Pakistan News

Opposition lawmakers are seen standing in the parliament during the joint session. — DawnNewsTV screengrab

National Assembly Speaker Asad Qaiser on Tuesday adjourned the joint session of the parliament briefly after opposition lawmakers caused a ruckus in the house.

The joint session of upper and lower houses was summoned by President Arif Alvi yesterday to decide Pakistan's future course of action in the wake of India's decision to strip occupied Kashmir of its special status under Article 370. But the session was disrupted soon after beginning by protest from opposition lawmakers who pointed out that the resolution, moved by Federal Minister for Parliamentary Affairs Azam Khan Swati condemning India's "illegal actions" in occupied Kashmir, did not specifically mention Article 370 of the Indian constitution.

The protest and chants during today's sitting continued even after Qaiser assured that Article 370 will be mentioned in the resolution, following which he adjourned the session.

Members of government went to the chambers of Leader of the Opposition of the National Assembly Shehbaz Sharif in order to placate him and convince opposition members to return to the parliament.

Opposition protested because govt resolution didn't mention Article 370

After the session's adjournment , PML-N leader Ahsan Iqbal spoke to reporters outside parliament building and said that the opposition had protested "with a heavy heart" because the resolution presented by the government did not mention the reason due to which the session had been called: the scrapping of Article 370. 

"All international laws recognise the border that separates Indian-occupied Kashmir and Azad Jammu and Kashmir as Line of Control. India tried to convert Line of Control into an international border, which is not a trivial matter.

"India took such a major step and the resolution does not even mention it; this is why opposition protested today," the PML-N leader said. He added that Prime Minister Imran Khan was not in attendance even though the opposition had chosen to forgo the matter of non-issuance of production orders [for arrested MNAs] to show unity and discuss the Kashmir issue.

He further said the the foreign minister, who is currently out of the country, should have returned by a chartered plane to brief the parliament on the situation even if it was for a day.

Special Assistant to the Prime Minister (SAPM) on Information Firdous Ashiq Awan also addressed opposition's protest in a conversation with media outside Parliament House and said: "We respect the opposition's wishes and will make the additions they are calling for because no controversy should be created on a resolution supporting the rights of Kashmiris."

"Kashmiris are looking towards Pakistan in this time of dire need," she added. "We would like them to know that they are not alone; Pakistan will continue its diplomatic support for their cause and raise the matter on all relevant forums.

"We are looking to raise the matter in the United Nations and ask the forum to look into India's violation of their conventions."

'Kashmir was and will remain disputed'

Meanwhile, Sharif met Azad Jammu and Kashmir (AJK) Prime Minister Raja Farooq Haider in his chamber and said that Pakistan will continue to stand alongside Kashmiris.

"No matter what India does, Kashmir was and will remain disputed [territory]," Sharif said. He also expressed concern over the health of Jammu Kashmir Liberation Front (JKLF) Chairman Yasin Malik.

Haider briefed Sharif about the situation in AJK and said that the Indian forces had been targeting civilians by using cluster bombs from across LoC.

"If [Indian Prime Minister Narendra] Modi thinks Kashmiris will give up their right to self-determination, he is mistaken," Haider said.

Parliament joint session

Human Rights Minister Shireen Mazari, Science and Technology Minister Fawad Chaudhry, Railways Minister Sheikh Rasheed, Leader of the Opposition in the National Assembly Sharif, PML-N leaders Khawaja Asif and Ayaz Sadiq among other MNAs as well as senators were in attendance. AJK premier was also attending today's session.

Opposition parties had demanded that a joint session be convened soon after media broke the news of India's decision to repeal Article 370. PPP Chairperson Bilawal Bhutto-Zardari was the first opposition leader who had called for immediately summoning the joint session of parliament. He then flew to Islamabad from Karachi to participate in the joint session.

