the ambitious goal will exacerbate what some call “tax terrorism” by officials under pressure to meet unrealistic targets.

The budget also levied a steep new tax surcharge on the super-rich, raising the effective tax rate for those earning more than $285,000 to 39 per cent, and nearly 43 per cent for those earning around $700,000. Nirmala Sitharaman, the finance minister, said no more than 5,000 individuals would be affected and that they should be willing to contribute to the nation.

“The signal she sends is that rich Indians deserve to be penalised,” wrote the columnist Tavleen Singh. Ms Singh believes the latest tax rise will encourage more rich Indians to follow in the footsteps of the more than 23,000 dollar-millionaires that Morgan Stanley estimates have left India since 2014. The new taxes have had other unforeseen consequences, hitting foreign portfolio investors, who pulled an estimated $5.5bn from the stock markets in July. 

As the mood sours, the luxury industry is feeling the pinch. Footfalls in Delhi’s most upmarket shopping mall are said to have fallen 11 per cent last year, as the rich feared they would be under surveillance there. Once blistering sales for designer wear have tapered off. “The feelgood factor is extremely low — the lowest I’ve seen in decades,” Mr Tahiliani told me after his show. “There is such unease. Nobody is investing. People are just nervous about spending.”

Riaz Haq said...

#India’s rich party under a growing cloud of gloom. India’s #gdp growth has slowed for 4 quarters in a row and shows little sign of picking. “I’ve been working for 35 years. I’ve never seen so much gloom and despair,” #Modi #economy up. via @financialtimes

The recent suicide of India’s “coffee king”, VG Siddhartha, was seen by many in the business world as symptomatic of a wider malaise. “If you look at India Inc, they are not in an ebullient mood. They are concerned. Alarm bells are ringing. We need to hear them,” Mrs Shaw says.

After Mr Modi’s landslide re-election victory in May, some Indian industrialists were cautiously optimistic that the prime minister would turn his attention to reviving an economy showing signs of trouble.

That hope was not realised. Instead of new stimulus measures or a fresh wave of bold structural reforms, the new government’s first budget in July set an aggressive target of increasing tax collections by 20 per cent. Businesses fear the ambitious goal will exacerbate what some call “tax terrorism” by officials under pressure to meet unrealistic targets.

The budget also levied a steep new tax surcharge on the super-rich, raising the effective tax rate for those earning more than $285,000 to 39 per cent, and nearly 43 per cent for those earning around $700,000. Nirmala Sitharaman, the finance minister, said no more than 5,000 individuals would be affected and that they should be willing to contribute to the nation.

“The signal she sends is that rich Indians deserve to be penalised,” wrote the columnist Tavleen Singh. Ms Singh believes the latest tax rise will encourage more rich Indians to follow in the footsteps of the more than 23,000 dollar-millionaires that Morgan Stanley estimates have left India since 2014. The new taxes have had other unforeseen consequences, hitting foreign portfolio investors, who pulled an estimated $5.5bn from the stock markets in July.

As the mood sours, the luxury industry is feeling the pinch. Footfalls in Delhi’s most upmarket shopping mall are said to have fallen 11 per cent last year, as the rich feared they would be under surveillance there. Once blistering sales for designer wear have tapered off. “The feelgood factor is extremely low — the lowest I’ve seen in decades,” Mr Tahiliani told me after his show. “There is such unease. Nobody is investing. People are just nervous about spending.”

Riaz Haq said...

#Pakistan’s ‘Exports surge 14.2pc, imports drop 18.3pc in July' 2019 . #exports #imports #trade - Profit by Pakistan Today

Adviser to Prime Minister on Commerce Abdul Razak Dawood said on Wednesday that Pakistan’s exports had increased by 14.23pc in July this year, as compared to the same month of last year.

In term of dollars, the country’s exports increased from $1.63 billion in July 2018 to $1.87 billion in July 2019, the adviser informed while addressing a press conference at the commerce ministry.

He continued that Pakistan’s imports from other countries also reduced by 18.39pc during the month.

The adviser said during the period under review, an increase in exports was witnessed in various sectors, including rice (71pc), readymade garments (17pc), home textiles (14pc), plastic goods (34pc), chemicals (26pc), mangoes (33pc) and footwear (24pc).

Replying to a question, he said that China-Pakistan Free Trade Agreement (CPFTA), a comprehensive tariff policy, reforms in National Tariff Commission (NTC) and an increase in local exports were among the major hallmarks of his ministry during the first year of this government.

He informed media that Afghanistan had offered a Preferential Trade Agreement (PTA) to Pakistan in order to enhance trade between the two countries.

During the visit of Afghan President Ashraf Ghani, both sides had discussed issues pertaining to bilateral transit trade, he said, adding that both countries were willing to increase the volume of bilateral trade.

He said Afghan Ambassador Shukrullah Atif Mashal had invited him to visit Afghanistan on August 20th.

“I will visit Afghanistan to share the agenda of bilateral trade and to chalk out ways to increase the volume of transit trade.”

On a query, the adviser said that Pakistan had successfully gotten market access to the China, European Union (EU), Indonesia, Malaysia and the Association of Southeast Asian Nations (ASEAN).

“We are committed to getting trade access to the potential markets of the United States (US), Canada, Japan, South Korea and Australia so as to increase the volume of our exports,” he maintained.

Regarding his recent visit to South Korea, Dawood informed that during his visit, he held meetings with various Korean companies who were willing to bring their investment to Pakistan, particularly in the textile and agriculture sectors.

He noted that Pakistan has been facing a trade deficit with South Korea, as the former’s exports to latter were $300 million as compared to the imports of $600 million.

“We have arranged the business-to-business meetings with Korean investors in order to negotiate on a Free Trade Agreement (FTA), similar to those it signed with India, Vietnam, Bangladesh and Chile,” he stated. “Both sides decided to hold a working group meeting in October to discuss ways to increase the volume of bilateral trade.”

Riaz Haq said...

Jeans Sourcing Landscape Sees Major Changes as China Fade Continues
By Arthur Friedman

Reflecting the volatile sourcing environment created in great part by the U.S.-China trade war, the first half of 2019 saw significant swings in denim apparel sourcing.

Imports of the category from China dropped 10.44 percent in the six months through June to a value of $369.97 million. This brought China’s market share of the category–97 percent of which are denim jeans–down to 22.82 percent, a 5.11 percent decline for the year ended June 30.

Levi Strauss & Co. said it has drawn down its reliance on China as a source for its jeans. Imports from China now represent less than 8 percent of overall production for Levi’s and the company said it is in the process of bringing that number down to “very low-single-digits” by 2020. Many brands have followed suit in denim and overall apparel to limit risks from tariff threats by President Trump and increased costs in China.


All of the other Top 5 suppliers posted gains in the amount of denim they shipped to the U.S., with each growing their market share. Mexico, the No. 2 denim supplier to the U.S., inched up on China to hold a 22.16 percent market share. Jeans imports from Mexico rose 14.44 percent to $410.07 million, leading a Western Hemisphere increase of 12.03 percent to $509.74 million, which also included a 28.02 percent gain by Nicaragua to $55.19 million, and a 12.06 percent advance by Guatemala to $16.22 million.

Among the major Asian apparel suppliers, Vietnam and Pakistan are the big winners so far this year, while Cambodia and Indonesia lost ground, and Bangladesh maintained the status quo.

Jeans imports from Vietnam jumped 29.36 percent to a value of $142.36 million. The country’s market share rose 36.39 percent to 8.38 percent for the 12 months, as makers look to capitalize on its apparel manufacturing expertise.

Pakistan, which benefits from also being a major supplier of denim fabric, saw its first-half imports to the U.S. rise 15.49 percent to $119.72 million. The country’s market share increased 16.27 percent to 6.69 percent.

Riaz Haq said...

Where Does All the World’s Cotton Come From?
By Arthur Friedman

Cotton is perhaps the most recognized fiber in the apparel market, and is used, either in its pure form or blended with other materials, to make much of the world’s clothing.

The soft, fluffy staple fiber grows in a boll around the seeds of a cotton plant, and the fiber is nearly pure cellulose, the most abundant organic polymer on Earth. Fibers from the cotton plant are spun into yarn or thread and made into fiber, yielding soft, breathable textiles. Cotton is the most widely used natural fiber in clothing today.

Cotton plants are native to tropical and subtropical regions around the world, found largely in India, Egypt, Africa and the Americas.

Representing an estimated 50 percent share of the global fiber market, cotton is grown on six continents. There were an estimated 119.3 million 480-pound bales of cotton produced in the just-completed 2018-2019 season, according to the U.S. Department of Agriculture (USDA). This marked an increase of 0.7 percent from the previous year’s 118.5 million bales.

India’s market share has grown in recent years, surpassing the U.S. and China as the world’s top cotton cultivator. India produced 26.5 million bales of cotton in 2018-2019 compared to 29 million bales the prior year, according to USDA data.

China is the second-largest producer of cotton, a plant that is cultivated into a raw material, growing 26.5 million bales in the season, a drop from 27.5 million bales in 2017-2018. The U.S. is the third-largest producer of cotton, which in its raw form is sold as a commodity on the global market, growing 27.8 million bales in 2018-2019 compared to the prior season.

Brazil produced 12.8 million bales this last crop season, after harvesting 10 million bales in the prior current season. Rounding out the top five is Pakistan, which grew 8.5 million bale’s worth of cotton in 2018-2019, a slight increase from the year before.

World trade
Global trade reached 41.4 million bales this past season, about on par with the previous year. China was the largest importer in the world this past season, bringing in 9.3 million bales. Vietnam imported 7 million bales this year, followed by Bangladesh, with 6.9 million bales imported.

Rounding out the top five, Indonesia brought in 3 million bales this year, while Pakistan imported 2.9 million bales.

The U.S. was by far the world’s largest exporter of cotton. In 2018, the country exported 14.5 million bales, a falloff of 8.2 percent compared to the 15.8 million bales exported the prior year but still representing roughly 40 percent of global exports. The decline was mainly due to a steep drop in exports to China as a result of the trade war between the two countries.

Brazil exports increase to 6.24 million bales from 4.2 million bales last year, while India saw its shipments decline to 3.8 million bales from 5.2 million bales exported in 2017-2018.

Australia’s exports fell to 3.6 million bales this year compared to 3.9 million bales last year. Benin, the largest African cotton exporter, exported 1.3 bales in 2018-2019.

Riaz Haq said...

