ISLAMABAD, July 16: Pakistan’s textile and clothing sector export price has nosedived to the lowest level among the leading exporting countries preventing fresh investment in the sector necessary to improve competitiveness and productivity.

Sources told Dawn on Wednesday that the previous government’s policies of subsidising the export price of textile and clothing sector resulted not only in lowering of consumer price of the products but it also painted Pakistan as the cheap supplier to the world market.

“The import of textile machinery is on decline for the past few years. This shows that no body is re-investing in the sector,” an industry source said.

Analysts said that before promising any further subsidies package for the sector the government should carry out audit of the biggest recipients of the research and development (R&D) to identify the impact of the subsidy on growth in export and reinvestment.

Statistics showed that the government dolled out more than Rs43 billion subsidies under R&D during the past three years for increasing export of the sector.

They said that the re-finance scheme for export is another big subsidy, which is also one of the sources for fuelling inflation in the country. The long-term financing facility is also a subsidy available to the sector.

Having low unit price of textile and clothing resulted into lower profits, which actually blocked fresh investments in the new technology, the source said adding the low unit price also resulted into low return on equity, low capital formation, and ultimately low quality products.

An official report said Pakistan’s share of high value-added products (apparel) is lower than low value-added products (non-apparel) in the 27-member bloc of European Union and the United States. While Pakistan’s competitors like China, India, Bangladesh and Vietnam are exporting high-value added goods more than lower value-added goods.

In the USA, Pakistan is fetching lowest Sme (square meter) price of its cotton products ($0.91) as compared to India ($1.9), Bangladesh ($2) Vietnam ($3) and China ($1.5).

This showed that unit price of Pakistan ($0.9) is half of the world unit price ($1.8) in USA. The same trend has been witnessed in the EU market negating the textile tycoons’ claims of competition in international market.

This shows that the high price is not the problem of Pakistan textile sector but the problem is the low price.

Pakistan’s export of textiles and clothing (T&C) to the EU and the USA accounts for 68 per cent of its total T&C exports.

Statistics showed that Pakistan’s share in world export of T&C amounted to 3.1 per cent and 1.2 per cent, respectively, in 2004. The position is almost the same after the dismantling of the quota regime.

This showed that Pakistan’s share in global export of T&C is neither commensurate with Pakistan’s status of cotton producer nor reflects its potential despite the fact that Pakistan is the fourth largest produce of cotton.

Traditionally, Pakistan is the supplier of low quality and low value-added products as compared to its competitors, which was further aggravated by subsidising the export price during the past few years.