“This House may discuss the recent surge in unprovoked firing and shelling on civilian population and use of cluster bombs by Indian forces in Azad Jammu and Kashmir; deployment of additional troops and atrocities in Indian-occupied Jammu and Kashmir and recent developments,” said the agenda issued yesterday by the National Assembly Secretariat for the joint sitting.

Meanwhile, a Corps Commander meeting under the chairmanship of Army Chief Gen Qamar Javed Bajwa is underway in Rawalpindi to discuss the deteriorating situation in occupied Kashmir and the Indian aggression along the Line of Control, reported Radio Pakistan.

India's presidential order

Yesterday, India's ruling BJP stripped Kashmiris of the special autonomy they had for seven decades through a rushed presidential order. An indefinite curfew — that has entered its third day today — was imposed in occupied Kashmir and elected leaders were put under house arrest.

By repealing Article 370 of the constitution, people from the rest of India will now have the right to acquire property in IoK and settle there permanently. Kashmiris as well as critics of India’s Hindu nationalist-led government see the move as an attempt to dilute the demographics of Muslim-majority Kashmir with Hindu settlers.

Furthermore, Indian Home Minister Amit Shah, who is also president of the BJP, moved a bill to bifurcate the state into two union territories — one, Jammu and Kashmir, which will have a legislature, and the other, Ladakh — to be directly ruled by New Delhi.

 

Prime Minister Imran Khan and US President Donald Trump pictured at the White House on July 22. — AFP/File

 

WASHINGTON: A US delegation will reach Islamabad on Monday for talks with Pakistani officials, as the Afghan peace process intensifies and could lead to a presidential visit to the region, if it succeeds.

Also, US special envoy for Afghanistan, Zalmay Khalilzad, arrived in Doha on Saturday to “resume talks with the Taliban”, he wrote in a tweet in Dari. “The Taliban have shown signs of a willingness to compromise. We are ready for a good deal,” he added.

Read: New round of US-Taliban talks opens in Doha: Taliban

In Washington, diplomatic sources told Dawn that Alice Wells, the Trump administration’s point-person for South and Central Asia, was coming to Islamabad for talks with Pakistani officials on Afghanistan and bilateral relations.

Trump may visit Islamabad if Afghan peace agreement is finalised

The sources said this would be a follow-up of the US-Pakistan consultations that began in Washington when Prime Minister Imran Khan visited and met US President Donald Trump at the White House on July 22.

They also said if the Doha talks led to an agreement between the United States and Taliban, President Trump might visit Afghanistan in September to finalise the deal.

And if Mr Trump visits Afghanistan, Pakistan would try to bring him to Islamabad as well to further strengthen the impression that relations between Islamabad and Washington are improving rapidly, according to the sources.

Although close allies once, relations between the United States and Pakistan deteriorated after May 2011, when the American intelligence discovered Al Qaeda leader Osama bin Laden in Abbottabad and a team of US Navy Seals took him out. But the ties began to improve late last year, when Pakistan persuaded the Taliban to hold direct talks with Washington.

Since then, the two sides have held eight rounds of talks in as many months and this weekend they began yet another. US-Pakistan ties got another boost last week, when President Trump met Prime Minister Khan and indicated in a joint news conference that he liked the new Pakistani leader and was looking forward to working with him to end America’s longest war.

Mr Trump also expressed his desire to mediate between India and Pakistan on Kashmir at the White House news conference and reiterated the offer on Thursday, saying he would “certainly intervene” to help resolve the 70-year-old dispute, if asked to do so.

Much of the new-found warmth in the US-Pakistan friendship, however, revolves around the Afghan peace process. President Trump wants to “extricate” the United States from this “crazy war” before the 2020 US presidential election, and hopes that Pakistan will assist him in achieving this target.

Asked at a briefing if the Taliban could be trusted, the US leader said: “I don’t want to say if they can be trusted or not. Look, history, I would say, is not so good, but they don’t like us much either.”

