Pakistan to enhance exports need to focus on finished textile goods

In order to enhance exports, the Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea) recommends announcement of zero-rated regime by the prime minister; release of stuck up refund payments against sales tax, duty drawback and drawback on local taxes and levies (DLTL); No payment no refund system; tariff of electricity, gas and water for export sectors should be brought down; and incentives on exports as per the competitors countries.

According to the association, finished textile goods are the only viable solution to boost the country’s exports.

At present, total exports of Bangladesh is $33 billion, of which textiles contribute $27.5 billion, which includes $26.5 billion of garments only. Bangladesh’s exports are now increasing at $3.5 billion per annum and it is expected to reach $50 billion by 2020.

Pakistan ranks 138 out of 189 on the ease of doing business, while last year it was 136. The cost of making garments in Pakistan is almost double ie, $2.7 in Pakistan and $1.5 in Bangladesh.

The 60 percent cost component of wages has a vital impact, which is two times in Pakistan, the other costs that includes energy and financials also burdened due to high tariff, said Shaikh Mohammad Shafiq, central chairman of Prgmea.

The government must realize that exports could not be increased by selling raw materials in foreign markets. This trend is not going to continue and it is the reason Pakistan is facing serious downfall.

The country should utilize raw materials and exports only possible in the form of finished products.

Cost is one of the key factors that Pakistan’s garment exports is only 10 percent of Bangladesh woven garment sector, which shows keen interest of Bangladesh government and other low-wage countries to boost up this sector and to offer different incentives and schemes to further enhance growth of this industry.

Labour is one of the major cost components of the industry and Bangladesh goes in favour of employers where minimum wage stands at around $68 as compared to Pakistan, which is $125 and rising.

Additionally, the lower utilities cost further benefits the manufacturers.

The Prgmea urged the government to develop a coherent plan that should allow some sort of exemption / concession to the garment sector with positive frame of mind, as the growth rate of this industry is continuously declining.