KARACHI, May 26: Pakistan earned a handsome $3 billion through textile exports in the last four months, analysis of data released by the Federal Bureau of Statistics show. The $3.048 billion worth of textiles exports during January-April 2005 puts the average monthly exports at $762 million —- up 22.1 per cent from the average monthly exports of $623.8 million during July-December 2004.

“This huge improvement can be attributed to the phase-out of the textile quotas from January this year,” says Mr Majyd Aziz, himself a textile exporter and ex-chairman SITE Association of Industry.

“We could have done wonders had the EU not imposed anti-dumping duty on bed wear and reintroduced customs duty,” he said. In ten months of this fiscal year i.e. during July-April 2004-05, Pakistan’s textiles exports rose to $6.791 billion up about three per cent from $6.594 billion in July-April 2003-04.

The imposition of 13.1 per cent anti-dumping duty on bed wear coupled with re-imposition of 12 per cent customs duty on textile exports from Pakistan to the EU from January this year have restricted exports growth. “Our bedwear exports to the EU in particular and other textiles exports in general have been hit badly,” laments Mr Shabbir Ahmed, chairman of Pakistan Bedwear Exporters Association.

Bedwear exports fell more than 5.4 per cent to $1.087 billion in ten months to April 2005 from about $1.15 billion in a year-ago period.

Overall textiles exports of $6.791 billion during July-April 2003-05 forms 59 per cent of Pakistan’s total export earnings of $11.529 billion. Because of this high contribution of textiles in the country’s overall exports, the government is considering offering certain incentives to this sector in the next budget due to be presented on June 4.

Textile tycoons say the budget will be textile-friendly but they do not disclose the nature of the incentives this sector is going to get. Offering incentives to textiles and other major export-oriented sectors of the economy would be just natural for the government as it is battling to keep balance of payments deficit as low as possible. The government had set $13.7 billion target for exports during this fiscal year, up from $12.3 billion in the last year.

The government and the State Bank estimate that exports would reach to somewhere $14.2 to $14.6 billion. The private sector also says these are realistic estimates. “As external trade normally rises faster in the last two months of the fiscal year, it would not be very surprising if exports reach near $14.2-$14.6 billion,” says Mr Majyd Aziz adding that a pick-up in exports of certain categories of textiles provides reason for optimism.

Exports of cotton cloth, knitwear, towels, readymade garments, made-ups and other textile manufactures not individually identified have shown sufficient growth in 10 months to April 2005. Exports of towels, for example, increased by 30 per cent to $417 million from $320 million. Similarly, exports of cotton cloth and knitwear rose by 10.3pc and 14.7 per cent to $1.527 billion and $1.327bn respectively during July-April 2004-05, from $1.384 billion and $1.157bn during July-April 2003-04.

Textile exporters say exports of cotton cloth, knitwear and towels have grown mostly after the elimination of quantitative restrictions on textiles exports from January this year. “Our exporters were more than ready to grab a larger share of the market in the post-quota regime,” says Mr Majyd Aziz, referring to the $4 billion plus investment in textile sector in the last three years and reshaping of marketing strategies by top exporters. Some of them went for joint ventures the others made equity participation in importers’ companies or developed linkages with them. On top of all, exporters also managed to win a price war waged fiercely in the post-quota regime by textiles exporting countries including Pakistan and India.

They did all this in spite of rising cost of export finance coupled with higher tariff for gas, water and power and amidst a general deterioration in infrastructure facilities. Ex-president of the Federation of Pakistan Chambers of Commerce and Industry Mr Riaz Ahmed Tata believes that if Pakistan wants to sustain the post-quota growth in textiles exports, it will have to keep the cost of production low. This, he says, can be done by disallowing frequent increases in export finance rate and by making utilities available at affordable costs. Export finance rate or the rate at which exporters borrow money for up to six months from banks shot up to 8 per cent in May from 3.5 per cent at the start of the fiscal year in July 2004.

Export finance rate is set to rise further next month as the SBP goes ahead with aggressive tightening of interest rates to contain inflation.