PAKISTAN’s textile and clothing exports have contracted and the influential industry lobby group Aptma is back with its endless demands for more energy subsidies. Textile exports posted a decline of 3pc year-over-year and a 10pc fall on a month-over-month basis in July, according to new PBS trade data. The industry’s exports have been dropping for the last two years, stagnating at $16.3bn-$16.6bn. As always, the textile lobby puts the blame for export decline on rising energy costs. But it is not just that. The textile exports trajectory shows that the industry has not been able to boost its foreign sales in terms of quantity, in spite of availing large energy subsidies over the last couple of decades. The upsurge in exports, post-pandemic or earlier in the 2010s, resulted mostly from soaring global commodity prices. Once commodity markets declined, textile export earnings also shrank.

A study of the post-pandemic performance of Pakistan’s textile and clothing industry by the Economic Advisory Group think tank found that 70pc of the increase in the dollar value of textile exports was simply due to a rise in global prices. The remaining 30pc came from an increase in the quantity of textile exports on the back of growth in global demand. Rising production costs have indeed affected the competitiveness of Pakistan’s industry but the latter’s failure to use massive government support — in the form of energy subsidies and cash rebates — to move to high-value segments, diversify products according to global trends and demand, upgrade technology to become efficient and reduce costs is more to blame for the stagnation in this sector. Other regional competitors, such as Bangladesh and Vietnam, have done that to capture a much bigger market share, despite being late starters. Bangladesh’s textile and clothing exports have reached $47bn and attracted significant FDI over the last two decades. With the recent political instability in the country threatening to push Bangladesh’s textile sector into a crisis, some textile leaders have claimed that they could fill the vacuum if the government reduced energy prices for the industry. The fact is that more than 80pc of Bangladeshi textile exports comprise readymade garments. With the apparel sector constituting just a fifth of Pakistan’s total exports, we do not have the infrastructure or products to replace Bangladesh even if the opportunity arises.

Published in Dawn, August 17th, 2024