Pakistan’s textile sector is bringing cheer to its flailing economy, with exports set to swell to a record after gaining an edge over South Asian rivals during the COVID-19 pandemic.
Textile exports are poised to surge 40 percent from a year earlier to a record US$21 billion in the 12 months ending in June, said Abdul Razak Dawood, commerce adviser to Pakistan’s prime minister.
Dawood said that the figure would expand to US$26 billion in the next fiscal year, surpassing the nation’s total exports last year, he said.
Photo: EPA-EFE
The textiles industry — which supplies everything from denim jeans to towels for buyers in the US and Europe — is one of the country’s few economic bright spots. Textiles amount to about 60 percent of Pakistan’s exports, and the nation allowed its factories to open ahead of India and Bangladesh when the pandemic emerged in 2020, drawing orders from global brands including Target Corp and Hanesbrands Inc.
“A lot of orders actually were shifted from Bangladesh and India to Pakistan” during the pandemic, Dawood said. “The other good thing that’s happening is we are now becoming competitive with Bangladesh. Three, four years ago, Bangladesh was really beating us.”
The government also plans to announce a proposal next month to provide incentives for exports to new markets such as Africa, South America and Central Asia, Dawood said.
The nation is doubling down to boost textile exports through measures including tax breaks, cheap loans and supplying electricity at rates comparable to rivals in South Asia. A 60 percent decline in the local currency against the US dollar since 2018 has also helped.
“Pakistan’s exports have become competitive over the past few years,” Ismail Iqbal Securities CEO Ahfaz Mustafa said. “There is a fixed energy tariff regime that keeps in mind regional prices. The government is much quicker to refund the money it owes exporters and there has been a giant currency devaluation.”
The South Asian nation is looking to increase its exports to get out of regular boom-bust economic cycles that have led it to seek help from the IMF 13 times since the late 1980s. It is also trying to revive a US$6 billion bailout program to meet financing requirements amid a record trade deficit.
Pakistan’s commerce adviser said there is “very little” that can be done about the nation’s record-high imports, which are driven mainly by purchases of petroleum products and vaccines.
Pakistan would be “under pressure” if oil hits US$100 a barrel, Dawood said.
He expects food-related imports to decline this year following a better domestic crop harvest.
The nation is also pushing to intensify trade with Central Asian nations by signing agreements and allowing free movement of trucks. Trade has grown to US$120 million in six months of the current fiscal year from US$14 million of the entire previous year, he said.
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