Soaring cotton prices impacts towel exports

The soaring prices of cotton yarn and export refinancing issues are believed to have brought down the export of various kinds of towels by 36.27% during August 2007 as compared to the same period of the last fiscal year 2006. According to the exporter’s lack of a proper system in the local market to maintain the price level of cotton yarn steady, the cost of production had reached its peak in recent years, which is thought to be a core factor behind the decline of towels export. The other issue for such a slump in export was the unavailability of the export refinancing by the banks. The official figures said that during August 2007, the total export of towels was US $41 478 million as compared to US $65.079 million during the same period of the last financial year 2006, recording a decline of $23.601 million.

Similarly, during the first two months of the current fiscal year ie July-August 2007, the export stood at US $85.089 million against US $115.972 million during the same period of the last fiscal year 2006. This shows a slump of 27% or $30.883 million. Expressing disappointment, one of exporter said that in spite of State Bank of Pakistan's clear directions to all banks to provide the exporters with soft loans for export purposes, they were not able to acquire them for various reasons, which badly discourages them. He further said that "banks are already earning 13% profit on loans, but were reluctant to provide it on 7% to exporters despite State Bank's directions.