‘’A textile exporter gets almost Rs70 for every dollar he earns as against Rs63 for a dollar by a non- textile exporter, an analyst from a well-known brokerage house said. He based his calculations on the subsidies, discount on bank credit and export refinance facilities for the textile exporter.
But now when the overall economy has come under stress of rising current account deficit, inflation, weakening rupee, interest rate spiral and other political, social and economic factors, the non-textile sector appears to be hard pressed. Engineering and sports plus a few other industries are somewhat under stress, struggling to maintain their growth momentum.
Clustered mainly at Sialkot, Wazirabad, Gujranwala, Gujrat, Multan, Lahore and Karachi, these small and medium-size enterprises enjoy very little support from the government or the banks. Nonetheless, these ‘’less affluent cousins’’ of the big business, have showed an export growth of 174 per cent in the eight years since 1998-99.
An analysis of Trade Development Authority of Pakistan (TDAP) shows that about two dozen categories of items clubbed under the ‘developmental and all others’ group netted about $2.4 billion in 2006-07 as against a little over $900 million in 1998-99. In the current fiscal year, all these items are set to net in more than $3.5 billion. The total non-textile export this year is expected to be over $7 billion while that of textile is projected to be close to $12 billion.
‘’For last three years, the share of textiles in total exports is falling while that of non-textile is on the rise’’, Sher Afzal, a furniture exporter from Gujrat informed Dawn over telephone. Furniture is slowly emerging on Pakistan’s export map. The government’s target for furniture export in the current fiscal year is $15 million out which more than $7million have been earned in the last eight months.
Sher Afzal is confident that his sector will net in about $12 million export earnings despite many problems of his trade. ‘’Wood is hard to get’’, he complained. Timber is mostly coming from China, Manaymar or some other far away countries. Like all other trades, furniture too is under heavy taxation and duties. Its export in 1998-99 was only $4 million which increased by nearly three times to $11 million by 2006-07.
Furniture makers in Gujrat, Siallkot and even in Karachi complain of banks’ reluctance to finance them even against confirmed and booked export orders. There are as many as 36 accessories needed in furniture-making. Most of these are imported and carry taxes. ‘’Refund of taxes against exports is one of the most painful, expensive and time-consuming job, ‘’ a Karachi furniture-maker said.
As one of the biggest clusters of small and medium-size enterprises. ‘’Sialkot generates more than $1 billion of export every year’’, claimed Dr Nouman Idress Butt, a former president of the Sialkot Chamber of Commerce. The city is home to sports, surgical instruments, sport wears, leather goods, cutlery and few other industrial products.
Pakistan owes its present status in the world of sports to Sialkot which is considered to be one of the biggest hubs of sports industry business. Pakistan’s soccer balls are popular at international tournaments but sell at low prices compared to the balls made by the international manufacturers of sports goods. For long, there was a stigma of child labour attached to domestic sports industry.
‘’We have phased out 5,000 to 7,000 children from our industry, ‘’ Dr Butt disclosed and added that all these children have been educated and trained. Many of them now gainfully employed in Sialkot and other parts of the country, of course after attaining adulthood. A full-time Child Labour Monitoring Centre in Sialkot keeps a strict vigilance. Foreign buyers are now more positive to Sialkot-made soccer balls and Dr Butt hopes about 100,000 soccer balls will be exported this year.
The government has set an export target of $325 million for sports goods as against actual export of $288 million last fiscal year. In last eight months, exports fetched $186 million. Apparently, the target will not be met and even last year’s level of exports will be difficult to maintain.
‘’We are under tremendous stress,’’ Mohammad Akhtar, President of the Sports Goods Manufacturers Association said. However, he is confident about the potential of the industry. The industry is in process of upgrading its production quality and a research and development centre with Rs400 million investment is being set up to help the industry make more responsive to world market needs. ‘’We plan to go for manufacturing laminated balls for soccer, ‘’ Dr Butt added.
The engineering sector also shows promising growth. The exports of engineering products grew by 350 per cent in eight years from $63 million in 1999-98 to $282 million in 2006-07. The official planners have projected engineering goods export at $10 billion by 2010. But the situation right now is that even a modest target of $325 million set for 2007-08 looks difficult to achieve. Actual exports in last eight months are $159 million and industry leaders are not sure of even earning $200 million by June next.
Tariq Ikram, Chief Executive, Trade Development Authority takes credit of the phenomenal growth in the non-traditional exports. ‘’Back in the year 2000-01 we worked out a strategy to promote overall exports with emphasis on textiles and equal focus on non-textiles’’, he claimed. It was on his initiative that tabulation methodology of export statistics was changed drastically.
He attributed the indifference of both the government and the business in addressing the fundamental issues during 1999-2005 when textile and apparels grew at a fast pace, showing an increase of more than $5 billion that ensured cash flows and revenues to the present pathetic situation of textile industry. ‘’Today, with earnings not increasing, and the government revenues under pressure, it may difficult to invest in textiles” Tariq Ikram said.
No doubt, Pakistan’s exports have doubled from those of the last decade-- from $8 billion in 1998-99 to over $17 billion now. But according to Mirza Qamar Beg, a former Vice Chairman of Export Promotion Bureau (now renamed TDAP), the rise in exports does not match the export growth of many other countries. Moreover, the exports as a ratio of international trade and of GDP has fallen. The share of exports in total trade has declined to 36 from 43 per cent. Export growth is coming down from 22 in 2003, 16.8 per cent in 2005 and 13.8 in 2006 to less than six per cent this year.
‘’It is our competitive disadvantage that is at the heart of the problem,’’ Mirza Qamar Beg asserts while pointing out that the main drivers — human resources, technological inflows, supporting institutions — are weak and not improving fast enough.