KARACHI, Aug 12: Textile operators are apparently taking a pause before moving ahead with new investment and imports to reassess the outcome of their investment made so far to meet the challenges of a fierce price-war in the international export market following the expiry of textile export quota regime.

Official trade statistics show that imports of textile machinery fell by almost 17 per cent in the fiscal year 2005-06 to $771.46 million as compared to $928.60 million in 2004-05. This fall comes as an anti-climax to the $5 billion investment made in the last five years by the textile and clothing industry in “expansion, new plants and technological upgradation”.

“The textile and clothing sector is in deep crisis. It is no longer a myth,” wrote an industry leader to the federal textile minister in May this year to push ahead the industry’s case with a plea of Rs50 billion concessions, subsidy and government assistance just before the budget presentation.

For unknown reasons, the government took more than eight weeks to respond positively to the textile industry demand. The government ignored the plea contemptuously in the budget for 2006-07. Minister of State for Finance Omar Ayub Khan in his budget speech on June 5 did not make even a casual reference to the textile industry. Later, the government snubbed the textile industry leaders in a post-budget meeting in Karachi. State Bank Governor Dr Shamshad Akhtar used polite words to convince the textile leaders of financial implications on their demands. The prime minister too preferred to ignore the demand in the Export Promotion Board meeting.

And then abruptly, the Economic Coordination Committee of the cabinet decided to come out in July with an announcement to accede to the textile industry demands. The total impact of concessions being sought by the textile industry comes to about Rs25 billion. The rate of interest on export refinance and on export-oriented textile units had been brought down and would be met from State Bank’s profits at the end of the day.

With all indications of a good cotton crop after the recent rain, the textile operators are gearing up to begin their operations from next month. “The most ideal situation would be consumption of the entire bumper cotton crop by the local spinners, entire yarn by the domestic value-added industry, including weavers, and consumption of entire fabric by the local garment industry,” a top garment exporter desires.

Enquiries made with banks reveal that the textile operators are asking for an increase in their credit margin in the coming season in anticipation of a good cotton crop and expected good orders from their buyers. As had always been, the focus remains on the 25 EU member countries and the United States, which together absorb as much as 56-58 per cent of Pakistan’s more than $9 billion textile export. Pakistan is looking for a $10 billion plus textiles export in the fiscal year 2006-07.

Market diversification is now a key strategy to explore Africa, South America and Far East by Pakistan’s textile operators. Markets exploration visits are being finalised at the government level. About a dozen top textile houses are already in touch with their buyers all over the world. The tough competition is not only coming from China, India and Bangladesh but also from Malaysia, Indonesia and even Vietnam and Thailand.

“July is not the month to judge textile export performance,” a top textile manufacturer and exporter said, adding that these days the textile exporters are gearing up their production chain to commence operations from next month and are also involved in hectic negotiations with their buyers abroad.