#Pakistan #garment makers chase rivals in #India and #Bangladesh. Pakistan has been hailed as an "attractive sourcing base" by industry executives including Spencer Fung, CEO of Hong Kong-based supply chain giant Li & Fung

The global shift to online retailing is further intensifying cost competition, a trend that could benefit Pakistan.

Leading the shift is Amazon, which offers cheaper apparel that can be customized to individual shoppers' tastes and delivered quickly.

Pakistan garment companies are fighting hard to break into the supply chains of some of the world's biggest fashion brands as the country races to catch up with Bangladesh and other Asian apparel heavyweights.

The battle is fierce, however, as customers like Zara and H&M demand high quality and low costs from their suppliers, all on increasingly tight time tables.

Kay & Emms, a garment maker based in Faisalabad, says it is benefiting from clients' desire to diversify.

"We are getting more benefit because the customers are thinking that they are not 100% safe while putting all of their eggs in one basket that is either China or Bangladesh," Faisal Waheed, sales and marketing general manager at Kay & Emms.

Compared to the traditional leaders in garment production -- China, Vietnam and Bangladesh -- Pakistan is still a minor player, and the pressure on companies to reduce costs is intense.

"There is always a war-footing situation," Waheed said. "Every customer is cost-conscious, because they know they have the buying power around the globe. They have a lot of suppliers in their basket -- Cambodia, India, Bangladesh, China and Pakistan. If you don't act on war footing, you will be losing business."


Pakistan has been hailed as an "attractive sourcing base" by industry executives including Spencer Fung, CEO of Hong Kong-based supply chain giant Li & Fung, as garment production for Western brands continue to shift to lower cost countries.

Kay & Emms is still small by global standards, with an annual turnover of just $50 million and 2,300 employees, but it is growing at an annual rate of 60%. About a fifth of its sales comes from Zara, a brand belonging to Spain's Inditex. Kay & Emms has been supplying jogging pants, hoodies, crew neck shirts, pullovers and zipper jackets for Zara since 2014, but it was a hard-earned success, according to Waheed.

"After an effort of more than four, five months, we got the first order," Waheed said. "It was quite hard to get into their business."

Zara is a demanding customer, Waheed. "It is cost-conscious, quality-conscious and time-conscious." But his company was after the prestige of doing business with the world's biggest apparel company. Zara releases new items every three to four weeks, rather than on a four-season cycle. "It compels us to develop new fabrics and garments," Waheed said. "That's harder, but more exciting."

Pakistan's cost-competitive garment makers are drawing attention from multinational brands, even though the country's growth lags behind more dynamic markets such as India or Bangladesh. Pakistan is still recovering from the U.S. war on terror, which has stirred Islamic insurgency and has left tens of thousands dead near the border with Afghanistan.

Riaz Haq said...

Pakistan fast gaining access to markets of developed nations
By Salman SiddiquiPublished: August 24, 2019

Pakistan is fast strengthening trade ties and getting access to markets of several developed countries around the globe in an attempt to increase exports, which is a must to do away with the pressure on the rupee, build foreign currency reserves and steer the country out of the financial crisis.

“We have got increased market access to China, Europa, Indonesia…and a small market access in Qatar,” said Adviser to Prime Minister for Commerce, Investment, Industries, Production and Textile Abdul Razak Dawood during a visit to a Dawlance factory on Friday.

“Now I am going to the United States to get more market access there,” he said, adding that there were four other countries with whom Islamabad was negotiating to get more market access, which included Canada, Japan, South Korea and Australia.
“All of us in Pakistan must understand that without (revival of) exports this country is not going anywhere,” he remarked while emphasising that exports were increasing at a fast pace.

“Are the country’s exports increasing fast,” he asked and said in the same breath “the answer is yes.”

He said exports increased 14% in July 2019 compared to July 2018. “That is good, but still not good enough. We have to do a lot more. Data for August is keenly awaited to see whether the trend is sustained,” he said.

Pakistan’s exports remained almost static at $24.22 billion in FY19 compared to $24.76 billion in FY18, according to the central bank.

Dawood said exports, which started improving at the outset of second year of his government, would help ease pressure on the rupee and build foreign currency reserves of the country.

The current account deficit dropped significantly to $13.5 billion in FY19 compared to a record high of around $20 billion in FY18. “The deficit will be further restricted in the range of $5-7 billion in the current fiscal year,” he said.

He, however, regretted too much reliance on textile exports and urged other sectors of the economy to play their role in diversifying exports. “We have to now move towards export of engineering goods, chemicals, IT products, processed food and others,” he said.

The PM aide was happy to note that engineering firms like Millat Tractors and Dawlance had started exporting their products to African and European countries respectively.

He asked the large-scale manufacturing (LSM) sector to help small and medium-sized enterprises (SME) to enter the manufacturing sector.

“We actually had a de-industrialisation situation. That is over. We are now back on the track of industrialisation,” he said, adding that the new industrialisation phase would help build the brand of ‘Make in Pakistan’ for exports and import substitution.

“Prime Minister Imran Khan holds weekly meetings to stay updated on the issues and problems faced by the industrial sector and how to resolve them,” he said.

Dawood said the government was trying to correct the duty structure. “I am not satisfied (with the current duty structure). There is a lot to be done. We have to correct the duty structure to facilitate the ease of doing business.”

He invited budget proposals from the industries to resolve their outstanding issues and added that such challenges may be overcome much earlier than the next budget presentation.

“What do you want in the next budget or before the budget (for industries),” he asked.

The adviser said the Chinese were relocating their industries to Pakistan, which would help build the export sector and promote import substitution. A large Chinese delegation of 65 parties is due in October. They are believed to make a huge participation in the new industrialisation phase in Pakistan.

He said fundamentals of textile exports had also changed to positive. Exports of value-added textile goods like garments and knitwear increased notably in July while exports of raw material – yarn – dropped 18%.

Riaz Haq said...

US, China, UK top three export destinations of Pakistani products

The United States remained among the top exports destinations of the Pakistani products followed by China and United Kingdom during first month of current financial year 2019-20 as compared to the corresponding month of last year.

During the month of July, 2019, the total exports to the US were recorded at $373.514 million against the exports of $328.090 million, showing an increase of 13.84 percent during the period under review, according to the data issued by State Bank of Pakistan (SBP).

This was followed by China, wherein Pakistan exported goods worth $167.058 million against the exports of $152.043 million same month of last year, showing growth of 9.87 percent.

To United Kingdom (UK), Pakistan exported products worth $147.333 million during the current fiscal year against the exports of $153.702 million during last fiscal year, showing decrease of 14.4 percent, SBP data revealed.

Among other countries, Pakistani exports to Germany stood at $116.041 million against $116.064 million during last year, showing decline of 0.01 percent while the exports to Afghanistan were recorded at $108.642 million against $127.475 million last year, the data revealed.

The exports to Netherlands (Holland) were recorded at $85.398 million against $80.424 million whereas the exports to Spain were recorded at $81.468 million against $74.632 million last year.

During the period under review, the exports to Italy were recorded at $70.195 million against $68.008 million whereas the exports to Bangladesh stood at $66.957 million against $58.370 million.

Pakistan’s exports to France were recorded at $40.699 million against $38.209 million last year where as the exports to Turkey stood at $30.924 million against $29.267 million.

Similarly, the exports to Saudi Arabia during the period under review were recorded at $30.139 million against $27.008 million while the exports to Singapore stood at $ 27.155 million against $15.157 million.

During first month, Pakistan’s exports to Kenya were recorded at $24.101 million during the current fiscal year compared to 22.703 million same month of last year, the exports to Canada stood at $23.975 million against $25.792 million, to Japan $20.301 million against $17.608 million whereas the exports to Malaysia stood at $14.901 million during the current year against $14.013 million during last year.

Riaz Haq said...

#American denim giant Levi Strauss partners on #Pakistan #water project to restore #Ravi River basin around #Lahore | Apparel Industry News | just-style via @juststyle

The project is part of the company's better water management strategy in sourcing countries.

Riaz Haq said...

#Pakistan managed to successfully address major #energy and #infrastructure issues in the first phase of #CPEC. Phase 2 can put Pakistan economy back on track via #industrial and #agriculture #development and #trade.

With the completion of major infrastructure and energy projects, the first phase of the China-Pakistan Economic Corridor (CPEC), which has helped Pakistan manage huge deficits in the energy sector and transportation infrastructure, is coming to an end.

Before CPEC, Pakistan was going through the worst load on power management and according to the government of Pakistan, the country was losing $4-5 billion every year due to energy shortages, while the estimated cost did not include social costs to society.

On the other hand, the National Highway Authority (NHA) estimated that Pakistan needed $1.2 billion to rehabilitate the transportation infrastructure, which along with the energy shortage, was hindering the country’s fast economic growth.
Pakistan managed to address these major issues with the help of the first phase of CPEC, which is now entering the second phase. Once again, the time is critical as all economic indicators are painting a miserable picture – inflation is on the rise, the rupee has depreciated against the US dollar – and new opportunities are few.

The government is striving to reverse the order and is aggressively pursuing any available opportunity for investment and job creation. The second phase of the economic corridor can be the answer to that, but the question is what strategies and tools are required by Pakistan to benefit from the next phase. Moving forward, there are three points which need to be taken into consideration.

First, the initial phase of CPEC was dominated by infrastructure development. All these interventions needed the lead role of the government, although, with certain reservations, the government managed to play a good role. Secondly, Pakistan should keep in mind the economic and development status of the country before designing any intervention. The first point to recognise here is that Pakistan lies between the primary and secondary phase of economic development, which means the country has started to graduate from commodities or natural resource stage and is trying to enter the second phase.

Although the process is slow, the country is still making progress. Therefore, the future plan should be developed keeping in mind the current status of development.

The second phase is all about industrial cooperation, development of agriculture and trade, therefore, its needs and demands are entirely different from the first phase. The first required the leading role of the government, while the second phase requires a 180-degree change in management and roles of actors. It demands the leading role of industrialist, the private sector and the business community, while the government’s role would be only of a facilitator.

The government needs to start future planning and phasing of implementation for the second part of CPEC, accordingly. In this regard, the government has started to engage the business community of Pakistan by creating a ‘business council’ under the chairmanship of Abdul Razak Dawood. However, the direction of the business council is not clear yet and the terms of reference (ToRs) are not depicting the required changes and instruments for practical interventions.

Riaz Haq said...

Special Economic Zones (#SEZs) in #Faisalabad alone would help #Pakistan grow its #exports by $1billion to $1.5 billion per year in the short span of time by ensuring effective and comprehensive planning, Says (FIEDMC) Chief Mian Kashif #economy

Appreciating economic vision of Prime Minister Imran Khan, he said the premier has directed all the concerned departments to remove hurdles in the way of development of SEZs and establish them on priority basis.