He said in the last few months, he had brought the number of soldiers down very substantially and now all sides would get “a lot of advantages” by making a deal on Afghanistan.

“Let’s put this way: We’re more police than anything else, and that’s not for our soldiers,” said Mr Trump while explaining why he was so keen on withdrawing American troops from Afghanistan.

“I’ve said — I’ve said it a lot. We could win the war, if you look at it — and you can look at it any way you want — we can win the war in Afghanistan in less than a week,” he added.

“But I’m not looking to kill 10 million people. I’m not talking nuclear. I’m talking conventional. But we’d win that war in less than a week, and I have that as an option, always. But that’s what we’re not looking to do,” Mr Trump insisted.

Published in Dawn, August 4th, 2019

According to an Inter-Services Public Relations (ISPR) press release issued on Tuesday, rescue teams of the Pakistan Army and Rescue 1122 had reached the site of the incident and a fire had been extinguished. — AFP

Seventeen people, including five crew members and 12 civilians, lost their lives after a Pakistan Army aviation aircraft on a routine training flight crashed near Mora Kalu Rawalpindi.

According to an Inter-Services Public Relations (ISPR) press release issued on Tuesday, 12 others were injured in the incident.

The crew members martyred in the incident, including two pilots, were: Lt Col Saqib (pilot), Lt Col Waseem (pilot), Naib Subedar Afzal, Havaldar Ibne Ameen and Havaldar Rehmat.

The ISPR said that rescue teams of the Pakistan Army and Rescue 1122 had reached the site of the incident and a fire had been extinguished. All injured were shifted from the Holy Family Hospital (HFH) to the Combined Military Hospital, Rawalpindi.

Military officials cordoned off the crash site. A cleanup operation at the site of the incident has started in order to clear the rubble.

Several men and women who lost their relatives in the crash were seen wailing and crying as rescuers put charred bodies of the victims into ambulances.

Women mourn the death of their relatives after a Pakistan Army aviation aircraft on a routine training flight crashed near Mora Kalu Rawalpindi. — Reuters
Women mourn the death of their relatives after a Pakistan Army aviation aircraft on a routine training flight crashed near Mora Kalu Rawalpindi. — Reuters

 

One resident of the area told AFPthat the crash happened around 2am.

"I woke to the sound of a huge explosion. I stepped out of my house and saw huge flames and we rushed to the site," said Mohammad Sadiq.

"People were screaming. We tried to help them but the flames were too high and the fire too intense, so we could not do anything. The dead includes seven members of one family and most of them were burned to death."

Another resident, Ghulam Khan, said he heard the plane as it buzzed over his house, adding the aircraft appeared to be on fire before it crashed.

"The sound was so scary," he added.

Soldiers (L) stand guard near a damaged roof after a Pakistan Army aviation aircraft on a routine training flight crashed near Mora Kalu Rawalpindi. — Reuters
Soldiers (L) stand guard near a damaged roof after a Pakistan Army aviation aircraft on a routine training flight crashed near Mora Kalu Rawalpindi. — Reuters

 

Funeral prayers of the deceased were offered at Chaklala Garrison, a statement issued by the ISPR said. Chief of Army Staff General Qamar Javed Bajwa, serving and retired military personnel and relatives of the deceased were among those in attendance.

Prime Minister Imran Khan expressed grief over the loss of precious lives in the incident. According to Radio Pakistan, the premier expressed commiserations with the families of the victims and prayed for the recovery of the injured.

Leader of the Opposition in the National Assembly Shehbaz Sharif, National Assembly Speaker Asad Qaiser and National Assembly Deputy Speaker Qasim Khan Suri also expressed grief over the loss of lives in the incident.

Additional reporting by Javed Hussain

US State Dept approves proposed $125m support programme for Pakistan’s F-16s

The US State Department announced on Friday that the Trump administration is set to approve $125 million for Pakistan to provide technical support to its fleet of F-16 aircraft.

