While the volume of export orders for Christmas in Europe and the US remains largely unchanged this year, foreign buyers are complaining of a sizeable drop in their domestic sales and building up of imported stocks.

“Christmas and New Year’s sale is on in the two continents and our buyers are reporting a dismal business this year’’, says a top home textile exporter who sees serious problems head.

“Only big business houses have managed to get Christmas orders from the West but many small producers of knitwear, garments, towels and other value added goods have either closed down or are winding up their businesses,’’ a knitwear manufacturer said.

“Real crunch is coming for summer and spring sales as buyers are now demanding a drastic cut in prices from us’’, Iqbal Ibrahim, Chairman of All Pakistan Textile Mills Association (APTMA) informed on telephone.

Textile exporters say that they start getting Christmas orders sometimes in March-April. Servicing of these orders begins in September-October. In November, exporters complete all shipments and gear up to receive orders for coming spring and summer.

Not only in textiles, but also in leather, sports goods, sports wears and other items, big departmental stores in Europe and the US are finding it hard to maintain Christmas sale volumes of last year. Unemployment is on the rise and there is a severe liquidity crunch in the market.

“There have been mergers of a few mega chain stores in the US and Europe which have strengthened their bargaining position with us,’’ a top exporter of readymade garments from Karachi said.

An almost 22 per cent fall in dollar-rupee parity in last few months has given enough cushion to exporters “to meet at least their local expenses,’’ to quote an official of textile ministry. Businessmen say that foreign buyers were shrewd, well-informed and used their bargaining muscles to extract fully the benefits of currency depreciation.

“Don’t forget there is 15-20 per cent imported ingredient in export products and freight cost has also gone high,’’ retorted Shabbir Ahmad, a leader of bed linen industry. He agrees that a fall in rupee value against dollar has given exporters some relief but has also contributed to production cost. Aziz Memon, a leading garment manufacturer and exporter, blames ‘tentative approach’ of the government in dealing with problems of the textile industry that has affected the export business.

“What prices I could have quoted to my buyers in March-April 2007 when there was no idea whether the government would continue research and development rebate facility in 2008-09 fiscal year or not’’? For almost half of this fiscal year, the government has kept exporters on tenterhooks on almost all issues--R and D rebates, utility charges, dollar-rupee parity, he added. Big business houses can survive even in a tentative environment as they can absorb some minuses and pluses in trade but the small ones are in process of being out of business. Textile exports, once 64 per cent of total foreign sales of merchandise exports, are now down to 51 per cent and the non-textile sector is catching up. In the first quarter 2008-09, export of textiles plus raw cotton amounted to $2.72 billion against non-textiles’ foreign sales of $2.54 billion.

Indications of coming slump in export prices are somewhat visible in the average unit prices obtained by exporters during the first quarter. The statistics provided by Trade Development Authority of Pakistan (TDAP) reveal that average unit price of garments were down at $38.48 for a dozen in July-September 2008 as against $39.13 same period last year. Similiarly, knitwear price averaged $17.76 a dozen as against the comparative rate of $19.70. Bed ware was exported at $5.17 a kilogramme as against $5.70. Towels were quoted at $3.73 for a kilogramme as against $4.27. “It is a virtual across the board downslide in prices,’’ Shabbir Ahmad said. He reckons that the fall in average unit prices of these products would be sharper during October when official figures are released in next few days.

But a far more steep fall in export prices is feared during January-June 2009 if exporters and government fail to divert their markets from EU and the US to other countries--Russia, Central Asia, East Asia, South Asia and the Middle East.

“Finding a foothold in a new export market and then consolidation needs a lot more hard work and investment,’’ a senior official in the commerce ministry explained while informing that several initiatives have been taken and many more are on cards. But the situation is not so dismal for exporters. The cotton crop is good and prices are coming down. It is sure to bring down production cost in textiles. On Thursday, the official announcement for compensating spinners with a concessional long-term financing was made by the federal cabinet. State Bank Governor Dr Shamshad announced 100 per cent export refinance after private banks indicated reluctance to give even 30 per cent of refinance at 7.5 per cent rate.

It is a new profit earning window for banks as State Bank will give these banks financing at three per cent. Banks will earn 4.5 per cent on 100 secure export refinance business. The APTMA Chairman wonders as to why banks are being pampered by a government that claims to bring about a policy shift from demand-led to production-led growth.

The anti-dumping duty on Pakistan’s bed linen import in EU is expiring in March next year and if EuroCotton does not receive any complaint by December, Pakistani exporters will stand to gain.

And then, the EU is coming out with a new GSP plus policy from January 2009. The unfolding of new GSP policy for next five years may be able to create more room for Pakistan’s exports to 27 EU countries. These are all the expectations of the export strategists.