Fortunately, he said almost hundred percent plots in M-3 Industrial Estate have already been sold out while hundreds of units have become operational and were playing their role in providing exportable surplus in addition to accommodating thousands of workers.

Mian Kashif said that the industrial city would house more than 400 textile, steel, pharmaceutical, engineering, chemical, food processing, plastic and agriculture appliances units in addition to providing jobs to 250 thousand workers.

He claimed that the city was also expected to attract Rs400 billion local and foreign direct investment which would help Pakistan to stabilise its economy. He further said that Faisalabad was strategically located in the heart of Pakistan with two motorways passing from its eastern and western sides.

He said that this city has a unique privilege to contribute 60 percent towards textile exports and 45 percent towards total exports of the country.

He further said that it was not only restricted to textile which was its iconic identification but hundreds of SMEs hailing from chemicals, steel, food processing and others were also playing their role in the overall economy of Pakistan.

FIEDMC Chairman further said investors from China, Turkey, Korea and Britain have pumped $ 1.10 billion and their confidence in Pakistan have been restored as they are also bringing more investors from their respective country to invest in SEZs.

He said these investors expressed their eagerness to explore the possibility of investment in diverse sectors of Pakistan especially in ceramics, chemicals, steel, food processing and automobiles.

He said Prime Minister Imran Khan clearly directed them to focus on developing such industry in SEZs which is based on export and import substitution to restrict the import bill.

He said the good thing is that a number of Chinese industries have started pumping investment in SEZs and apparently the reason behind this is the production cost in China has increased which is making Pakistan one of the beneficiaries of on-going US China trade war.

He emphasised that consistent policies were imperative to attract foreign investment into the country, which could lead the economy towards sustainable growth.

He said industries operating in the FIEDMC will have an immediate access to high-quality infrastructure, un-interrupted power supply, public facilities and support services along with simpler ease of doing business.

Chief Operating Officer Muhammad Aamer Saleemi also briefed the delegation and said FIEDMC in collaboration with Industrial Police Liaison Committee has established police post at M-3 Industrial City and the industrial community will work under safe environment.

“The whole industrial estate will be monitored by high resolution surveillance cameras and 24 hours police patrolling will be provided in the estate,” adding he said this would make FIEDMC the safest industrial estate in the country.

He said CPEC will attract $40 billion worth of investment which will directly raise investment-to-GDP ratio by 2.8 percentage points besides some indirect investment addition.

“The investment in hard currency will also support exchange rate stability in the country and stabilise balance of payments situation in the country,” he added.

Riaz Haq said...

At Bluezone, Collaborations Help Kickstart Creativity in Denim

The Munich, Germany trade show held last week was home to several collaborations that demonstrate how each player in the supply chain contributes to creativity and innovation in the industry.

From mills and trim suppliers, to the next generation of denim designers, here’s a look at some of the notable partnerships found at the show.

Creative collaboration
Bluezone’s trend curators at Monsieur T introduced a new layer to their seasonal forecast with the All Related Collaboration, a project that emphasized teamwork and creativity.


In partnership with Greek denim label Salt & Pepper Jeans Co., Pakistan denim mill Naveena presented a line of nostalgic-inspired jeans and overalls recreated with contemporary fabrics and sustainable processes. The result is a collection of unique handmade jeans that capture the spirit of American craftsmanship with a touch of European aesthetics and an environmentally-friendly process.

The capsule collection, custom made by Salt & Pepper Jeans Co., are made with Naveena’s Retro Tech fabrics, which are designed to provide the wearer comfort without sacrificing a vintage authentic look. The jeans were washed by Italian chemical company, Officina+39, using its Trustainable substances and technology. The Trustainable portfolio uses fewer hazardous chemicals, reduces power usage and conserves water.

Naveena also teamed with Lenzing and Chottani for the show giveaway denim sailor bag made of Tencel x Refibra Lyocell.

“By collaborating with our partners, we link progressive design with technical innovation, making innovative and beautiful products in a clean, transparent way,” said Aydan Tuzun, Naveena head of global sales and marketing.

Riaz Haq said...

Jeans Imports From China Tumble as Sourcing Gets Increasingly Diverse

China’s jeans market share came down to 22.48 percent, just a tick above Mexico’s 22.27 percent, according to OTEXA. For the first seven months of the year, jeans imports from Mexico grew 12.53 percent in value to $483.58 million, topping China’s shipments so far this year. This was notably in contrast to Mexico’s overall apparel shipments in the period, which were down 2.94 percent to $1.89 billion.

Among the suppliers gaining ground this year from Asia were Vietnam, with imports to the U.S. up 30.24 percent to $192.74 million, and Pakistan, with shipments rising 8.72 percent to $148.3 million. Losing ground in the region were Bangladesh; with imports down 1.51 percent to $306.82 million, Cambodia, which saw shipments decline 9.48 percent to $60.76 million, and Indonesia, which dropped 13.89 percent to $40.21 million. Sourcing executives have pointed to labor and quality issues in these countries as the reasons for brands shying away from manufacturing there.

Production picked up in the Western Hemisphere, where Nicaragua saw its shipments to the U.S. increase 28.57 percent to $67.71 million, and Guatemala, with shipments up 13.25 percent to $20.37 million. Overall Western Hemisphere jeans imports to the U.S. were up 10.66 percent in the period to $605.13 million. For the year through July, the region saw its market share reach 28 percent.

Africa continues to get more attention from denim apparel producers, too. Countries showing substantial gains this year include Egypt, Jordan, Madagascar, Kenya, Mauritius, Tanzania and Ethiopia.

Riaz Haq said...

14 #German #textile machinery companies covering the entire textile chain are participating in #Pakistan visit, which will showcase the benefits and #technological #innovations at seminars in both #Karachi and #Lahore. via @Textile World

A technical seminar in Karachi will be held at the Hotel Karachi Avari Towers on November 12 and a second in Lahore will be held on November 14 at the Hotel Avari Lahore Towers.

“The regions surrounding both of these cities have become major hubs for textile manufacturing, especially in areas such as home textiles and denim, where Monforts enjoys market-leading positions with its finishing systems,” said area sales manager Manfred Havenlith, who in addition to presenting at the seminars, will be holding meetings and networking with existing Monforts customers and potential new ones during the trip. “The Punjab region around Karachi, as Pakistan’s largest city, for example, is now dense with denim manufacturers, many of whom have already expressed keen interest in the new Monforts CYD continuous yarn dyeing system we introduced at ITMA 2019 in Barcelona in June.”

The CYD system integrates new functions and processes into the weaving preparation processes — spinning, direct beaming, warping and assembly beaming, followed by sizing and dyeing – in order to increase quality, flexibility, economic viability and productivity. The unique Eco Bleach process is the first bleaching system for yarn treatment available on the market and is combined with the washing units, after which the fabric is then dyed immediately, resulting in considerable savings in wastewater and chemicals.

It is possible to process short batches of yarn in order to produce minimum runs of finished fabrics in a single continuous process and by comparing the usual processing sequences within the denim industry with the new CYD system, the advantages become immediately clear.

Key customers

Existing Monforts denim manufacturing customers in Karachi include Artistic Milliners, Artistic Fabric & Garment Industries (AFGI), Denim Clothing Company, Denim International, Kasim, Rajby Industries and Soorty. Home textiles customers meanwhile include Afroze, Al Karam, Lucky Textile Mills, Mustaqim and Yunus.

The situation is similar in the region around Pakistan’s second largest city, Lahore, where major Monforts customers include Azgard-9, Crescent Bahuman, Crestex, Kohinoor Textile Mills, Naveena, Sapphire Textiles and US Denim Mills.

On Monday, November 11, the VDMA delegation will also be visiting Karachi-headquartered Gul Ahmed Textile Mills, a leader in the home textiles field, which operates both yarn dyeing and fabric finishing lines from Monforts, and in recent years has expanded into retail, with over 40 stores across Pakistan, offering a diverse range of products, from home accessories to fashion clothing.

Trading partner

The European Union is Pakistan’s most important trading partner and textiles and clothing accounted for over 80 percent of its total exports of 6.8 billion euros to the EU in 2018, according to the European Commission.

Starting from January 2014, Pakistan has benefited from generous tariff preferences — mostly zero duties — under the EU’s GSP+ arrangement, which aims to support the country’s sustainable development and good governance. In order to maintain GSP+, Pakistan has to effectively implement 27 core international conventions on human and labour rights, environmental protection and good governance.

The VDMA delegation is being organised by SBS systems for business solutions on behalf of the German Federal Ministry for Economic Affairs and Energy (BMWi), in collaboration with the German Pakistan Chamber of Commerce and Industry (GPCCI) and with the technical support of the VDMA Textile Machinery Association.

Riaz Haq said...

#Pakistan #exports up 6%, #imports down 17% in October 2019. Exports rose to $2.0 billion against $1.89 billion in Oct, 2018. Imports down to $3.98 billion from $4.8 billion in Oct 2018. Monthly #trade gap declined 32%.

During July-Oct 2019/20, exports increased by 3.6 percent to $7.53 billion and imports down by 19.3 percent to $15.34 billion. During these four months of last financial year, exports were at $7.27 billion and imports were recorded at $18.966 billion.

During these four months, the economy racked up trade deficit of $7.78 billion against $11.7 billion recorded in same period of last financial year depicting a decline of 33.5 pc.

It is worth mentioning that since 2003, Pakistan has been consistently accumulating trade deficit, mainly due to high energy products imports. Interestingly, since 2012, China has emerged as Pakistan’s largest trading partner replacing the United States. In recent years, the biggest trade deficits were recorded with China, India, United Arab Emirates, Saudi Arabia, Kuwait and Malaysia. Pakistan records trade surpluses with the United States, Afghanistan, Germany and United Kingdom.

Experts say diversification in exports to other markets, especially those located in Latin America, Africa, Asia and the Middle Eastern countries is the call of the day. The government should also encourage technological upgrades in exports, develop agriculture, cottage industry, handicrafts, as well as gems and jewelry sectors, they added.

It is worth mentioning that in last financial year [2018/19], Pakistan trade deficit stood at $31.8 billion against $37.6 billion in 2017/18.

During the FY19, imports dropped by 9.9 percent to $54.8 billion compared with $60.8 billion in the preceding fiscal year. Exports during July-June 2018/19, totaled $22.98 billion against $23.2 billion in same period of FY15 depicting a decline of 1 percent.

