ISLAMABAD: Pakistani exports registered a decline in July due to energy and raw material shortages to industry amid a deteriorating economy, industry insiders said, urging the government to notify electricity and gas tariffs for export-oriented sectors at the earliest.
The South Asian nation has been struggling to boost its exports to keep the current account deficit in check. In recent months, the country has seen massive energy shortages due to the failure to import gas from the international market in a timely fashion.
“Our exports have plummeted some $500 million in July purely due to energy shortage,” Shahid Sattar, secretary-general of the All Pakistan Textile Mills Association, told Arab News. “There is a significant gap between the demand and supply which needs to be fixed at the earliest.”
Last week, the government agreed to provide electricity at $9 cents per kWh and RLNG at $9 per MMBTU all-inclusive to export oriented sectors including textiles, jute, leather, carpet, surgical and sports.
“The government has yet to notify this tariff for the industry which is causing panic and delays in delivering the export orders,” Sattar said.
The textile sector is a backbone of Pakistan’s economy, with a 60 percent share in the country’s total exports. Its contribution to gross domestic product is 8.5 percent and it provides employment to around 15 million people.
Pakistan’s textile exports have recorded an increase of 28 percent to $17.6 billion in the first 11 months of this fiscal year, according to the Pakistan Bureau of Statistics data, but energy and fuel shortages are hampering efforts to further boost exports.
“If the situation doesn’t improve, our exports will continue to decline, leading to unemployment and closure of the industry,” Sattar said, adding that the industry’s raw material, machinery and spare parts were stuck at ports due to a government ban on imports. This, he said, was yet to figure in to the exports data.
Samiullah Tariq, research director at the Pakistan-Kuwait Investment Company Limited, said the recent dip in the exports could be seasonal since historically Pakistan’s exports remained high in June and dropped in July, the last month of the financial year.
“The US and Europe that are Pakistan’s main export destinations have been facing an economic recession, so this could impact our exports growth,” he told Arab News.
Talking about the depreciation of the Pakistani rupee, he said depreciation would help the industry get new orders and focus on value-addition to increase the exports.
“This is a good time for the industry to get new orders and boost ” exports,” he said.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) said the export-oriented industry was facing raw material shortage as the government had restricted imports due to falling foreign exchange reserves.
“The rupee is getting stable against the US dollar now and hopefully the economic indicators will improve with disbursement of IMF tranche,” Suleman Chawla, acting president FPCCI, told Arab News.
“The government should try to bring down the energy prices for the industry and improve other related infrastructure like roads to facilitate the exports,” he added.
