The textile sector would face worse difficulties in 2023 than in 2022!
The textile sector accounts for more than 60% of Pakistan’s exports, but total exports were only $487 million as of February 2023, showing a 29% decrease from the previous year. Muhammad Jawed Bilwani, Chairperson of the Pakistan Apparel Forum and Principal Coordinator of the Value-Added Textile Forum, claims that the export business has been ignored by the government despite repeated requests.
Bilwani points out that the government’s conduct and behavior, such as the unavailability of petrol, lack of unbroken electricity supply, restrictions on opening Letters of Credit (LCs), and excessive delays in refunds to exporters, have negatively impacted the textile industry. Rising energy costs have also made some units non-competitive and forced others to shut down.
Bilwani also highlights additional problems caused by the industry’s downturn, including the all-time highs reached in the rupee-to-dollar parity, the inflation rate of 31.55%, and the government’s discontinuation of the Regionally Competitive Energy Tariff, suspension of DLTL under the Textile Policy, and delays in sales tax refunds. Furthermore, the government’s limits on the import of raw materials have made production more expensive and unviable for running and exporting.
Pakistan’s ranking in ease of doing business has declined to 108th in 2020, and it is likely worse now. According to a recent global analysis by the World Trade Organization, Vietnam, China, and India have the lowest production costs in textile manufacturing nations in Asia. Bangladesh ranks sixth due to the daily rising cost of manufacturing in the midst of local currency and economic indicator instability, while Sri Lanka ranks tenth. Pakistan is not included in the list.
Bilwani concludes that Pakistan’s textile sector is facing serious obstacles, and the government must act quickly to support it.