KARACHI, Oct 21: Time is apparently running out for Pakistan’s textile exporters, who after having failed to achieve a proportionate export target of $3.83 billion in the first quarter of this fiscal year, are finding it extremely difficult to earn $4 billion plus in the next quarter -– Oct-Dec 2006.

A slump in textile export has led to wide speculations and a few media reports blamed the textile exporters for a slowdown in the business. Textile exporters react sharply to these observations. “No businessman will back out from servicing an export order if he can do it within a stipulated time,” Aziz Memon, a big name in garment export, remarked.

Shabbir Ahmad, a leading bedwear exporter, said: “A deliberate slowdown in export means losing a customer in the international market and increasing your own financial cost and in final counts losing your face in the market which no businessman would like to do. It is not a slump in textile exports, but the decline is virtually across the board that conveys something is terribly wrong with our trade and business policies,” he said.

Textile export is projected to earn $11.5 billion this fiscal year, up from $10.1 billion during the fiscal year 2005-06. The planners pinned their hopes on a bumper cotton crop, which apparently will be substantially less because of extended monsoon in September. The lingering and unending problems of textile trade rooted in outdated and obsolete management practices as bulk of the business controlled by `seths’ is another cause of being uncompetitive.

Not satisfied with the relief package of about Rs30 to Rs40 billion offered to them by way of export rebates and concessions on loans mark-up, after the presentation of budget 2006-07, the textile business is desperate to get more concessions and is not happy with what they perceive late deadline by end-Dec fixed by Prime Minister Shaukat Aziz for the Steering Committee of the high-powered Textile Vision 2015 Committee to submit its report.

“We will lose our export orders which we find difficult to comply because of a rise in production

cost,” said Aziz Memon. “Once we lose a market after having failed to service our booked orders, it is next to impossible to get back there again,” he made it clear.

“We don’t need any concessions or relief but an even-playing field in the business,” asserts Mr Memon, adding that Pakistan textile exporters are being discriminated in the European market where a large number of countries have relatively easy access because of these countries being less developed or for other considerations.

In case of the US, a number of countries have free trade agreement (FTA) and, therefore, they get zero rating treatment on entry of their products into the American market, whereas for Pakistan the rate of duty ranges from 11 per cent to 18 per cent.“We did raise these points with a team of American negotiators at US consul general’s office in Karachi this month,” he recalled and revealed very soon Malaysia would end up with an FTA with the US. “We are clubbed with China and India in the US market,” he explained to assert his point that in China and India, the textile business enjoyed unlimited support in form of subsidies, tax concessions and reduced cost financing plus a relatively less energy cost and cheap labour.

Trade union leaders say that a big number of textile mills thrive on stolen electricity and water and workers are paid lesser amount than what is due to them legally. In large number of textile establishments, there is no social security for the labour. “This is how they cut on their production cost,” a trade union leader explained, adding that a weak legal system and ineffective labour laws give all opportunities to the factory managements to deny workers their due legal obligations.

Market analysts say that textile tycoons are uncomfortable because of a reduction in their profits and a realisation that they are falling back in competition not only in the international market but also in the domestic market where the Chinese, Thai and Indonesian textile products are making big inroads.

An analysis of first two months -— July and August -– export reveals that only yarn has performed better. The government has set a target of 1$.6 billion for yarn export against which the proportionate target for two months was $213 million. The actual yarn export exceeded target and earned $248 million.

But the exporters of value-added textile products are not happy with the rise in yarn and fabrics export that makes these products expensive for them in the domestic market and help their competitors in foreign countries reduce production cost in towels, bedwear and garments.

Except for yarn, the export of all textile products -— fabrics, garments, bedwear, towels and other products -- is lower than the targets set for each of this product.

Cotton has started trickling in ginneries, and mills have also started booking their orders for cotton. The estimate is that the mills will import at least three million bales of cotton and India remains one of the options for which.

Overland transportation is being considered. But cotton import will depend on export orders booking and rates of dollars in kerb markets where the rupee is coming under increasing pressures because of rising trade imbalance and widening deficit in current account.

The analysts say that Pakistani exporters are finding it difficult to respond to the challenges of international market after January 2005 following the phasing out of textile export quota regime. For more than five decades Pakistan business thrived on a captive market and a greenhouse environment. It is facing competition for the first time.

“Very soon Pakistan business landscape will be littered with dead and dying business houses,” a senior business leader predicts. He also points out that those companies that will withstand this tough period are bound to go a long way and grow.