Garments export may fall $300m on yarn shortage

No orders received for Feb 2010, says industry representative

Friday, December 18, 2009
By Shahid Shah

KARACHI: The value added textile sector fears that export of readymade garments may decline by around $300 million owing to shortage of yarn in the local market.

Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Mohsin Ayub Mirza told The News that in the value added textile sector they sell their products 120 days in advance but due to shortage of yarn, no orders were received for February 2010.

He said that owing to shortage of yarn around 20 per cent fall in export of knitwear and 10 per cent in woven garments is feared. If the situation persists there would be a decline of around $100 million in export of woven garments, $140 million in knitwear and $60 million in towels.

Export of cotton and cotton yarn increased by more than 30 and 23 per cent respectively in September and October. Export of cotton cloth, bedwear, towel and tents also recorded a significant growth whereas export of knitwear and readymade clothes slightly decreased in this period.

Raw cotton recorded export of 25.72 million kilograms in October against 17.92 million kilograms in September while cotton yarn export increased to 73.36 million kilograms in October against 56.18 million kilograms in September.

All Pakistan Textile Mills Association Chairman Anwar Ahmed Tata said the spinning industry was facing shortage of raw cotton but they had never demanded a ban on export of cotton and it was expected that about one million bales or 8.5 per cent of total production of cotton would be exported this year.

He said that the government has earmarked more than 90 per cent out of the Rs40 billion incentive package in the textile policy for the value added sector.

The APTMA chairman demanded the government not to intervene and take any short-term measures because the consequences would not only hurt the spinning industry but also the value added sector and the whole economy.

All Pakistan Textile Mills Association (APTMA) Chairman for Sindh-Balochistan Region M Yasin Siddik said it was time that our value added sector realised that Pakistan was not only competing on the basis of prices but also on the basis of quality, especially in products which were made from coarse counts yarn like denim, bed ware, cotton cloth and towels.

Pakistan Apparel Forum Chairman Jawed Bilwani demanding capping of yarn export said: “Our competing countries like India, Bangladesh, and China were also signatories of WTO, yet they were conscious of the importance of their value added textile sector and its exports and had been taking bold steps to protect this sector.”

India, WTO member since 1995, imposed quantitative capping of exports of cotton yarn from 1993 to 2002 besides imposing quotas on cotton yarn exports, Bilwani said.

Bangladesh, WTO member since 1995, slapped a ban on exports of jute on 7th December 2009 to protect the local spinners converting jute by way of value addition.

China, WTO member since 2005, increased export duties of 74 textile categories including Flax Single Yarn in 2005 and in addition to this it is giving subsidy in the form of 16 per cent export rebate for labour intensive textile and garment industries.

Bilwani said even Pakistan from 1988 to 1995 imposed export tax on raw cotton for development of cotton yarn industry. The aim was to reduce price of cotton fibre. The scheme was successful and from 1988 cotton export decreased substantially while production and export of yarn increased.

He said that now it is time to go one step forward to next level in value addition and impose restriction on exports of cotton yarn for development of the value added textile industries.

Production of cotton in the world is less than the last year except India, which has 3 million bales surplus than its requirement. Cotton price in the local market has increased by 31 percent to Rs4,500 per maund from Rs3,400 in two months only.

Total production of yarn was about 2.9 million tonnes or 240,000 tonnes per month in 2006-7, around 3.0 million tonnes in 2007-08 and 2.6 million tonnes or 215,000 tonnes per month in 2008-09, which was the year of recession. Current production of yarn for the four months of this year is around 240,000 to 245,000 tonnes with the re-opening of 20 closed mills.