The State Bank has raised serious questions about declining trend of exports despite huge supply of subsidised loans to the sector and termed the situation as gravely disappointing. The negative export growth during the current fiscal year turned into a demand for more subsidized loans and incentives to the exporters.

According to a research study conducted by the ABN Amro Bank, the softness in export earnings is led by the textile and clothing sector, the underlying trend is not confined to textile and clothing (T&C) exports alone. T&C exports have registered a cumulative decline of 9% for July-October 2006, while export receipts from non-T&C manufactures have fallen by 34% over the same period.

The export refinance amounting to Rs138 billion were released to the banks during the period July 1, 2006 to November 18, 2006 as against Rs120 billion released during the same period last year, thus showing an increase of 15%. The State Bank’s figures of supply of huge subsidized loans also reveal that the exporters have consumed refinance more than last year but the output is negative. It again supported the doubts that the real export growth is being deliberately hidden to get more subsidized loans.

Textile exporters keep on complaining against the high cost of production in Pakistan and high rates of electricity and gas and high wages in relation to productivity of labour and of lower prices of exports from India and Bangladesh, not to talk of China’s exports.

Independent foreign institutions have cautioned that Pakistan’s powerful textile and clothing industry was misusing export earnings for speculative real estate business to present a gloomy picture of foreign trade for getting maximum subsidies from the Government. The trend already had a negative impact on the manufacturing sector and created structural problems in the overall economy.

In the post-quota regime, the era of concession is fast diminishing; global trade is swiftly marching towards a level playing field. Instead of relying on governmental concessions, the textile management needs a paradigm shift. To improve the workers working conditions and wages, Bangladesh garment industry leaders have recently persuaded foreign buyers to agree to higher prices for ready-made garments. Most of foreign buyers such as Wal-Mart Inc and JC Penny etc are willing to raise prices if factories ensure social compliance.

However in Pakistan, textile workers are the most neglected, particularly women who get the lowest wages besides having no protection of job as only 2% workers have appointment letters while the rest work on daily wages, as stated at a seminar on textile policy organised by Sustainable Development Policy Institute (SDPI).

Fashion trend is a key element in the business of value-added clothing or garment. Fashion changes quickly, at least twice a year in developed markets. However in Pakistan, experts believe that industry does not keep pace with changing trends. Falling exports of value added textile products is due to its in ability to keep pace with latest fashion trends. Garment designing is critical to boosting exports and it is vital that the industry should focus on it.

Over the years, Pakistan is said to be the single crop economy i.e. cotton textile that claims the lion’s share in terms of the contribution in the national economy. Despite the $6 billion investment under Balancing, Modernisation and Replacement (BMR) programme and creation of new capacities over the last six years, growth in textile exports has been slowing down, which pushed the government to design such a policy, that may offer incentive to manufacturers and make the industry competitive. The proposed textile strategy will encompass the production of 20.7 million bales of cotton by 2015, production of standardised and clean cotton, balancing the value-chain by enhancing the weaving capacity, issues related to technological up-gradation throughout the value-chain, product diversification and development of compatible infrastructure.

The proposed broad features of the strategy also include providing a level playing field to the domestic industry viz-à-viz its competitor (countries), improved transport and communications, infrastructure and network, skill development and capacity building of the existing and the future human resource, as also studying trends in the international market to cater for the high end-product markets, especially women garments. On the other hand the Textile Ministry is also considering more incentives for textile industry to make its products more competitive in the international markets.