Pakistan's textile exporters faced a challenging year in 2022-23, encountering a significant setback as orders plummeted by almost 15per cent, with a total value of $16.5 billion. This marks a substantial 14.63 per cent decline from the preceding year, 2021-22, when textile exports were valued at $19.33 billion. Disturbingly, data reveals a stark 18 per cent decrease in the country's textile exports during the first nine months of the calendar year 2023, plummeting from $14.5 billion in 2022 to $11.9 billion.
Drop in exports
A report by Samaa TV, a prominent Pakistani news channel highlights, the textile sector's exports in September 2023 was $1.35 billion, down 12 per cent from the $1.53 billion recorded in the same month the previous year. This continuous decline underscores a worrisome trend for the government, grappling with a shortage of foreign exchange. The government heavily relies on non-debt creating dollar inflows, such as textile exports, to bolster its reserves.
The All Pakistan Textile Mills Association (APTMA) released data in October 2023, emphasizing the persistently challenging scenario faced by Pakistan's textile sector. The industry is intricately tied to export markets in the EU, the UK, the US, the UAE, and Turkey. This downturn in textile exports poses a severe concern for the government, which urgently needs to address the diminishing foreign exchange reserves.
Revival on the cards
Minister of commerce Gohar Ejaz, who is also the patron-in-chief of APTMA, conveyed a sense of confidence in the textile sector. As per him, a notable achievement in October 2023 was, cotton arrivals surpassed five million bales, exceeding the previous year's figure of 4.9 million bales—a substantial 34 per cent year-on-year increase. Ejaz attributed this success to the unwavering commitment of local farmers and the resilient nature of Pakistan's cotton industry.
In addition, Ejaz underscored the global growth of textile market, which expanded from $573.22 billion in 2022 to $610.91 billion in 2023, signifying a compound annual growth rate (CAGR) of 6.6 per cent. This positive trajectory hints at a potential revival for Pakistan's challenged textile exports. Traditionally, Pakistan designates 60 per cent of its total textile output for exports, with Punjab playing a pivotal role in the sector. About 70 per cent of the textile industry is concentrated in Punjab, with Faisalabad as its hub. It's noteworthy that Pakistan holds the 8th position among the largest textile product exporters in Asia.
GSP renewal still uncertain
As reported by brerecorder.com, the fourth joint Generalised Scheme of Preferences (GSP) Review Report from the European Commission and the European External Action Service (EEAS) has detailed the progress of eight GSP+ beneficiary countries, including Pakistan. The report assesses the effective implementation of the 27 international core conventions that underlie the GSP+ scheme. Compliance with these conventions is a prerequisite for beneficiary countries to maintain their GSP+ status, covering human rights, labor rights, environmental standards, and good governance for the period spanning 2020 to 2022.
The report flagged several areas of concern, including political instability, constitutional challenges, an economic crisis, high inflation, and a severe shortage of foreign reserves. Notably, Pakistan holds the status of being the largest beneficiary of the GSP+ scheme. As the current GSP Regulation is set to expire by the end of 2023, Pakistan has initiated efforts to secure a renewal of its GSP+ status for the post-2023 period.
However, renewal bid faces challenges due to ongoing human rights violations, contentious blasphemy laws, and escalating religious intolerance and sectarian violence. Additionally, the country has struggled to achieve sustained development and poverty reduction, as expected by the GSP scheme. Italian news site InsideOver has raised concerns, suggesting uncertainty regarding the renewal of Pakistan's GSP+ status for the next decade.