Category Archives: Industry News

Cheap gas, electricity to be provided to textile industry

FAISALABAD: State Minister for Finance Rana Muhammad Afzal Khan on Monday said that gas prices would be further decreased for textile industry to reduce cost of production to maximum extent.

Addressing a meeting at All Pakistan Textile Processing Mills Association (APTPMA) here, the state minister said the government had planned to provide electricity at rate of Rs.7 per unit to textile industries besides introducing weighted average price of RLNG across the country.

He said that owners of textile units had to go in refund claims system due to imposition of sales tax on coal if they used it during gas shortage. Therefore, the government was considering a proposal to launch easy process of zero rated coal for textile industry to save it from additional burden of sales tax refund claims, he added.

The state minister further said that Faisalabad Airport had witnessed heavy rush of air passengers as this was not only third largest city of Pakistan but also textile capital. Therefore, expansion of Faisalabad Airport was need of the hour so that at least three flights could land at a time in addition to facilitate 118 fights in a week here, he added.

Earlier, Chairman APTPMA Sheikh Khalid Habib in his welcome address said that due to high energy cost, textile business was being shifted from Pakistan to India, China and Bangladesh which also caused substantial decrease in textile exports of the country. He demanded immediate payment of refund claims in addition to provision of cheap gas and electricity for textile industry.

APTPMA members Mian Aftab Ahmad, Engineer Rizwan Ashraf and Engineer Ehtisham Javaid also addressed.


Pakistan plans Rs10b research fund to boost cotton output

ISLAMABAD: The Pakistan government is likely to announce a Rs10-billion research development fund in an effort to boost cotton production next season as the harvest remains unimpressive for the past few years.

Talking to The Express Tribune, a senior government official disclosed that a high-level meeting on Wednesday tried to prepare a plan for enhancing the production of cotton that had been virtually stagnant for the past few years sparking concerns among government circles.

Representatives of major cotton-producing provinces – Punjab and Sindh – attended the meeting held at the Planning Commission. Other stakeholders were also present.

Cotton production has been estimated at 11.1 million bales in the ongoing season against the target of 12.6 million bales. The harvest was even lower at 10.7 million bales last year.

In the huddle, the idea of creating the research development fund was floated which was welcomed by Punjab and Sindh.

Elaborating, the government official said it was a 10-year plan, which would be sent to the federal cabinet for approval. It is likely to be formally announced in next fiscal year’s budget in May this year.

Under the plan, the government will spend Rs1 billion every year on research activities to find out ways of increasing the production of cotton, which feeds the massive textile industry of Pakistan.

The plan came after spinning mills went to court challenging the cotton cess amounting to Rs400 million that they had been paying every year for spending on research work.

However, for the past two years, they had refused to contribute and went into litigation with the federal government.

According to the government official, it was decided in the meeting that the research fund would be disbursed in the form of competition grant to the researchers.

In recent years, the cotton plantation area has shrunk in the wake of setting up of sugar mills in the cotton zone of south Punjab.

Absence of a support price has also pushed cotton farmers towards planting other crops such as wheat and sugarcane for which the government has been announcing support prices to ensure a fair return to the growers.

Cotton farmers have not been able to notch up satisfactory earnings and have switched to sugarcane cultivation in areas where sugar mills have been set up.

Country’s economic managers had decided last year to frame a national sugar policy in a bid to secure the cotton belt that had come under threat from the growing number of sugar mills and planting of sugarcane in such zones.

Almost 70% of sugar mills are located in the core cotton zone of the country, especially in Punjab. The presence of mills in top cotton-growing areas and their increasing crushing capacity have caused a 26% decline in cotton-sowing areas, especially in south Punjab including Rahim Yar Khan and Muzaffargarh.

The Ministry of Textile Industry has also demanded that provinces should stop granting permission for establishing new sugar mills in the cotton-growing areas.

