Energy problems to curtail export target

The textile industry will have to suffer power shortfall, while 5.56% additional gas tariff has added further to the cost of production. The textile industry is already finding it difficult to cope with power interruption, and with a  5.56% increase in gas tariff, its problems are multiplied many folds.

Textile sources said that according to estimates these problems would curtail the export target for 2007-08 by 13.65%. Total imports of the United States into Pakistan are around $100 billion, whereas our share is just $4 billion.

The increasing cost of production and the poor quality have raised prices by 12% as compared to the regional competitors.

For example, textile exports target of Bangladesh for the current fiscal year is $9 billion, and the country enjoys 'zero' percent rate of duty on its imports in EU market, being least developed country.

Moreover, the cost of production in Pakistan is 30% more than that of Bangladesh. The gas prices of Bangladesh are 50% less than that of Pakistan. In this context, the best way to reduce the cost of production in Pakistan is to subsidize the gas tariff to almost 20%.

The cross-subsidy of 30% is harmful for industrial growth in Pakistan, as a handful of industrial users bear the burden of subsidy to 165 million domestic consumers. This policy of the government renders the export-oriented industry uncompetitive in the international markets.

According to the Government, the Trade Policy 2007-08 aims to boost export of textile products to $17 billion in the next five years from the current $10.8 billion. However, considering the current crisis the textile industry is passing through nowadays, no doubt would affect the textile export for the year 2007-08.