Dagha says fall in exports a ‘big challenge’ for Pakistan

Federal commerce secretary Muhammad Younus Dagha said on Wednesday that the sharp fall in Pakistan's exports is a "big challenge" for the country, but added that the textile sector must regain its original place on the world markets by scaling up innovation of its products, better branding and higher output.

The trade secretary hinted at bringing in a policy to ensure food security, especially wheat and sugar through increased cultivation space for cotton. He said that policy deals with wheat and sugar cultivations, two of the country's major food crops, needs a fresh approach.

"Without compromising food security, the cultivation area for cotton has to be increased," Dagha said. He was addressing textile manufacturers and exporters at the PHMA House at a discussion. He said that duty drawback schemes like DTRE were significant benefits for exporters but they failed to yield results because they lacked implementation.

He said that the government is engaged in lobbying for the extension of Pakistan's GSP-Plus regime in the European Union, which is ending next year. He agreed with the complaining textile exporters on refund problems that have hurt both output and businesses, saying the payback system needs to be smoothed.

However, he made it clear to the exporters that the government should not expect to do "everything" for the private sector as it is genuinely responsible for policy farming. He said that the textile sector never made an effort to carry out research to boost its product innovation, branding and production growth, which cost it to lose its share on the world market against regional nations.

"Everything the government cannot do and too much demands from the government is also unjustified," Dagha said, adding that the government in its textile package has set a seven percent duty drawback, which is a kind of incentive for value-added textile sector. He said that ninety percent of the textile sector's concerns are genuine but citing high cost of production as the only reason for the fall in export is unjustified.

He said that the country's largest textile sector badly needs conversion of its manufacturing into innovations and fashion trending to attract the world buyers. On the other hand, he said, the regional competitors mastered the skill to introduce new garment products in world markets.

Pakistan's productivity is much less than that of its competitors, he said, suggesting that growth in output is also needed for a higher number of exports. He said that the textile sector also failed to attract fresh investments while the real estate market is flooded by investors.

He mentioned financial insecurity in Pakistan as another reason for low exports, saying that investors in Bangladesh and India bring back their savings to their own countries, while the local businessmen send their earnings out once the country falls into a crisis. With real estate, he said, the investors also find stocks exchange a better place to trade in shares for greater returns.

Dagha said that the GSP-Plus status has helped the country's exports with an increase of 53 percent to EU markets, which has fetched some $2 billion in additional revenue for the national exchequer.

He also told the exporters not to compare Pakistan's exports with those of Bangladesh, since that country enjoys duty-free access as "the Least Developed Country" in importers including the EU, Canada and Turkey.

The government has started a project naming "Brand Pakistan" to promote a soft image of the country abroad, he pointed out, saying that Expo Pakistan is scheduled to be held in Karachi in November, to attract global buyers and investors.

He said that five effluent treatment plants to be set up across industrial zones of Karachi, which are financed by the federal and provincial governments with equal shares of 50 percent.

Earlier, Muhammad Jawed Bilwani, chairman of the Pakistan Apparel Forum, said that the government should bring down the soaring cost of manufacturing to bring it at par with those of the regional competing countries and introduce a separate tariff slab for textile sector.

"Pakistan's Industrial Gas Tariff is 126 percent higher than Bangladesh, 62.87 percent greater than India and 26.5 percent higher than Vietnam. Pakistan's Industrial Electricity Tariff is 22.2 percent higher than Bangladesh and India and 37.5 percent higher than in Vietnam," he showed through presentation.

Water rates in all other cities of Pakistan are 0.50 dollars, while in Karachi the charge is $2.30. Pakistan's wages are 110 percent higher than those of Bangladesh, 24.21 percent than India and 25.8 percent than Vietnam, he added.

"Strategic Trade Policy Framework 2015-18 has failed to achieve it desired targets to enhance exports to $35 billion and to improve exports competitiveness," he said, adding that the government, therefore, should set realistic targets to revise the trade policy keeping in view the facts and taking the relevant stakeholders on board.

He proposed the government to found Textile Export Promotion Council besides regulating the five zero rated export sectors under an Act instead of SRO system. He urged the government to declare Value Added Textile Sector as a federal subject without any intervention of the provinces. He also demanded a cross-subsidy for textile sector to offset its financial losses amid soaring output cost.

Muhammad Zubair Motiwala, Chairman, Council of All Pakistan Textile Association (CAPTA) suggested to the government to appoint international consultants to study the impact of cost of business of Pakistan in comparison with the regional countries. He set out long, short and medium plans to the government to help rebuild textile sector.

"India is practicing a strong lobbying in the EU, USA and across international market, in addition to bringing reforms in cultivation of cotton and various other reforms. He also asserted upon the need of taking Pakistani business delegations to important countries particularly USA to meet the congress and senate," he said.

He urged the government to discourage the export of yarn and raw materials. He also proposed that the incentive, which the government pays on export of yarn, should extend to local vendors on its sales on domestic markets. "Competition in the world market becomes tougher as the competitors like China and Bangladesh are getting Pakistani yarn at 4 percent lesser cost than the Pakistani exporters," he said.

Those exporters attended the meeting include: Irfan Z. Bawany, Chairman, PHMA, Rafiq Godil, chairman of PAKSEA, Khawaja Usman, Chairman, PCFA, Umair Mianoor, Junaid Makda; Baber Khan, Akhtar Yunus, Jabbar Gajiani, Kamran Chandna, Javed Akhtar.

(Source : Business Recorder)