In the meantime, sugarcane cultivation has increased in the wake of improved returns and timely supply of inputs. Simultaneously, the prices of sugar have also gone up from Rs31 to Rs68 per kg over the past 10 years.

According to the Ministry of Textile Industry, the higher sugar prices have been an attraction for setting up more sugar mills, which went up from 45 to 85 across the country. Of these, 45 were located in Punjab, 32 in Sindh and eight in Khyber-Pakhtunkhwa.


Pakistan exports to EU grow by almost 6%

Pakistan’s exports to the 28-member European Union (EU) posted a growth of nearly 6% in January-September 2017 on a year-on-year basis. This shows that the Generalised System of Preferences-Plus (GSP+) scheme largely failed to boost exports to the EU. Total export proceeds to these countries amounted to €5.07bn during the period under review against €4.79bn a year ago, according to EU official data.

Latest figures show an upward movement compared to the similar period in the preceding calendar year. Annual growth recorded in January-September 2016 was just 3.5pc.
The GSP+ scheme became effective on January1, 2014 and will remain available for the next 10 years.

A product-wise analysis shows large variations. For example, exports of garments and hosiery witnessed a growth of 90.9% to €2.05bn during the period under review. The second biggest export category was home textiles, which grew 72.4% to €1.3bn. The share of these two products stood at 65% in January-September against 37.6% a year ago. The third biggest export category was cotton and intermediary goods of textiles, which increased 16.4% to €640.9mn.

Exports of the articles of leather increased 6% to €254.7m while the rise in rice exports was 11.6% to €109.6mn. Exports of sports goods (footballs) rose 41.8% to €102.7mn while foreign sales of surgical goods grew 22.4% to €58.1mn. There was a 21.1% increase in footwear exports to $58.1mn during the period under review.

Products that generated less than €40mn of export proceeds in January-September include plastics, minerals, machinery, carpets and cutlery. Exports of chemicals, articles of rubber and pharmaceuticals remained less than €10mn.

Country-wise data shows that the highest growth of 37.8% came from the UK as its imports from Pakistan surged to €1.02bn during the period under review. Exports to Germany were up 39% to €995.4mn. Both the UK and Germany have emerged as major export destinations for Pakistani goods under the GSP+ scheme.

The increase in exports to the UK is an encouraging factor. However, exporters fear they will lose the UK market following Brexit. London, however, has assured Islamabad of no change in the post-Brexit scenario.

The third biggest market for Pakistan’s exports is Spain. Exports to Spain went up 99.9% to €663.9mn. Spain was not the third biggest export destination until recently. It became Pakistan’s leading trading partner within the EU in the past couple of years owing to its extensive marketing strategy.

Pakistan’s exports to Italy increased 34.15% to €490.9mn. Exports to the Netherlands went up 56.1% to €480.6mn and those to France rose 24.9% to €353.9mn.

Exports to Belgium increased by 22.7% to €296.9mn, Poland by 121.9% to €112.9mn, Sweden by 46.4% to €111.48mn, Denmark by 81.7% to €103.95mn, Portugal by 22.7% to €86.4mn and the Czech Republic by 98% to €63.6mn.

Export proceeds to the remaining 17 EU countries were far less than €60mn in terms of value. However, the increase in exports to all countries was in double digits in percentage terms.

Pakistan’s exports to Austria increased by 64.8% to €54.05mn, Ireland by 34.6% to €44.7mn, Greece by 47% to €44.13mn, Slovenia by 116.7% to €17.73mn, Romania by 19.86% to €14.81mn, Bulgaria by 82.04% to €14.2mn, Hungary by 98% to €11.7mn, Croatia by 5.2% to €10.4mn, Estonia by 1.02% to €7.46mn, Cyprus by 145% to €4.3mn, Latvia by 41.3% to €3.9mn, Malta by 35% to €2.16mn and Luxemburg by 95.9% to €0.17mn.

Exports to Slovakia declined 6.2% to €14.03mn and those to Lithuania dropped 3.7% to €13.4mn.


