Devaluation to hit value-added textile sector adversely

Value-added textile exporters said the rupee depreciation will increase the cost of doing business and affect the sector adversely.

The rupee has devalued approximately 20.16% against the US dollar from Rs123.6 to Rs149.07 in just 9 months of the current government. Talking to media Central Chairman Pakistan Hosiery Manufacturers & Exporters Association (PHMA), Jawed Bilwani said the cotton yarn is available at the international price.

“Devaluation increases cotton and yarn price in rupees. Following the US dollar appreciation, we have been facing problems in importing machinery for which orders had been placed earlier on,” he said. “If we are not in a position to import machinery, how can we increase exports and GDP,” questioned the PHMA chief. He added that foreign buyers are demanding discounts due to the devaluation of the Pakistani currency.

Mr. Bilwani said the price of cotton yarn is cheaper in Bangladesh as compared to Pakistan due to the lower cost of utilities. “Most of the inputs – dyes, parts, chemicals, petroleum products, accessories, packing materials – used by us are also imported. As such, due to devaluation, their costs will also increase, resultantly increasing the cost of exportable goods,” he summed up.

An exporter Haji Salamat Ali said Pakistani exports need a level playing field to compete with rival countries which are rapidly increasing their market share. “Fluctuating rupee rates have become a source of tension for the value-added sector as the cotton yarn is the main raw product,” he noted. We were already facing the issue of chemical rates and availability due to an explosion at a Chinese chemical factory which was catering to the needs of 70% of the world, he added.

Raza Hussain, a garments exporter, said spinning mills are earning money by increasing the prices of yarn since the government is not focused on speculative buying and prices of the yarn.

Chairman Council of All Pakistan Textile Associations (CAPTA) Zubair Motiwala said rupee devaluation would hit the manufacturing sector hard. “Under the current situation, the industry will have only two options – either close down or increase price of manufactured goods further and become more uncompetitive in the international market,” he said.

He said the profit margin of value-added textile exporters is hardly 3% to 4%. Only exporters of raw materials – cotton and cotton yarn – benefit from devaluation, he added.


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