KARACHI: Pakistani textile millers have said the country will not be able to achieve its $26 billion export target for the current fiscal year amid an economic crisis in which manufacturers are struggling to obtain raw materials due to import difficulties.
During the past three quarters due to Pakistan’s economic difficulties, central bank foreign exchange reserves have dropped to a level barely able to cover four weeks of imports. As a result, letters of credit (LC), used for imports, are facing delays while being processed and priority is being given to essential items such as food and medicine.
The South Asian nation, heavily dependent on the textile industry, has seen a continued decline in its exports since October 2022. Textile exports reduced by 11 percent to $11.24 billion during the first eight months of the current fiscal year, from $12.60 billion last year.
The cash-strapped country’s textile exports decreased by 28.1 percent to $1.2 billion on an annual basis in the month of February 2023, compared to $1.67 billion recorded in the same period last year, as per data released by the All Pakistan Textile Mills Association (APTMA) on Monday.
On a month-on-month (MoM) basis, $1.2 billion worth of exports during February 2023 indicates the lowest monthly export figure of the country since May 2021, when exports were recorded at percent1.05 billion.
“Overall exports are estimated to remain between $16 billion to $18 billion as textile millers find it extremely difficult to open LCs for imports of cotton and machinery,” APTMA chairman Asif Inam told Arab News on Wednesday.
“Now, the opening of LCs for import of cotton and other spare parts has become a daunting task and a big mission.”
Pakistan exported textile goods worth $19.32 billion during the last fiscal year, FY22, which was 25.5 percent higher than the previous year.
The APTMA chief said millers were expecting export growth after the sector’s expansion last year but the current situation was keeping them from reaping the benefits of expansion.
“Textile exporters were eyeing a $26 billion exports target for the current fiscal year after they brought in machinery and expanded their operational capacities by 30 percent,” Inam said.
“[But] instead of reaping the fruit of expansion, we are going in [the] opposite direction.”
The textile sector contributes over 60 percent to Pakistan’s overall exports and remains the largest employment-generating industry in the country.
Amid the ongoing ecnomic crisis in Pakistan, however, its textile competitors, which include India, Bangladesh, and Vietnam, are taking advantage as export orders to Pakistan have been diverted to these countries, the APTMA chief said.
“Export orders are diverting from Pakistan as the buyers have come to know that the country was suffering from shortages of raw material,” Inam said.
Sohail Pasha, chairman of the Pakistan Textile Exporters Association, agreed with the APTMA chief, saying that under the current circumstances, Sindh and Punjab’s textile mills were operating at around 50 percent and 70 percent capacities, respectively.
“There are three key deterrents,” Pasha said. “The global recession-like situation, high electricity cost at home, and opening of LCs [are] playing a discouraging role in the exports from Pakistan.”