The proposed programme has already been given the go-ahead by the State Department and sent to Congress for approval.

 

The announcement followed Prime Minister Imran Khan’s ice-breaking visit to Washington earlier this week, which included a three-hour visitto the White House as well.

 

During an unprecedented 47-minute joint press talk with the prime minister on July 21, US President Donald Trump also offered to mediatebetween India and Pakistan to help them resolve the 70-year old Kashmir dispute.

“The State Department has made a determination approving a possible Foreign Military Sale (FMS) to Pakistan for Technical Security Team (TST) in continued support of the F-16 program for an estimated cost of $125 million,” said an official announcement released on Friday evening.

The US Defence Security Cooperation Agency delivered the required certification, notifying Congress of this possible sale on July 26, three days after the prime minister’s visit.

The government of Pakistan requested a continuation of technical support services, which includes US government and contractor technical and logistics support services. The request also includes other related elements of logistics support to assist in the oversight of operations in support of the Pakistan Peace Drive advanced F-16 program. The total estimated program cost is $125 million.

“This proposed sale will support the foreign policy and national security of the United States by protecting US technology through the continued presence of US personnel that provide 24/7 end-use monitoring,” the State Department said.

Also read: Imran Khan in Washington: He came, he saw, he conquered

“The proposed sale of this support will not alter the basic military balance in the region,” the statement added, in an effort to assuage possible Indian irritation.

The principal contractor for this support program is Booz Allen Hamilton Engineering Services LLC, Fairborn, Ohio.

Implementation of this proposed sale will require the assignment of 60 contractor representatives to Pakistan to assist in the oversight of operations as part of the Peace Drive F-16 program.

The US Defence Security Cooperation Agency informed Congress that “there will be no adverse impact on US defence readiness as a result of this proposed sale.”

This notice of a potential sale is required by law and does not mean the sale has been concluded.

Almost all such requests, however, are approved after a possible debate. In case Congress rejects the request, the administration can still use a waiver to provide the requested services.

All FMS support programs for Pakistan were halted by the Trump administration after accusing Islamabad of not helping Washington in achieving its objectives in Afghanistan. But during the prime minister’s July 20-23 visit to Washington, both sides announced they were now on the same page on Afghanistan.

The prime minister said that he would soon call Taliban leaders to Islamabad to persuade them to hold direct talks with the Taliban. President Trump thanked him for Pakistan’s support that enabled direct talks between US and Taliban delegations in Doha, Qatar.

Since the prime minister’s return, the Taliban have conveyed their willingness to visit Islamabad to meet Mr. Khan while President Trump has dispatched his top general and a senior diplomat to Kabul to brief the Afghan government.

PML-N vice president Maryam Nawaz Sharif has taken a gibe at the ruling PTI saying the government is ‘powerless’ as the order to release senior columnist Irfan Siddiqui has been issued without even bringing it into the notice of the prime minister. — PMLN Media Twitter/File

LAHORE: PML-N vice president Maryam Nawaz Sharif has taken a gibe at the ruling PTI saying the government is ‘powerless’ as the order to release senior columnist Irfan Siddiqui has been issued without even bringing it into the notice of the prime minister.

 

“This is the level of the selected and his government. The decisions are taken and withdrawn while he [the prime minister] is totally unaware of. What’s the use of such a rule wherein the government and the selected are humiliated on a daily basis and they are left as bystanders! But the talk of respect and ego can be understood only by the respectable,” reads her tweet issued in response to a press conference by the Special Assistant to Prime Minister on Accountability, Shahzad Akbar.

Ms Nawaz also embedded a combo of TV screen grabs of Mr Akbar’s presser and of National Assembly Speaker Asad Qaiser’s.

Mr Siddiqui, an adviser to former prime minister Nawaz Sharif, was released on bail on Sunday two days after he was arrested by police for violating the tenancy act in a late-night raid.

