Business

Pakistan's Textile Exports Unlikely To Pick Up Soon

Pakistan's textile exports were down 37% in May, cotton yarn sees the steepest decline, readymade garments and linens the least Pakistan's textile exports stood at US$ 751 million in May 2020, a 37% decline when compared to the exports worth US$ 1.19 billion in May of last year. This was the second successive month of massive reduction in textile exports amid the global pandemic. In fact, all categories of textile exports witnessed double-digit declines. Exports of cotton yarn saw the steepest decline, from US$ 107 million in May last year to US$ 52 million in May this year, or a 51% decline. Highest value areas like garments (which stood at US$ 252 million last May) and knitwear (which stood at US$ 274 million last May), declined by 46% to US$ 136 million, and 34% to US$ 181 million this May respectively. The category of bedwear experienced the least amount of shock, but even that segment declined by 22% year-on-year from US$ 188 million to US$ 146 million. The solace for the industry is that May was not as bad as April. That particular month, which saw exports decline by 65% year-on-year to US$ 404 million, represented a historic, multi-decade low. Lockdowns across the world, and delayed shipments to major markets are the obvious factors that resulted in this steep fall in exports. According to analysts, the base level of April was so low, that May figures look like a solid rebound: exports in May shot up 86% when compared to April. Every single export segment showed a double-digit month-on-month increase, with segments like towels and garments increasing 127% MoM and 121% MoM respectively. It is important to note that the actual share of the composition of segments has remained unchanged. So in May, knitwear remained at 24%, bedwear at 19%, readymade garments at 18%, cotton cloth at 13% and others at 25%, respectively. On a monthly basis, the share of textiles in total exports in Pakistan declined to 42% in April, and 53.8% in May. If one looks at the period of the first eleven months of the fiscal year 2020, the share of textiles in total exports of Pakistan remained unchanged at around 59.5%, compared to 59% for the same period last year. However, during that same eleven month period, textile exports were down by 6% year-on-year to US$ 11.6 billion, with double digit declines in yarn and cotton cloth (13% and 12% respectively), while categories like knitwear and garments also stayed firmly negative. According to Lakhani, textile exports are expected to recover gradually from the lows of April and May, but remain lower on a yearly basis over the next few months. Analysts suggest developing new channels and products for exports, such as masks and PPEs, while simultaneously ensuring adherence to safety SOPs on the domestic front to ensure the situation does not worsen. However, while the Pakistani textile industry has somewhat reoriented itself towards exporting masks and creating PPEs, the orders are simply not enough to make up for the loss in other segments. In reality, exporters find these orders to be non-repetitive, with low margins. Textile industry associations in the country have asked the government to competitively price energy, lower sales tax, and have the turnover tax reduced from 1.5% to 0.5%.