Riaz Haq said...

HBL to grow in #China. Habib Bank, #Pakistan's biggest lender is approved for full #commercial ops by #Chinese #bank regulator. HBL expects to get a branch license within three months, according to CEO Muhammad Aurangzeb. #CPEC #Trade via @Profitpk

The experience in working with Chinese companies building the China-Pakistan Economic Corridor, coal mines and power plants in the South Asian nation encouraged the lender to expand in the world’s second-largest economy.

Habib Bank, controlled by the Aga Khan Fund for Economic Development SA, is among the few Pakistani lenders to fund the Belt and Road projects that are otherwise dominated by Chinese banks.

China’s state-run companies “increasingly want to work with us in all those locations which are part of the Belt and Road but Chinese banks are not present,” Aurangzeb, 55, said in an interview in his Karachi office. “In the next 3-5 years, if we get this one right, this puts us in a supra-regional play.”

The bank is looking to leverage its relationship with Chinese companies in Pakistan. It has expanded business with one such company in the United Arab Emirates and is discussing a project in Oman as well, said Aurangzeb.

The bank’s shares have gained almost 20pc this year, while the benchmark KSE-100 Index has dropped about 1pc.

Habib Bank advanced credit and also acquired stake in the nation’s first-ever coal mining venture, one of the main Belt and Road projects, with Chinese companies in Pakistan’s Thar desert. It has also participated in a few coal-fired power plants and an electricity transmission line project in different roles, Aurangzeb said.

In its attempt to follow Chinese investment it became the first Pakistani lender to open a branch in Gwadar, a small fishing town where China is developing a port. It also became the first foreign bank to have a branch in Urumqi in western China last year, and acquired a licence last week that allows them to open yuan-based accounts for customers.

Riaz Haq said...

#Taiwanese #textile companies may relocate to #Pakistan. #Taiwan will transfer new #technologies & #manufacturing processes & Pakistan will not have to compete with #China or #Bangladesh or #Vietnam on price. Instead, it will add value to its products.

Being a cheap labour market (after huge currency devaluation), Pakistan can transform into an excellent destination for Taiwanese textile companies, which are willing to relocate their units outside Vietnam, said Taiwan Textile Federation President Justin Huang.

“At present, Vietnam is crowded, which causes difficulties for Taiwanese textile firms there, such as labour shortages,” Justin said in an interview with The Express Tribune. “In Pakistan, however, labour issues will not emerge at least for the next 10 years and this is something attractive for us.”

He pointed out that China had invested massively in Pakistan’s infrastructure development projects under the China-Pakistan Economic Corridor (CPEC) and stressed that Taiwanese businessmen could take maximum advantage from such investment.

Pakistan had a duty-free export agreement with the European Union and in December, the second phase of a free trade agreement (FTA) with China would also become functional, which would prove to be helpful for the Taiwanese investors and trade and industrial development in Pakistan, he said.

“We are different from China and other countries because we focus more on technical and functional textiles,” he emphasised.

Justin added that he would forward all the information collected from Pakistan to other federation members in Taiwan including the fact that Pakistan was a huge market of 200 million with excess labour and the government was willing to support foreign investment.

The federation president expressed the resolve to devise a mechanism for enhancing trade and investment collaboration between Taiwan and Pakistan in the textile and garments sector. He was of the view that Pakistan’s textile industry produced excellent products for home use and had the capacity to produce quality apparel as well.

“If things follow the right direction, we will transfer new technologies and manufacturing processes to Pakistan, which will facilitate the country in upgrading its products,” Justin stressed.

“After that, Pakistan will not have to compete with China or Bangladesh on price issues and the country will be able to add value to its products.”
Textile companies based in Taiwan have already designed products for global brands like Nike and Adidas. Sixteen teams in the football World Cup 2018 used Taiwan-based fabric in their kits.

He voiced hope that the FTA with China would also assist Taiwanese companies, which had already invested in China and had set up their units in the country.

“Our officials can bring in their work experience to Pakistan along with the academia to train the local human resources,” he pointed out. “In future, Pakistan will need a lot of textile engineers, hence, there is a need to provide sufficient training to them so that the country can utilise its manpower.”

He also stressed the need for easing the visa approval process for the Taiwanese investors.

“Right now, it is difficult for us to visit Pakistan due to a long process of applying for the entrance visa,” he said. “It took me more than three weeks to get approval for Pakistani visa.”

Riaz Haq said...

A day earlier, the central bank had said the during the first quarter of this fiscal year, the current account was negative with a cumulative $1.572 billion deficit, however, in October it has turned positive.

The country’s current account deficit, in the last fiscal year, clocked in at $12.75 billion, down 36 percent from record-high $19.9 billion in FY-18.

According to the Pakistan Bureau of Statistics (PBS), the trade deficit fell 33.5 percent in July-October FY-20, while imports of goods dropped 22.9 percent to $14.656 billion in the first four months of the current fiscal year.

Exports grew slightly by 3.4 percent to $8.220 billion, the SBP data showed. Foreign direct investment into Pakistan rose 238.7 percent in the first four months of the current fiscal year to $650 million.

Exports of services during the four months clocked in at $1.749 billion compared to $1.709 billion during the last fiscal year. Imports of services, on the other hand, reached $3.117 billion compared to $3.076 billion in FY18.

“In particular, the onset of fiscal stimulus and successful resolution of trade negotiations involving major economies would be instrumental in supporting global consumer demand, which would, in turn, bode well for exporting partners, including Pakistan, along with improved prospects of foreign investments,” SBP report said.

The Free Trade Agreement (FTA-II) with China and preferential trade agreement with Indonesia might also boost exports, it suggested.

Riaz Haq said...

#US sending 15 #trade delegations to #Pakistan next year: says Sec Alice Wells after her speech critical of #China and #CPEC - Newspaper - http://DAWN.COM

The paper, now posted at the US State Department’s official site, says that the US Commerce Department has “already stepped up its activity in Pakistan with 15 trade delegations planned for the next year”.

And once the new expanded Deve­lopment Finance Corporation (DFC) is up and running, “Pakistan is going to be a country of great interest”.

According to the paper, the DFC will have more than double the investment cap than the Overseas Private Investment Corporation (OPIC), increasing from $29 billion to $60bn. OPIC is a US government agency which mobilises private capital for overseas investments.

Document suggests US-Pakistan ties are going to expand

The paper argues that doubling the cap would enable investment in projects that have high standards and are financially sustainable over the long haul.

While urging Pakistan to benefit from these additional US resources, Ms Wells reminded Islamabad last week that “true sustainable development is really a marathon and not a sprint. It requires the development of effective regulatory framework, strong rule of law, fiscal health, and an enabling business climate”.

She recalled that during Prime Minister Imran Khan’s visit to the United States in July, President Donald Trump was “extremely enthusiastic about the potential for increasing and expanding our US-Pakistan trade and investment relationship. And both our governments are working very hard to find practical ways to do that. We commend Pakistan for surging 28 slots on the World Bank’s 2020 Ease of Doing Business ranking and being highlighted as one of the top ten reformers globally,” she added.

The paper also highlights some commercial connections between the United States and Pakistan such as, the US firm Excelerate is prepared to potentially invest more than $300 million to upgrade a floating storage regasification unit in Pakistan’s first LNG terminal.

ExxonMobil has been working to support Pakistan’s ambitious effort to access new LNG supplies.

Over the last five years PepsiCo has invested $800m to expand its infrastructure and diversify products, and Coca-Cola has invested $500m in the last couple of years, providing thousands of jobs for Pakistanis.

Uber Technologies entered the Pakistani market in 2016 and currently operates across nine cities, providing employment opportunities for thousands of Pakistanis.

The paper argues that US corporate social models are outstanding vehicles that create jobs and opportunities for communities associated with these foreign investments.

So, the US-Pakistan Women’s Council, for instance, fosters cooperation between American and private sector, Pakistani private sector, to mentor women and girls. Another American brand, KFC, supports the education of children with hearing disabilities and other underprivileged young people, partnering with schools throughout Pakistan.

Proctor & Gamble’s Children’s Safe Drinking Water Programme has provided 875m litres of clean drinking water to Pakistani communities in need.

Noting that US companies bring superior quality and technology, the paper points out that Pakistani leaders often praise US companies like Cargill and Corteva, that are passing critical technology and driving “enormous productivity gains in Pakistan’s huge agricultural sector”.

The US has also helped establish some of Pakistan’s most prestigious educational institutions and centres including Lums, IBA, JPMC and the Centre for Advanced Studies in Energy at Nust.

“And just to be crystal clear, the US-Pakistan development partnership has primarily taken the form of grants — not loans,” said Ms Wells while adding that such links “offer a sense of the direction that we envision”.

Riaz Haq said...

#Pakistan exported $1,156 million worth of readymade #garments (#RMG) in five months, showing an increase of 36% in quantity and 13.19% in value. #exports

Pakistan exports increase by 4.8pc in five months: Finance advisor
By Ali Ahmed on December 21, 2019
Sheikh said that from July-Nov 2019, exports increased by 4.8pc as compared to same period last year.
Value added exports like readymade garments, knitwear and other major exports are showing strong pick up in both quantity & value, he said.

Adviser to the Prime Minister of Pakistan on Finance and Revenue Abdul Hafeez Sheikh said that strong export growth is essential for the industrial expansion and job creation in an economy, as Pakistan posted 4.8pc export growth.

In a tweet, the advisor said that in five months (July-Nov 2019) exports increased by 4.8 percent as compared to same period last year. “Value added exports like readymade garments, knitwear & other major exports are showing strong pick up in both quantity & value," he said.

As per the data of Major Exports of Pakistan in 2019-20 (July-November) shared by Hafeez, knitwear items worth $1,320 million were exported in the five months, showing a quantity increase of 6 percent and value increase of 8.69pc.

Whereas, Pakistan exported $1,156mn worth of readymade garments in five months, showing an increase of 36pc in quantity and 13.19pc in value. Meanwhile bedwear was third on the list with $1.013bn worth of exports, an increase of 14.37pc in quantity and 4.69pc in value.

Riaz Haq said...

Terra Nova Capital Partners--#European #Investor in #Pakistan #IT company: "...they hire the best IT talent locally, 80% of their revenue comes from overseas thanks to strong client relationships in North America, Germany and the Middle East". #technology

On the ground, we found most companies in a depressed state due to currency devaluation and struggling domestic economy. However, the exporters are poised to benefit from the devalued rupee, while import substitute businesses take advantage of government policies such as tax subsidies designed to reduce the problematic current account deficit. As a result, we invested in four companies which we believe will do well even in this turbulent time for the economy: three export-related businesses (an IT company, a textile manufacturer, and a hydrogen peroxide producer that supplies textile industry) and a fertilizer business benefiting from import substitution policies.