Responding to one of her followers’ tweet that the bail plea of Mr Siddiqui was accepted after the prime minister learnt that Maryam Nawaz’s speeches were written by herself and not Mr Siddiqui, she said: No, it is because it [the arrest decision] backfired. There is a limit to everything and that limit has been crossed. Whatever excesses they commit now will only be counterproductive. So watch out!

In yet another tweet she denied a claim made by a senior journalist that Nawaz Sharif as prime minister had asked for sacking of some [army] officials and tendering of apologies on a tweet issued from the official account of the director-general of the ISPR, public relations wing of the armed forces.

“Prime Minister Nawaz Sharif neither demanded dismissal of anyone nor sought tendering of apologies by others. He had only stated that he was a humble person and didn’t want anyone to seek his forgiveness. But, yes, the tweet containing the word Rejected is an insult of the elected prime minister and the Constitution and that must be withdrawn.”

The ISPR had in a tweet back on April 29, 2017 rejected the report issued by the PM’s office regarding a news leak report. The tweet was withdrawn after about 10 days.

Commenting on JUI-F president Maulana Fazlur Rehman’s threat of marching on Islamabad in the month of October if the incumbent government didn’t resign next month (in August), she said “unlike a similar march by Imran Khan when except some individuals involved in the behind the scene conspiracy masses were not part of it, a very big people’s power is behind the Maulana. If other parties joined in [the march] then if God wills, the game will end. Those arrogant of power know that a war cannot be waged against the masses. The end of the conspiracy will be terrible, if God wills.”

Then in opposition, the Imran Khan-led PTI had earlier marched on Islamabad in August 2014 and then attempted to lockdown the federal capital in November 2016.

Source: Dawn

The government will be raising about Rs200bn through Islamic bonds next month to reduce circular debt after securing about Rs11bn relief from independent power producers (IPPs). — AFP/File

ISLAMABAD: Amid ongoing probes into dollar-based tariff indexations, ‘unnatural profits’ in the power sector and last year’s capacity payments of over Rs466 billion, the government will be raising about Rs200bn through Islamic bonds next month to reduce circular debt after securing about Rs11bn relief from independent power producers (IPPs).

The finance ministry has called a meeting of presidents of 10 commercial banks in the country on Monday (today) to finalise a term sheet for Pakistan Energy Sukuk-II amounting to Rs200bn for power sector liquidity through Power Holding (Pvt) Limited — an assetless shell company of the power division. Finance Secretary Naveed Kamran Baloch will lead the government side.

The consortium, led by Meezan Islamic Bank, comprises nine other commercial banks — Habib Bank, Bank Alfalah, Bank Islami, Dubai Islamic Bank, Bank Al-Habib, Bank Albaraka, National Bank of Pakistan, United Bank and Faisal Islamic Bank. This will be the second Sukuk financing worth Rs200bn for the power sector in less than six months.

Government finalising out-of-court settlement with IPPs

The government had raised Rs200bn through Pakistan Musharqa Sukuk in March this year to bail out the power sector after the IPPs started international arbitrations to secure their overdue unpaid bills. The consortium at the time consisted of six banks — Meezan Islamic Bank, Bank Islami Pakistan, Faysal Bank Limited, MCB Islamic Bank, Dubai Islamic Bank and Al-Baraka Bank.

MCB Islamic Bank has stayed away this time.

The government had lost a case in the London Court of International Arbitration (LCIA) to about 10 IPPs, creating about Rs35bn liability, including interests and other costs, against taxpayers’ money.

Power division secretary Irfan Ali had last month told the Senate Standing Committee on Power that the government was in talks with the IPPs to get some concessions, particularly on late-payment surcharges.

The government has now finalised those negotiations under which the 10 IPPs, which had won international arbitration against the government, have agreed to reduce their mark-up payments on overdue arrears from Kibor plus 4.5 per cent to Kibor plus 2pc. They have also agreed to apply mark-up after 90 days of non-payment instead of the existing 35 days, while the mark-up will now be payable on the outstanding amount once instead of compound interest rate.