Pakistan invites Japan to assist in promoting its textiles through PTA

ISLAMABAD: Minister of State for Finance, Rana Muhammad Afzal Khan invited Japan to assist Pakistan to promote its textile through Preferential Trade Agreements (PTA).

During a meeting with Ambassador of Japan, Takashi Kurai, who called on him, Rana said Pakistan highly values its relationship with Japan, a press statement said.

He hoped that the economic cooperation between the two countries would be brought to a much higher level with the passage of time.

The minister informed the ambassador that Pakistan offers numerous opportunities to the potential investors from Japan and they can invest in tourism, processing and packaging of sea food, halal food and its export.

Japan can invest in these sectors and bring in her technology and sanitary and phytosanitary standards with the investment.

On the occasion, Kurai congratulated the minister on assuming his responsibilities and praised the efforts made by Pakistan to eradicate extremism and strengthening of economy.

He said the Japanese government has planned to support the government of Pakistan in export promotion, improvement of security through the provision of security equipment at the airports and diversification of automobile industry.

The ambassador asked the minister to participate in the EXPO 2025 to be held in Kazakhstan.

He suggested that the Joint Government Business Dialogue process between the two countries should be revived for the benefit of both the countries.

The minister assured the ambassador of all possible support from his side.

The meeting was attended by senior officials of the Finance and Economic Affairs Divisions.


No sales tax, customs duty on cotton imports in Pakistan

The Pakistani Government last week withdrew sales tax and customs duty on cotton imports with effect from January 8 to meet the shortfall of silver fibre, a key input in the country’s textile industry. The Economic Coordination Committee (ECC) of the cabinet approved a proposal regarding the same at a meeting headed by Prime Minister Shahid Khaqan Abbasi.

The textile sector, which contributes more than 60 per cent of the country’s total exports of $20 billion, had been demanding the abolition of 4 per cent customs duty and 5 per cent sales tax since last year to promote value addition.

The ECC meeting also approved financing plan for 1.2 billion cubic feet/day capacity of re-gasified liquefied natural gas (RLNG-III) pipeline project from Karachi to Lahore, according to Pakistani media reports.

The country set up its first RLNG plant in 2015 with a production capacity of 600 million metric cubic feet/day (mmcfd), and another with the same capacity was added recently to reduce the gap between demand and supply of around 2 billion cubic feet per day.

Despite being the world’s fourth largest cotton producer, Pakistan relies on import of cotton to meet local demand, which is estimated at 15 to 16 million tons per year. Cotton production is expected to be around 11.1 million bales of 170kg each during the 2017-18 crop year.


ASEAN & South Asia Dyestuff for Textile Market to Reach $1,938.9 Million by 2023: P&S Market Research

According to the new study published by P&S Market Research, the ASEAN & South Asia dyestuff for textile market is forecasted to Reach $1,938.9 Million by 2023.

The growth of the ASEAN and South Asia dyestuff for textile market is mainly driven by the tremendously high demand of dyestuff from the home textile and automotive textile industries, in emerging economies.

The apparel industry is witnessing tremendous growth in the current scenario, owing to the surge in demand for apparels such as outerwear, jeans, t-shirts, innerwear, shorts, dresses, trousers, children’s wear, and socks, across the world. For instance, as per NDP Group, Inc., in 2016, the apparel sales in the U.S. increased by 19% for men’s, women’s, and children’s apparels. Accordingly, the demand for dyestuff (black color) used in the manufacturing process of these wide range of apparels is also growing.

On the basis of type, the ASEAN and South Asia dyestuff for textile market is segmented into reactive dyes, disperse dyes, vat dyes, direct dyes, acid dyes, sulfur dyes, and others. Reactive dyes held the largest share of the ASEAN and South Asia dyestuff for textile market, in terms of both value and volume, in 2016. The main characteristic of reactive dyes is the formation of a covalent bond with cellulose, which is the key component of cotton fibers, making it the most permanent of all dyes. This makes reactive dyes a preferred choice over other dyes in the ASEAN and South Asia dyestuff for textile market.