The IT services company we invested in is a hidden gem that shines from all angles. First, the business stands to benefit from the weak currency: while they hire the best IT talent locally, 80% of their revenue comes from overseas thanks to strong client relationships in North America, Germany and the Middle East. Second, they have grown earnings for many quarters and expect further 15% bottom-line expansion next year. And third, they have built an open-minded, friendly culture: we were impressed that the company’s CFO is female (having women in top positions is rare in Pakistan), there is a gym at the office (with female-only hours), and the employees collaborate, look happy, and smile. This progressive and growing business was trading at only 7x P/E, a bargain compared to its historical levels of around 20x and IT outsourcers in other markets trading at over 30x.


After many unsuccessful attempts to get a meeting with Pakistan’s finance minister, we decided to simply show up at his office. Getting through security was surprisingly easy, but as we were about to waltz into the minister’s office, a large man summoned us.

The large man was the “Additional Finance Secretary”. We explained that we have been active foreign investors in Pakistan for six years, and had sent five unanswered emails to the minister over the past four weeks requesting a meeting. The man assured us that every email gets printed and placed on his desk so he personally saw every message we sent (though he did not recall seeing any of them). Instead of, he said we should send our request to the Yahoo! email address on his official business card (?!) and he would get back to us in a few weeks. As it was apparent he was just trying to get rid of us, we persisted. He finally told us that if we follow him he would take us to shake the minister’s hand and make the appointment.

However, as we were passing by the minister’s door we realized that the man had no intention to stop. Instead, he said he was escorting us out of the building. In a last-ditch effort, we knocked on the door and were about to open it – only to be dragged away by the large man. We later learned that finance minister takes 2-hour afternoon naps in his office, so we hope we didn’t wake him up.

Riaz Haq said...

Without #Afghanistan, #Pakistan and #UnitedStates need a new basis for relationship. Under this arrangement, "We would see Pakistan not as a problem to be managed but also as an opportunity as a potential South Asian economic tiger." #economy #trade #FDI

Pakistan’s population is in the same league as other democracies such as Brazil, Indonesia, and Nigeria. The United States has security ties with each of these democracies, but it also has economic ties, people-to-people ties, and ties in technology, education, and innovation. We should have similarly broad and deep relations with Pakistan.

Although there are valid criticisms in the United States of Pakistan, we need to engage the country in a more rounded way. A broader, more comprehensive engagement would likely require Pakistan to also have a more comprehensive vision of its own role in the world — one also less-viewed through the prism of a single country, namely, India. Pakistan places a disproportionate lens on its military and defense, it spent 4 percent of its GDP on the military in 2018. In contrast, Pakistan only spent 2.9 percent of GDP on education in 2017.

Pakistan’s Potential

Pakistan could become another Argentina or Ukraine in terms of agricultural potential. Agriculture accounts for 20 percent of Pakistan’s GDP and employs 43 percent of its workforce. Agriculture also plays a huge role in Pakistan’s exports, accounting for about 80 percent. But Pakistan’s agricultural productivity currently only ranges between 29-52 percent and could be much higher, with broader use of improved seeds and farming techniques.

Pakistan also has very significant tourism potential. It is best known for its ancient historical and religiously significant buildings, such as the Madshahi and Grand Jamia Mosque. It also has immense natural beauty, such as the Hunza Valley and Desoi National Park. However, Pakistan is one of the least competitive countries in South Asia in regard to travel. Pakistan had 1.7 million visitors in 2017, compared to Sri Lanka’s 2.3 million and Jordan’s 4.2 million. Introducing a recent e-visa program was a great start to opening the doors for tourism but much more needs to be done.

Pakistan has significant hydropower potential but has only developed one-tenth of its 60,000 MW potential. If this resource were properly tapped, it could play a huge role in tackling the power deficit in Pakistan and the broader region.

What would a reframed relationship with Pakistan look like?

On the U.S. side a reframed relationship would require a broader and larger set of stakeholders. We would see Pakistan not as a problem to be managed but also as an opportunity as a potential South Asian economic tiger.

Most members of congress who had an interest in Pakistan — especially outside of the military relationship — have left politics, so a new coalition in Congress needs to be rebuilt. The relationship is poisoned by disappointments, accusations, fear and distrust.


Education is also key to reframing the relationship. Student exchange programs are beneficial in improving relations between countries. In 2016, the last year for which we could find numbers, there was an 8.5 percent increase in the number of Pakistani students studying in the United States — which is still just 11,000 Pakistani students. That is half of the 22,000 Pakistani students studying in China.

The United States must revisit its foreign aid program to support Pakistan in reaching its full potential. From recent informal conversations, it’s clear that neither OPIC, now the USDFC, nor EXIM Bank have sent a mission to Pakistan for many years. That needs to change. Our foreign aid has dropped drastically and is at levels far below what’s required, given the challenges. Creating a new relationship could take as a long as a decade but must begin now.

Riaz Haq said...

State Bank of #Pakistan unveils Rs200 billion exports stimulus in the form of loans for #export oriented sectors under concessionary Long Term Financing Facility (LTTF) and Export Financing Scheme (EFS).

“Rs100 billion at concessionary rate had been allocated for LTTF for all exporting sectors,” Baqir said. The existing rate of refinance under LTTF is 6 percent for the end user. “The maximum limit of borrowing for an industry has been increased from Rs2.5 billion to Rs5 billion.” Governor Baqir, previously, emphasesd that the country needs a shift to an export-based economy to achieve high and sustainable growth.

The economy expanded 3.3 percent in the last fiscal year of 2019, the weakest annual pace in more than nine years, as exports - a key growth driver – had declined amid high cost of doing business and a strong rupee.

The government estimates economic growth to plummet to 2.4 percent, the slowest pace in over a decade, in the year started July. Governor Baqir said the SBP would announce another concessionary policy for small exporters.

“The business community is facing hardship due to changes in advance import payment… Considering their problems, advance payment restriction is eased and the central bank allowed 50 percent advance payment,” he added. “In the latest decision, the SBP allowed 100 percent advance import payment.”

Besides, related to import on open account basis, the SBP governor announced to include commercial importers in this regime. He said that the SBP received several representations from commercial importers to allow open account facility as allowed to other sectors of the economy.

The per project limit for LTFF has been increased by 100 percent to Rs5 billion to counter impact of rupee devaluation. The EFS limit meant for working capital has also been increased by an additional PKR100 billion. Amended foreign exchange regulations to support manufacturing sector.

Almost 100 percent of letter of credit amount can be made in advance for machinery, spare parts and raw materials. Importers other than manufacturers can import on behalf of manufacturers on open account. Pakistan’s exports of goods declined 3.96 percent year-on-year in December 2019 despite cash support and multiple currency depreciation. Exports clocked in at $1.99 billion in December, down 3.96 percent over $2.07 billion in corresponding month last year.

For the six-month period between July and December, exports edged up by 3.17 percent to $11.53 billion, as against $11.18 billion in same half last year. Analysts, however said the numbers are not commensurate with the level of cash support, concessions in utilities and multiple currency depreciations.

Riaz Haq said...

U.S., CHINA, U.K. TOP EXPORT DESTINATIONS FOR #PAKISTAN. #Exports to #US in 1H/FY20 at $2,074.168 million, against $2,018.797 million in 1H/FY19. #China $889.642 million and #UK at $863.347 million in 1H/FY20

The U.S. was the top export destination for Pakistani goods in the first half of the current fiscal year (FY2019-20), while neighboring India witnessed a massive plunge, according to data released by the State Bank of Pakistan.

The central bank’s monthly report on export receipts revealed that total exports to the U.S. during July-December 2019 stood at $2,074.168 million, against $2,018.797 million in July-December 2018, showing a mild increase of 2.74 percent. Similarly, Pakistan exported $936.858 million to China in FY19-20, compared to $889.642 million in FY18-19, an increase of 5.3 percent.

Coming in third, the U.K. received Pakistani exported products valued at $863.347 million during the first half of the current fiscal year, showing a decrease of 3.54 percent from last fiscal’s $895.074 million.

The data issued by the State Bank also revealed that the Pakistani exports to the United Arab Emirates hit $827.731 million in FY19-20, against $638.221 million in FY18-19, a substantial increase of 29.69 percent. Exports to Germany, meanwhile, were recorded at $670.833 million in the current fiscal, showing an increase of 3.64 percent against the $647.285 million recorded last year.

Additionally, the data shows, exports to Afghanistan reached $543.159 million, showing little change from the $534.654 million they stood at last year. Similarly, exports to Spain hit $445.086 million this year against $448.162 million in FY18-19.

Other major trade partners that showed little change in exports between last fiscal and this year were: Italy, which hit $386.969 million in FY19-20 against $379.409 million last year; Bangladesh at $369.313 million this year against $378.193 million in FY18-19; Belgium at $266.187 million (FY19-20) against $301.740 million (FY18-19); France at $222.013 million (FY19-20) against $228.707 million (FY18-19); Singapore at $117.594 million (FY19-20) compared to $130.160 million last year; Canada at $143.424 million against $148.368 million; and Saudi Arabia at $243.213 million against $151.389 million.

Pakistan witnessed a dramatic decrease in exports to neighboring India in the current fiscal, hitting $16.878 million against the $213.655 million that was earned last year. This is a massive drop of 92.1 percent. The reduction in exports is largely linked to ties worsening between the two nations in recent years, especially in light of New Delhi unilaterally scrapping the special autonomy for Jammu and Kashmir that had been enshrined in the country’s constitution.

Riaz Haq said...

#Pakistan #textile sector at full production capacity. “If all goes well, the developments in textile industry support…the government to achieve the set export target of $24-25 billion this fiscal year” #exports #trade The Express Tribune

The textile manufacturing sector – the single largest export-oriented sector of Pakistan – has spiked to full-capacity production after the government withdrew duties and taxes on import of the raw cotton in January.

Besides, Islamabad is getting higher export orders for textiles since China, the single largest textile exporter at world across, is lying closed to fight against the deadly coronavirus for the past couple of months.

“Pakistan (textile sector) is working on full capacity,” All Pakistan Textile Mills Association (Aptma) former chairman Asif Inam told The Express Tribune on Saturday.

“If all goes well, the developments in textile industry support…the government to achieve the set export target of $24-25 billion this fiscal year (July-2019 to June 2020),” he said.