As a result, the government is estimated to get a financial relief of about Rs11bn against the original cost of about Rs34bn awarded in favour of the IPPs by the LCIA. The two sides are expected to sign the settlement agreement over the next couple of weeks.

On the directives of Prime Minister Imran Khan, the power division had started negotiations with the 10 IPPs set up under the 2002 power policy for out-of-court settlement of originally Rs16bn award allowed by the LCIA. The arbitration cost had increased to Rs34bn on account of interests and other costs.

An official in one of the IPPs said the government might be overestimating the relief because the negotiations were limited to the extent of interest payments. It might be a couple of billions of rupees and nothing like Rs11bn, he said, adding that the out-of-court settlement would be a time-bound discount and in case of non-clearance of dues within 45 days, the original mark-up would get revived.

Simultaneously, officials are expecting that Rs200bn Sukuk financing will also be approved by the Economic Coordination Committee (ECC) of the cabinet later this week to ensure timely clearance of not only the arbitration liability to the litigants but also other outstanding dues to all the IPPs and fuel suppliers suffering cash flow problems because of around Rs1.4 trillion circular debt.

An official said the ECC had approved in principle up to Rs400bn Islamic financing for the power sector in February this year in two phases, but a fresh approval by the ECC as well as the cabinet was required for the second tranche because of changed financing costs arising out of more than 500 basis points increase in the central bank’s policy rate to 13.25pc under the IMF programme.

The Islamic financing for the power sector has already been declared statutory liquidity ratio eligible by the government and the State Bank of Pakistan.

The assets belonging to a number of public sector power companies have been mortgaged in favour of the financiers as well as the previous bond backed by a government guarantee with a 10-year maturity at a rental return of Kibor plus 80 basis points. The bonds entail half-yearly rental repayments from the date of draw-down and repayments are made directly by the central bank on the basis of a budgetary allocation by the finance ministry on its standing instructions to direct debit for return and maturity repayment at the SBP counter.

The boards of directors of all power distribution and generation companies have agreed to pledge the properties/assets in the trust for banks. Some additional properties and assets have been selected in the distribution and generation network as collateral against rental payments.

At present the National Electric Power Regulatory Authority, National Accountability Bureau and newly created Inquiry Commission on Debt are probing the IPPs financials for purported higher than normal profits. The government is also considering appointing a specialised commission comprising international engineering, legal and financial experts on the issue.

Source: Dawn

Amidst the spectacle of Khan-Trump camaraderie, one of the bones tossed around was the increase in bilateral trade.

“I see great trade with Pakistan. And I’m not talking about a little bit more. I’m talking about 10 and even 20 times what we’re doing right now,” said US President Donald Trump.

Those are big numbers to throw around. The United States is Pakistan’s top market accounting for 16 per cent of its exports in 2018. An increase of this magnitude would mean a jump of over $67 billion in our bilateral relationship, with exports increasing by $38bn.

Any increase in exports will remain marginal until firms move out of their comfort zones and improve their operations and product offerings

Clearly, the words are hyperbolic. Trump pooh-poohed a 20pc increase in trade but even that would indicate a nearly $1bn increase in exports. Textiles dominate and make up over 80pc of exports to the United States.

Assuming an ideal scenario in which Pakistan and the United States are best buddies, what would it take for Pakistan’s textile sector to make such a leap?

Amongst the many hurdles are the age-old woes of ease and cost of doing business that the textile sector has been lamenting since time immemorial. Then there is the current macroeconomic environment that is scaring off investors. And last but not least, the shortcomings of the textile sector that render it uncompetitive even if all other variables are in place.

Better Work programme

After the 2012 Baldia fire tragedy at a garment factory, Walt Disney sent a letter expressing concern about the safety standards in the industry. The upshot of it was that Pakistan was removed from the list of permitted sourcing countries since it scored 18 points on the World Governance Index (WGI) when the minimum qualifying requirement was 25 points.