In terms of value, disperse dyes are the fastest growing segment in the ASEAN and South Asia dyestuff for textile market, and are expected to maintain the same trend during the forecast period. This is due to the fact that among all types of dyes, only disperse dyes are effective for “Normal” polyester.

India held the largest share of the ASEAN and South Asia dyestuff for textile market, in terms of both revenue and volume, in 2016. There has been a significant growth in the dyestuff industry during the last decade, which has created an export opportunity for India in the ASEAN and South Asia dyestuff for textile market. Due to the enforcement of strict pollution control norms, several units in countries such as the U.S., Germany, France, and the U.K., has resulted in a closure of units, which has given rise to capacity building in India, and has hence, made the country a largest market in dyestuff for textile.

Bangladesh held the second largest share of the ASEAN and South Asia dyestuff for textile market, in terms of both revenue and volume, in 2016. Bangladesh is emerging as an exporting nation of textile products. The demand of dyes in the country has increased significantly in recent years. Low-wage labor and easy raw material availability are some of the prime factors driving the country’s dyestuff for textile market. The dyestuff sector is one of the important segments of the chemical industry in Bangladesh. The country imports almost 95.0% of the textile dyestuff, majorly from China, India, Thailand, Taiwan, Korea, Sri Lanka, U.S., Germany, Italy, Spain, Singapore, Switzerland, and Turkey.

Some of the key players operating in the ASEAN and South Asia dyestuff for textile industry are Huntsman Corporation; Krishna Dyestuff Company; Monarch Dyestuffs Industries and Exports Ltd.; Sumitomo Chemical Company, Limited; Lanxess AG; E.I. du Pont de Nemours and Company; BASF SE; Atul Ltd.; Hangzhou Sunshine Chemicals Co., Ltd; and Arkema Group.


PEW demands leather promotion for economic growth

The Pakistan Economy Watch (PEW) has asked the government of Pakistan for the development and promotion of the local leather industry for positive growth on the economy. A request has been made to the policymakers for more relaxations in the taxing system so that Pakistan leather industry could regain its position in the international market.

With raw leather available in abundance in the country, there is a scope for the country to become one of the leading players, Pakistani media reports said quoting PEW president Dr Murtaza Mughal.

Further, Mughal emphasised on the availability of infrastructure facilities for ease of doing business such as skilled labour, power supply at an affordable rate and lower production cost among others. The development of local leather industry will also increase the scope of employment.

“Pakistani leather is the best in the world outside Italy but regional countries like India and Bangladesh are grabbing its share because of active support of their governments. Potential of the leather sector can be doubled in few years regaining the title of second largest export earner after textiles,” said Mughal.


Cotton production increases 7 percent

LAHORE: At least 422,738 cotton bales of 160 kilograms each reached ginning factories during the last fortnight, industry data showed on Wednesday.

Total cotton arrival at ginning stage has so far reached at 11.108 million bales, showing a seven percent increase in volume compared with the same period a year ago, according to a consolidated statement of cotton arrivals in factories around the country till January 1.

Pakistan Cotton Ginners Association, All Pakistan Textile Mills Association and Karachi Cotton Association jointly compiled the statistics.

Cotton production is expected to be around 11.1 million bales of 170kg each during the current crop year of 2017/18 against the revised production target of 12.6 million bales keeping in view the cotton arrival trend.

Government revised down cotton output target by 10.26 percent to 12.60 million bales for the current season over an earlier estimate as the country’s biggest crop producer Punjab fell short of targeted cultivation area. Cotton production was recorded at 10.6 million bales during the crop year of 2016/17.

The latest data showed that cotton production rose 12.38 percent in Sindh, while there has so far been a 4.2 percent increase in the cotton arrival in Punjab.