“We don’t have the capacity to take additional export orders these days. We have entered into the capacity constraint zone,” he said.

He said there is a 26% volumetric growth in textiles export. “This (26%) was the capacity in surplus till recent months. The government has fully utilised that,” Inam same.

State Bank of Pakistan Governor Reza Baqir said the other day there was up to 40% volumetric growth in textile exports. Besides, the export of finished goods is on the rise, while export of raw material, including cotton and yarn are on a downward trend, which are positive developments for Pakistan’s economy.

Pakistan has continued to receive good export orders, including in the downstream industry. “The world textile buyers have diverted their purchasing orders to Pakistan since China (70-80% production) is closed to fight against spread of the coronavirus,” Inam said.

The virus has disrupted the world. A significant number of countries have been affected by the virus, as over 2,300 people have died and over 75,000 people got infected.

The official claimed that the textile exports could be doubled over the next five year if the government overcomes the high energy pricing, gas connection and tax refund issues. The Aptma has demanded a long-term five-year textile policy from the government. “Once the government announces the policy, the textile exports will start growing at 10-15% per annum over the next five years,” he added.

Cotton import

He said Pakistan is estimated to import around 7.5-8 million bales (of 170 kilogram each) this fiscal year after local production came almost half of the required 15 million bales in FY20.

They will be record high import in Pakistan. Pakistan has produced around 7.5-8 million bales so far, which comes to around half of the domestic requirement.

“We have so far imported around one-third of the total required quantity of imported cotton at 7.5-8 million bales. We will import around 70% of that over the next two-three months and remaining in the rest of the period of FY20,” he said.

High energy, water costs may push Pakistan’s apparel industry towards crisis

The import of cotton paced up following the government withdrew 3% regulatory duty, 2% additional customs duty and 5% sales tax on import of cotton from January 15, 2020.

The imposition of the duty and taxes on cotton import by the previous government in the centre had put the textile industry in danger.

“The withdrawal of duty and taxes has fully mitigated the risk of decline in cotton consumption in Pakistan.

USAID has recently anticipated increase in consumption of cotton at textile industries in Pakistan. We will use at least 15 million bales this year (FY20),” Aptma former chairman said.

Riaz Haq said...

#Pakistan’s #trade deficit down 27% to $15.7billion in first 8 months of FY 2019-20. In #February, #export jumped 13.6% to $2.13 billion, giving a reason for celebration.Total exports up 3.6% to $15.6 billion in Jul-Feb of current FY. #economy #PTI

Pakistan booked a trade deficit of $15.7 billion in first eight months of current fiscal year, down 27% due to suppression of imports, amid rekindled hopes for the revival of exports that bounced back after contracting for three months in a row.

In February, export receipts showed an increase of 13.6% and amounted to $2.13 billion, giving a reason for celebration to members of the government’s economic team, who immediately started sending congratulatory tweets.

Export receipts in February hit the highest level in nine months. Last time in May 2019, the exports had risen to $2.1 billion, according to Pakistan Bureau of Statistics (PBS) figures.
Since then, exports have fluctuated between $1.7 billion and $2 billion, which does not reflect the true potential. Historically, exports have stayed around $2 billion a month. The Ministry of Commerce took to Twitter to announce the trade statistics, which otherwise is the responsibility of the PBS.

Total exports increased 3.6% to $15.6 billion in Jul-Feb of the current fiscal year, announced Commerce Secretary Ahmad Nawaz Sukhera through his Twitter handle.

In absolute terms, Pakistan managed to increase exports by $547 million from July through February.

The cumulative increase in exports was appreciable when compared with the export trend in Pakistan’s competing countries and the global economic situation, stated the commerce secretary.

Imports during the eight-month period dropped 14.4% to $31.3 billion, according to the commerce secretary. In absolute terms, imports contracted $5.3 billion, which provided some relief for the government.

After the first review, the International Monetary Fund (IMF) projected that the trade deficit of Pakistan in the current fiscal year would narrow down to $24.3 billion, also slightly lowering its projections due to weakening exports.

The IMF had earlier predicted that exports would grow to $26.8 billion but in its latest report the estimate was revised down by nearly a billion dollars to $25.7 billion.

Overall, the trade deficit, which stood at $21.5 billion in the first eight months of previous fiscal year, shrank to $15.7 billion in the same period of current fiscal year. In absolute terms, there was a reduction of $5.8 billion in the trade deficit and 91% of the improvement came from the import side.

Eight-month exports were equal to 58.2% of the annual target of $26.8 billion while imports were equal to 60% of the target of $51.7 billion.

In the ongoing financial year, due to global slowdown and other factors such as Brexit, exports of India declined 1.9% and Bangladesh’s exports fell 5.2% while Pakistan’s exports increased 3.6%, said Aliya Hamza Malik, Parliamentary Secretary for Commerce and Industry.

She said the textile sector was running on full production capacity and food exports were also rising significantly.

Successive governments have been providing subsidised loans, gas and electricity to the exporters but they have always asked for more. The Pakistan Tehreek-e-Insaf (PTI) government has once again reached an understanding with the exporters, promising them to provide cheaper electricity and gas.

Over a year ago, the PTI government had also given huge benefits to the exporters and in return they promised to revive 200 closed units. But no one talked about the revival of units after winning concessions from the government.

On a yearly basis, exports increased 13.6% to $2.13 billion over the same month of last year, a net increase of $256 million.

Riaz Haq said...

Some #Manufacturing may relocate to #Pakistan from #China after recovery from #coronavirus to reduce concentration of supply chain, says Deputy Gov of Pak State Bank.

After recovery from coronavirus, the world is likely to reconsider the global supply chains to avoid concentration of industries in one country, China, which will create opportunities of relocation of some industries to Pakistan, said State Bank of Pakistan (SBP) Deputy Governor Dr Murtaza Syed.

Speaking at a meeting to discuss the impact of coronavirus on Pakistan’s trade, organised by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Syed pointed out that though coronavirus cases were decreasing in China, the infections were increasing in other countries. “By the end of May, the situation may improve,” he added.

The central bank official stated that 50-60% of the factories were closed in China due to COVID-19, therefore, next quarter results would show a decline in economic growth. Last year, the global GDP grew around 3%, which was going to fall this year due to the epidemic, he said.
“Risk appetite is decreasing among investors around the world and money is moving towards risk-free markets like bonds,” he said.

Syed pointed out that England and other developed economies were reducing interest rate to help their markets cope with the impact of the coronavirus.

He told businessmen that in 2018, Pakistan imported electrical and electronic equipment worth $3.09 billion while machinery, nuclear reactors and boilers valuing at $3.09 billion were imported. Both the categories were among major imports from the country. The deputy governor said, “Pakistan also imports around 20% raw material, hence, there is disruption in the supply chain, which our businessmen are overcoming by heading towards other countries to substitute their imports.

“Machinery import is decreasing as Pakistan has completed imports under the China-Pakistan Economic Corridor (CPEC), therefore, currently we have some room. However, due to the decline in machinery imports, progress on the Special Economic Zones (SEZs) is going to be delayed.”

He pointed out that the exporters were also looking towards Africa and European countries to divert their exports. “Recently, oil prices decreased, which is going to have a positive impact on Pakistan, as oil is one of the major commodities imported every year.” In the near future, the situation due to the coronavirus could turn worse, but there was hope in the long term, he remarked.

Speaking during the meeting, The Indus Hospital Infectious Diseases Consultant Dr Samreen Sarfaraz said, “COVID-19 is a storm in a teacup, which is exaggerated and shown as a tsunami.”

“COVID-19 is moderately transmissible and a new viral illness of low mortality rate,” she said. “Roughly, 80% of patients recover without being admitted in a hospital, other 17% recover after admission for supportive care and only 3.4% die,” she said.

“Its pandemic potential is nothing when compared to the influenza pandemics in the past.”

Riaz Haq said...

#China #Pakistan FTA-2: #Pakistan textile #exports to rise to $25 billion in new regional hub. As #coronavirus outbreak puts the globalisation into reverse and challenges existing global value chains, new supply chains continue to form behind the scenes.

With the second phase of the CPFTA, there is a possibility of relocating the production of international brands, many of which have facilities in China that import cotton fabric from Pakistan as raw material—to Pakistan itself. The inflow of Chinese investment in machinery and technology in order to set up production bases in Pakistan will drive innovation and economies of scale, thereby making Pakistan regionally competitive in cotton-based garments. In addition, Pakistan will garner a favourable position for exporting to other markets that have so far been trading primarily with China as well as potentially to other Regional Comprehensive Economic Partnership (RCEP) members.


In January 2020, Pakistan and China entered into the second phase of China-Pakistan Free Trade Agreement (CPFTA2), under which China has eliminated tariffs on 313 priority tariff lines of Pakistan’s export interest. In return, Pakistan has offered China market access to raw materials, intermediate goods, and machinery.

Of the 313 high-priority products that Pakistan can now export without duty payments to China, 130 are from textiles and clothing sector. Reduced tariffs, an expected surge in Chinese investment into Pakistan and the potential shift of production base from China to Pakistan, may change the regional dynamics of textiles trade. The numbers explain how.

Under the CPFTA2, many Pakistani textile products will now enjoy duty-free access to China, which has extended similar tariff reductions to other trading partners - Bangladesh, Thailand and Vietnam among others - under the ASEAN-China FTA. Tariffs on readymade cotton garments (HS codes 61, 62 and 63), have been massively reduced. For example, men’s ensembles of cotton (HS code – 62032200), Pakistan’s top world export, was traded with China at 17.5 per cent (MFN rate) which reduced to 12 per cent under Phase-I of FTA and has dropped to 0 per cent in the Phase-II of FTA. This places Pakistan at a more than equal footing with Bangladesh, and ahead of India which faces a tariff rate of 8 per cent on the export of this product to China.


Pakistan is likely to be preferred over Bangladesh given the former country’s comparative advantage in producing cotton fabric (nearly 25 per cent of Pakistan’s total cotton exports in 2018 were to China); ease of doing business (Pakistan ranks at 108 compared to Bangladesh at 168 and India at 63 under the World Bank’s Doing Business 2020 study); ease of trading across borders (Pakistan ranks at 111 compared to Bangladesh at 176 and India at 68) and ease of starting a new business (Pakistan ranks at 72 compared to Bangladesh at 131 and India at 136).

Pakistan’s government targets raising the country’s textile and clothing exports from USD 13.5 billion in 2018 to USD 25 billion by 2025. As China has the world’s largest textile industry—in terms of both production and export—it is an inevitable trading partner for Pakistan to meet this 2025 target.

