March 10, 2002	Sunday	Zilhaj 25, 1422

LAHORE, March 9: Fabric exporters say the reduced unit price in the international markets and the abrupt appreciation in the value of the rupee against the dollar following the Sept 11 events has drastically eroded their profits in the second quarter of the current fiscal year.

Our viability has been hit very hard since the Sept 11 events although exports (of all types) of fabrics, including grey cloth, have gone up 9.7 per cent in terms of quantity in the first seven months of the current fiscal year (July-Jan) over the same period the previous year, leading fabric exporter Javed A. Siddiqui told Dawn here on Saturday. On the other hand, the average unit price plunged by 9.4 per cent in the same period to $0.60 per square meter from the last year’s $0.66.

In the first seven months of the current fiscal year, Pakistan exported 948 million square metre of fabric worth $568.100 million as against 864 million square metre for $567.446 million during the same period last year.

The situation has been compounded by the sudden and abrupt fall in the value of the greenback against the rupee since Sept 11, causing massive dent in their profitability (in terms of rupees) and also their economic profitability in the 2nd quarter of the year (Oct-Dec), says Siddiqui.

His own weaving mill, a medium-sized facility, saw its profits for the 2nd quarter declined to Rs160,000, which is some 1/10th of the money made by it during the same period last year.

It’s a common trend in the (weaving) sector, he says. The unit prices of fabric are steadily coming down from over $1 per square meter in 1995-96. In the FY2000-01, the profits fell 80 per cent. This is despite the fact that quantity has continued to increase.

Siddiqui says: “If you look at the export figures or taxes given by the mills, you would never be able to judge the impact (of the reduced) unit prices on the viability of the mills. Since the tax is paid on the total sales revenues, it has remained more or less the same. On the other hand, the cost of doing business in Pakistan and the price of utilities has also moved up.”

He demands that the government should provide the exporters of grey cloth the refinance facility. The central bank has “allowed” the facility to those exporters whose unit price is $3 per square meter. It is useless because no (quality of) fabric exported from Pakistan fetches that much high price, he says. The unit price of grey cloth is even lower than the average unit price of fabric.

Siddiqui asserts that though the fundamentals have improved in the shape of stronger rupee against the dollar, improved (foreign exchange) reserves, and low inflation rate, the benefits have not reached the business community so far. The cost of bank credit is still high. The government must put pressure on the banks to make them reduce their rates. Besides, the exporters should be allowed duty drawback at the old rate to enable them compete in the world markets and restore their viability.