Analysts said the arrival trends, during last fortnight, are above the market expectations.

“It could partly be due to the late sowing of crop in the province (Punjab) and high rates of the silver fiber being witnessed in the market in the last several weeks,” Ihsanul Haq, chairman of Cotton Ginners Forum said.

“It is now expected that volume of cotton import would be lowered accordingly.”

Pakistan, which is the world’s fourth largest cotton producing country, falls short of around four million bales a year to meet the local demand of nearly 16 million bales. The country, the world’s third-largest cotton consumer, usually starts cotton import from September.

Till November, textile mills have signed import contracts of 1.8 million bales from countries, including US, Brazil, South Africa and Middle East. Government has also restored cotton imports from India to meet the growing appetite of key textile industry, though it slapped a tough set of rules for consignments from the neighbouring country to the dismay of Pakistani buyers.

Under the new rules, the National Plant Protection Organisation would inspect and test the consignments according to appropriate procedures and to ensure the goods are free from pests.

The country, however, surpassed Bangladesh to become India’s biggest cotton buyer, accounting for 40 percent of its cotton exports after buying $822 million worth of cotton from India in 2015/16.


PYMA urges govt for elimination of tax on yarn import

The Pakistan Yarn Merchants Association (PYMA) has urged the Pakistan government for removal of the regulatory duty on the import of yarn. An appeal has been made to Dr Miftah Ismail, advisor to the Prime Minister on finance, revenue & economic affairs, for supply of affordable raw materials to the textile industry to increase the production.

The association has asked the government for provision of a level-playing field along with non-discriminatory business environment will help in supply of cheap raw material to the export-oriented industries, according to Pakistani media reports.

Removal of regulatory duty will reduce the cost of doing business and bridge the gap between production and consumption. With the apparel sector having limited production line due to lack of latest fabric varieties at the local level, the high duties will result in significant decline in the exports of apparel.

In December last year, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) also urged the government to relax duties on yarn import to encourage value addition.


Industry hopes textile exports will jump to $13b this year

FAISALABAD: Textile exports have been going up steadily since the start of the current fiscal year in a positive sign that raises expectations that full-year proceeds will touch $13 billion after a hiatus of two years.

Textile shipments jumped 7.66% year-on-year to $5.51 billion in the first five months (July-November) of the current fiscal year, driven primarily by a surge in value-added textile exports.

In a review of the industry’s performance in the outgoing year 2017, Pakistan Textile Exporters Association (PTEA) Chairman Shaiq Jawed said in a statement that textile shipments had been on an upsurge since the start of 2017-18 in July following a continued fall in the previous fiscal year.

After hitting the peak at $13.73 billion in 2013-14, textile exports dropped to $13.47 billion in 2014-15 and $12.44 billion in 2015-16. Afterwards, they inched up 0.04% at $12.45 billion in 2016-17, but were still lower by more than a billion dollars than the peak.

Propped up by cash incentives under the prime minister’s trade package, textile exports took off, but challenges were still there that should be addressed to further ramp up growth, Jawed said.

Pointing to the industry’s lack of competitiveness both in domestic and international arenas, he called the high cost of energy a serious concern as the textile sector heavily banked on energy supplies to run its operations smoothly.

In Pakistan, he said, the industrial gas tariff was almost 100% higher and electricity price was about 50% higher compared to regional competitors. Punjab-based industries are compelled to consume high-priced regasified liquefied natural gas (RLNG) in winter, which puts them at a disadvantage compared to industrial units in other provinces.

“The liquidity stuck in the tax refund system is another stumbling block; exporters are waiting for the release of billions of rupees blocked in sales tax, income tax and customs duty rebate claims, which has sparked severe liquidity crunch,” Jawed said.

“If these payments are released, the exporters can spend the money on trade expansion.”

Technological advancement is another area where Pakistan has trailed its competitors.

“Not enough investment has been made in technology because of which productive capacity of the sector has remained stagnant,” he said.


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