For Pakistan, to fully reap the benefits of the CPFTA2, access to cheaper imported inputs will be crucial to its export competitiveness for cotton-based readymade garments.

While Pakistan grows cotton domestically, 37 percent of its cotton imports came from India. After the trade ban between India and Pakistan in 2019, Pakistan began sourcing cotton/yarn from the US and Vietnam, thereby witnessing a rise in cotton prices, amid low production and higher import tariffs (11% from the US and Vietnam, compared to 5 per cent from India for cotton yarn (HS Code 520524), one of Pakistan’s major imports from India).

Riaz Haq said...

#Pakistan #COVID19 #Lockdown Idles Factories. “It’s a pity as February 2020 garment exports increased by over 20%, an all-time record..... March to June it...could be slashed by at least 60-70%..” #textile #garments #exports #economy via @SourcingJournal

There’s a new kind of supply chain disruption in 2020—and it’s the kind that could leave destitution in its wake.

In the past week, key sourcing countries, including India and Bangladesh have put country-wide lockdowns or stay-at-home orders in place, and Pakistan has done the same.

Monday marked the beginning of a two-week lockdown that has all factories in the country, as well as other business producing or selling non-essentials, closed completely. Only medical, food and pharmaceutical facilities are still in operation, in addition to some gas stations and banks that remain open.

While the World Health Organization (WHO) has Pakistan’s confirmed cases at 991, with 104 new COVID-19 virus infections reported in the past 24 hours, local sources say the number of infected persons is closer to 1,100. And the country is trying to stanch the spread.

“All over Pakistan it’s a complete lockdown in all the provinces everywhere,” Hafiz Mustanser Ahmed, managing director of Lahore-based factory U.S. Apparel & Textiles, told Sourcing Journal Thursday. “The transportation when it comes to taking the employees to the factories or the public transportation, it’s all 100 percent closed. All the factories are closed.”

For now, moving goods back and forth between the ports and Lahore, Pakistan’s second-biggest textile manufacturing hub after Karachi, is still allowed, but there simply aren’t many goods to move, said Ahmed, whose factory produces denim bottoms for Levi’s, Target, H&M, J.Crew, Primark and Costco, to name a few.


“It will happen. Nobody can stop this,” Ahmed said. “In this part of the world, where Pakistan is operating, where Bangladesh is operating, the governments are not rich at all so they don’t have that much sufficient funds available with them. They won’t be able to pay for the salaries for them… For the workers who are on the piece rate, it’s going to happen because there are no pieces to produce, and the workers on the daily rate, it’s going to happen, and the workers who are on the salaries, it’s going to happen there as well.”

In the coming days, the government is expected to announce details of support package for workers, which could include food rations and subsidies for utilities. Factories, however, may not see funds to help facilitate their operations, though Schlossman said some duty refunds are being paid back to factories to partially ease the financial impact.

For now, retailers who are still willing to accept goods they had ordered, the government in Pakistan is making concessions to certain factories to deliver them.

“If you have a product that is almost ready for dispatch and if my customer is accepting the product, [the government] is allowing us to partially operate the factory to deliver those goods,” Ahmed said, noting, however, that the allowance is granted by application and under strict rules for the temporary operating period. Workers cannot stand too close to one another, buses shuttling them from home to work can only transport a limited number of passengers, the factory must have thermometers on hand to take workers’ temperatures, and immediately on dispatching the goods, the closure goes back into effect.

Riaz Haq said...

Coronavirus challenge and Pakistan’s exports

According to statistics released by Pakistan Bureau of Statistics, exports increased 13.82% year-on-year in February 2020. Amid a global slowdown in trade, exports from Pakistan have increased by 3.65% in the current fiscal year. Imports have continued to decline, registering a decrease in value of 14.06%.

The trade deficit in the first eight months of FY20 was 26.52% lower than the same period of FY19.

Interestingly, although exports increased sharply in February 2020 in terms of year-on-year and month-on-month growth, the decline in imports became much more subdued. Imports decreased 1.71% only over the same period of previous fiscal year.

Therefore, as the value of imports stabilises after reaching its apparent trough, the linkage between exports and imports must be maximised in order to ensure that Pakistan optimises its participation in international trade activities.

In essence, exports from Pakistan have shown a reversing trend as a general declining trend has now turned positive. Exports had declined from $25.1 billion in 2013 to $23.6 billion in 2018.

On the other hand, exports to the EU increased from $6.3 billion in 2013 to $8 billion in 2018.

This suggests that the unilateral trade incentives provided by the EU to Pakistan in the form of GSP Plus status did help boost export sales to the region and limit what otherwise could have been a complete decay of the export sector between 2013 and 2018. The trade linkages established between Pakistani exporters and their clients can help increase exports and tap newer markets as supply chains are threatened due to the spread of the coronavirus.

Pakistan must continue with its policies to boost total exports. Although the growth in global trade is likely to slow down this year, Pakistan must consider developing its export sector to take advantage of opportunities as a result of challenges reported by the large manufacturing powerhouses.

Riaz Haq said...

#Pakistan, #China universities sign agreement on #textile cooperation between National Textile University (NTU) Pakistan and #Shanghai University of Engineering Science (SUES) of China| Associated Press Of Pakistan

An agreement on textile cooperation was jointly signed by National Textile University (NTU), Pakistan and Shanghai University of Engineering Science (SUES), China last week.
According to SUES, NTU is the very first Pakistani partner for SUES, and the move is of great significance when it comes to the educational exchanges and cooperation between universities of South Asian countries involved into China’s Belt and Road Initiative (BRI), China Economic Net reported on Friday.
Xia Jianguo, the President of SUES, noted that the signing ceremony was SUES’s first move of international cooperation ever since the COVID-19 outbreak. The iron-clad friendship between China and Pakistan has laid a solid foundation for the cooperation and exchanges between both universities.
President Xia spoke highly of the competences and characteristics of research and talent training in NTU regarding textile. Over the years, SUES has conducted a wide range of international exchanges and cooperation with overseas universities and enterprises, he mentioned, adding that he firmly believed the cooperation would provide both with more opportunities for common development.
Prof Dr. Tanveer Hussain, the Rector of NTU, expressed his heartfelt thanks to SUES for the arrangement and preparation for the video signing ceremony.
He said NTU has been the premier institute of textile education in Pakistan, meeting the technical and managerial human resource needs of almost the entire textile industry of Pakistan ever since its inception.
What is more, he expressed full confidence and keen expectation for a long-term cooperation between the two universities in multiple levels and fields.
The signing ceremony was held in video form. Directors from SUES’s Office of International Cooperation and Exchange and the Institute of Textile and Garment were present.

Riaz Haq said...

#German international brand Hugo Boss places first order for sportswear with a #Pakistani #garment manufacturing company. #exports #RMG

Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood on Tuesday said that well known brand, Hugo Boss has placed its first order of sportswear to a Pakistani company. “Happy to note that well known brand, Hugo Boss, has placed its first order of sportswear to a Pakistani company,” the Adviser said on Twitter. He attributed this achievement due to the effort of Pakistan Readymade Garments Manufacturing and Exporters Association (PRGMEA) for holding the 35th IAF Fashion Convention in November last year, in Lahore.

The International Apparel Federation’s (IAF) 35th World Fashion Convention was held in Lahore on November 12-13, 2019, in collaboration with Dutch industry association Modint.

German fashion house Hugo Boss is known around the world for its smart men’s suits. It manufactures clothing and accessories internationally and has various products, such as eveningwear, shoes, leather goods, eyewear, watches, perfumes, and children’s fashion. It recently launched more casual and sportswear styles in order to attract younger people, making major investments in online products after its attempt to go upmarket failed some years ago.

In another Tweet, the Adviser said that Pakistan’s exports had reduced less as compared to other countries of the region due to the Covid-19 pandemic. He said that Pakistan’s exporters had performed well in last fiscal year despite slowdown in economic activities due to the Covid-19.

“I want to congratulate all our exporters on the good performance in 2019-20, in spite of the very challenging situation caused by Covid,” he said and added that Pakistan’s exports were only 6 percent less than 2018-19, while our regional countries Bangladesh was down 17 percent and India down by 14 percent.

This good performance was also due to the timely lifting of the lockdown and the good coordination between federal and provincial agencies at the daily meetings of NCOC. Our exporters deserver every praise for their effort, hard work and reaching out to our customers, he added.

Riaz Haq said...

#Pakistan Denim Manufacturers Are Cautiously Optimistic About Recovery. Pak denim industry experiencing “a surge of orders,” due to “pent-up demand for garments, particularly from Europe.” #exports #garment #jeans #denim via @SourcingJournal

Most industries in every country have been adversely effected by the coronavirus. In Pakistan, however, the textile industry is among the hardest-hit sectors.

“Pakistan textile industry is a key exporter for the country accounting for more than half of all overseas shipments,” said Tricia Carey, Lenzing’s director of global business development-denim.

In a recent Carved in Blue webinar, Carey moderated a conversation with representatives from denim fabric and garment manufacturers in Pakistan, checking in on the status of their business and how they plan to navigate the challenges that lie ahead.

With more than 200,000 confirmed cases of the coronavirus, the country remains on a “smart lockdown” that requires shopping malls and restaurants to be closed, but essential businesses and export industries have received permission to operate under strict guidelines, explained Hasan Javed, director of Artistic Garment Industries (AGI).

AGI resumed business slowly at the end of April. Initially, Javed said, the main focus was to implement training and awareness sessions held in small groups at the facility about how to conduct work safely under the new guidelines.

“It took some time for everyone to get used to the social distancing rules and the ‘new normal’ as they say,” he said. “Now in the last few months we have gradually ramped up our production, and at the moment we’re running close to 80 percent [capacity].”

The goal for July, Javed added, is to run at close to full strength, both on the fabric and garment side of AGI’s business. “We’re fairly optimistic about the next couple of months,” he said.

Business in Pakistan has improved since April when the country was in a total shutdown, said Rashid Iqbal, Naveena Denim Lahore (NDL) executive director. NDL’s production is running at 40-50 percent capacity and Iqbal expects those numbers to hold steady for July.

Momentum is also building for Azgard Nine Ltd. Ahmed Humayun Shaikh, CEO of Azgard Nine Ltd., said the company is experiencing “a surge of orders,” which he attributes to “pent-up demand for garments, particularly from Europe.”

But he warned that this flurry of orders is fleeting. “I don’t think we can expect the pandemic to actually increase demand so it will settle down at some reduced rate once people get what they need,” Shaikh said.

When markets do finally resume at a normal level, executives anticipate that Pakistan will regain its share and perhaps be in better standing in the global denim market.

“The reason being, when it comes to the supply chain Pakistan is the fifth-largest cotton growing country in the world with a fabric capacity of 500 million meters a year,” Iqbal said. “We’re very ideally placed.”

To fully realize this this opportunity, Iqbal said agility is going to be the “name of the game.”

However, in order to be agile, companies may want to eliminate the number of suppliers essential to production.

As brands recover, Crescent Bahuman Ltd. representative Zaki Saleemi said companies will want to simplify their suppliers and inventories, which may bode well for Pakistan’s crop of vertical denim manufactures.

“We are a lot more vertical than a lot of other countries,” he said. “Vertical is key.”

Shaikh agreed, adding that customers want goods quickly because “they’re nervous and they want to fill the shelves.”

Riaz Haq said...

Is Pakistan’s Growth Rate
Balance-of-Payments Constrained?
Policies and Implications
for Development and Growth
Jesus Felipe, J. S. L. McCombie, and Kaukab Naqvi
No. 160 | May 2009


The basic premise of the BOP-constrained growth model is that in the long run, no
country can grow faster than the rate consistent with balance on the current account,
unless it can finance evergrowing deficits. Indeed, if imports grow faster than exports, the
current account deficit has to be financed by borrowing from abroad, i.e., by the growth
of capital inflows.6 But this cannot continue indefinitely. The seminal paper is Thirlwall


This paper examines the extent to which Pakistan’s growth has been, or is
likely to be, limited or constrained by its balance-of-payments (BOP). The
paper begins by briefly considering the BOP-constrained growth model in
the context of demand and supply-oriented approaches to economic growth.
Evidence presented suggests that Pakistan’s maximum growth rate consistent
with equilibrium on the basic balance is approximately 5% per annum. This is
below the long-term target rate of a growth of gross domestic product of 7–8%
per annum. This BOP-constrained growth approach provides some important
policy prescriptions for Pakistan’s development policy. Real exchange rate
depreciations will not lead to an improvement of the current account. Pakistan
must lift constraints that impede higher growth of exports. In particular, it must
shift its export structure to products with a higher income elasticity of demand
and sophistication.


Pakistan’s output growth rate since the 1960s has averaged 5.3% per annum, and
2.5% in terms of productivity growth. While these figures are respectable by world
standards, they are not so impressive compared with those of the East Asian economies
when they were at a similar stage of development in the late 1960s. In the 1950s and
1960s Pakistan started transforming from a poor agricultural economy into a rapidly
industrializing one; yet it never subsequently achieved growth rates similar to those of
the Asian tigers or, more recently, the People’s Republic of China (PRC). The country’s
Poverty Reduction Strategy (April 2007) has targeted a growth rate of gross domestic
product (GDP) of 7–7.5% per annum for the next decade. The question that naturally
arises is whether this is feasible or whether it is a hopelessly overoptimistic target. If
the former, what are the necessary policy measures that should be taken to ensure this
outcome? If the latter, what impedes higher growth?


In particular, there are concerns about the changing composition of output and the rise
of substantial deficits on the current and fiscal accounts. In 2001–2003, export growth
made a significant contribution to GDP growth. But in 2004–2007, when the growth rate
was higher, consumption, investment, and government expenditure were the largest
contributors. From the supply side, the service sector was the largest contributor to GDP
growth (Felipe and Lim 2008). Exports plus net factor income from abroad has fallen as
a percentage of GDP while the rapid growth has sucked in imports. This is reminiscent of
the early periods of high growth in the 1980s and 1990s when there were also significant
deficits in the current account. In fiscal year 2007–2008, the current account deficit
rose to 8.4% of GDP. This has led to a serious BOP crisis. As a consequence, rating
agencies Standard and Poor’s and Moody’s downgraded Pakistan. This will have serious
consequences for overseas borrowing.2

Riaz Haq said...

Readymade Garments Exports Increase By 18.04%

The Readymade Garments exports during first month of current financial year increased by 18.04 percent as compared the corresponding period of the last year.

According to Pakistan Bureau of Statistics (PBS), the Readymade garments exports worth US $274,246 thousand in first month of current financial year to US $232,327 thousand of the same period of last financial year.

During the period from July 2020, exports of Art, Silk and Synthetic textile increased by 14.

01%, worth $28,388 thousand as compared the exports valuing $24,900 thousand of same period of last year, it added.

Meanwhile, Madeup Articles exports increased by 26.04%, worth $60,805 thousand as compared the exports of valuing $48,244 thousand of the corresponding period of last year.

During the period under review, buses, Other Textile materials exports increaseed by 66.46%, valuing $48,758 thousand exported as compared the export worth $29,292 thousand of same period of last year.


Garment orders move to Pakistan, as COVID bites India, Bangladesh
However, the garment sector in the country is facing a severe shortage of yarn due to a shortage of cotton.

As the coronavirus pandemic continues to spread unabated in India and Bangladesh, garment orders from international markets are rapidly shifting towards Pakistan.

However, the garment sector in the country is facing a severe shortage of yarn due to a shortage of cotton.

As per reports, the development comes at a time when export orders are declining in Pakistan's neighboring countries due to the COVID pandemic, there is a flurry of export orders for Pakistan's garment sector, as India and Bangladesh, affected by the pandemic, have not yet been able to produce and deliver goods to European and American markets on time.

This has pushed the entire production pressure of the textile industry on Pakistan's textile exports.

However, there exist a major hurdle for the local industrialists to take advantage of this opportunity, as they say, that they are worried about the shortage of raw material, especially yarn, for the orders received by the garment sector.

Industrialists say that the international client gives 35 to 40 days for shipments but the local mill is giving them three months' time.

Exporters say that if the government does not take immediate action, not only will orders from rival countries stop moving to Pakistan, but local industrialists will also lose out to permanent buyers.

Riaz Haq said...

Textile exports decline 15pc YoY in August
Pakistan's textile and clothing exports clocked in at $1bn in Aug 2020, as compared to $1.19bn in Aug 2019

Pakistan’s textile exports have shown a 15 per cent year-on-year decline in August FY21, as compared to same month of the previous fiscal.

According to data released by Pakistan Bureau of Statistics (PBS) on Monday, Pakistan’s textile and clothing exports declined by over 15 per cent year-on-year in August 2020, from $1.19 billion in Aug last year to $1.007 billion.

The textile industry boasts a significant presence in Pakistan, being the largest manufacturing industry and the largest export earning sector. It contributes 8.5 per cent to the gross domestic product (GDP) of the economy and employs 45 per cent of the labour force in the country.

Exports in the textile sector have dipped in the second month of the current fiscal year after posting a growth in the first month. The Covid-19 has severely hampered the demand for the country’s textile exports during the last five months.

Earlier, it was only in February when the textile and clothing exports jumped nearly 17 per cent YoY. This growth was reported after a long time as the past few years had been marred by single-digit increases.

Details showed readymade garments exports declined by 13.74pc in value and drifted much lower by 51.83pc in quantity during August, while those of knitwear dropped 10.65pc in value and 27.2pc in quantity, and bed wear posted negative growth of 12.29pc in value and 25.52pc in quantity.

Towel exports fell by 10.12pc in value and 15.85pc in quantity, whereas those of cotton cloth dipped 17.91pc in value and dipped by 33.42pc in quantity.

The government lifted the ban on exports of seven products classified as personal protective equipment (PPE) in a bid to allow manufacturers to honour international orders.

Among primary commodities, cotton yarn exports dipped by 51.36pc, while yarn other than cotton by 100pc. Export of made-up articles — excluding towels — declined by 5.82pc, and tents, canvas and tarpaulin increased by a massive 34.07pc during the month under review. The export of raw cotton declined by 94.4pc during the month under review.

The import of textile machinery dropped by 30.27pc during the second month of the current fiscal year — a sign that no expansion or modernisation projects were taken up by the textile industry during the month.

The country’s textile and clothing exports posted a negative growth of over 6pc year-on-year to $12.526bn in the fiscal year 2019-20 compared to $13.327bn in the corresponding period last year.

Riaz Haq said...

Pakistan performed better than India in apparel exports to the United States in February 2021.

Pakistan had an outstanding performance among apparel export destinations globally during February, according to Sourcing Journal, a credible source for textile sector information.

“We were the only main exporter with increased apparel supply to America during Covid-19,” said Adviser to PM on Commerce Abdul Razak Dawood in comments to The Express Tribune.

Pakistan was on top position in the list of countries that export textile, according to a report released by Apparel Resources, another international platform that gives insights into apparel industry exports.

Normally, India and Bangladesh perform better than Pakistan but this time Pakistan has fared better than its neighbouring countries despite all the challenges of Covid-19 faced worldwide.

Although the apparel import value of the US, a prominent destination for textile exports, decreased 8.7% year-on-year to $5.39 billion in February 2021, its volume increased 3.2% and Pakistan was on top of the list of countries which witnessed a hike in their apparel exports.

Other countries that recorded growth in exports included China, Bangladesh and Egypt. Pakistan and China managed to increase their apparel shipments to the US both in terms of value and volumes.

“Pakistan is showing the world that we are a reliable supply destination,” Dawood emphasised.

India, Vietnam and Indonesia experienced a decline in apparel exports to the US both in value and volume terms.

The PM aide added that government policies for the textile industry played a significant role in exports. “Our vision is to promote ‘Make in Pakistan’,” Dawood remarked.

Even though the country is performing well in textile exports, it is facing many challenges to keep up with the performance. The biggest hurdle is the decrease in cotton production in the country, which is the main raw material for the textile sector.

The country is facing shortage of around half of its requirement of cotton, estimated at seven million bales. Giving in to the pressure from the textile industry, the government recently allowed duty-free import of cotton yarn.

During the pandemic, the medical segment of textile industry such as bed wear also grew as bed sheets were discarded frequently, said DH Corporate Research Lead Karim Punjani.

After coronavirus, the world learnt the lesson regarding supply chain sustainability, which indicated that no country should rely on only one destination for imports, he said.

“Countries now want to diversify their supply chain and this is a good chance for Pakistan to grab its share in countries which imported products from other countries previously,” the analyst added.

“This will be a challenge for Pakistan; either it increases exports through existing companies or helps new players to venture into this sector.”

Through its policy, Pakistan can encourage foreign direct investment in this sector by inviting companies to move their factories from other countries to the free economic zones in Pakistan.