“When Disney pulled out, it gave us two options — improve our WGI standing or join the Better Work Programme,” said Pakistan Textile Exporters Association Chairman Khurram Mukhtar.

Better Work is a programme run by the International Labour Organisation and the International Finance Corporation. Its objective is to improve working conditions in the garment industry and make the sector more competitive by bringing together diverse groups such as governments, global brands, factory owners, unions and workers.

However, when Pakistan approached Better Work, it was informed that it “currently had more candidate countries that it could accommodate”. This was back in 2013. An arduous process followed requiring feasibility studies and assessments.

Fast-forward to 2019, the process is finally bearing fruit and Pakistan is expected to be part of this programme this year, which will be funded by the Export Development Fund.

While there may not be a direct link between the Better Work programme and Pakistan’s exports, it increases arsenal in Pakistan’s ammunition, says Majyd Aziz, president of the Employers’ Federation of Pakistan.

Compliance

The Disney ban did not materially impact Pakistan’s exports, which have averaged around $3.6bn over the last 10 years.

However, it did highlight concerns regarding compliance.

“We can’t take the risk to not be compliant, we will be sued!” Soorty Enterprises Managing Director Shahid Soorty says, contending they have to be ready for spot checks at all times. These words represent the generally held views of different big manufacturers/exporters representing various associations.

While the major players may be compliant with international standards, they do tend to outsource to Cut-Make-Trim (CMT) units, said a source in the sector.

CMT units are the most basic form of operations in the ready-made garment industry. Input and product specifications are provided by the retailer while garments are manufactured and packaged by CMT units.

Compliance covers issues like minimum wage, working hours, child labour, fire-fighting systems, working conditions, treatment plant, disposal of hazardous waste and so on. Some renowned international chains require a suite of additional compliance certificates as well.

While the big boys fulfil the requirements, the CMTs fly below the radar and adhere to far lax standards. Incidents like the Baldia factory fire draw attention to non-compliance in the sector and paint a negative picture, which costs the textile sector across the board.

Cost of doing business

A lot of pens have dwelled on the high cost of doing business in Pakistan, especially in the current macroeconomic environment, but it bears repeating.

“About 90pc of garment exporters are small and medium enterprises (SMEs),” says Shaikh Muhammad Shafiq of the Pakistan Readymade Garment Manufacturers and Exporters Association. “With the withdrawal of zero-rating and a liquidity crunch, they will have to leave the market.”

This sentiment was echoed by various associations of textile exporters that asserted that the medium and smaller players were being forced to exit.

“Bangladesh can supply five-pocket jeans at $7-7.5 while Pakistan quotes $8-8.5,” said Mirza Ikhtiar Baig, a denim exporter. “This is why the bulk of orders go to countries like Vietnam, Cambodia and Bangladesh whereas Pakistan gets only spillover orders.”

“We have a factory in Bangladesh because of its lower cost of production. We get a 7pc discount there by default,” said Mr Soorty. In order of importance, he stated the ease of doing business, wages, labour laws, energy and other facilities were the reasons why Soorty Enterprises opts to export from Bangladesh while also having operations in Pakistan.

Since the majority of Pakistan’s exporters are SMEs, they do not have the critical mass to enjoy economies of scale. At most, they manage to get a stall in international exhibitions but lack marketing skills. Nor are they savvy enough to bid online for tenders with competing nations.

Sector shortcomings

The sector’s concerns and complaints notwithstanding, demand-side trends have changed over the last decade, which makes a dramatic increase in textile exports to the United States unfeasible in the short and medium terms.

Oil-based synthetic fibres have a lion’s share at 60pc of the world market while cotton’s share is about 25pc. Technological advances in synthetic fibres, better moisture absorbency and a lower cost of raw material make manmade fibre textiles a preferred option compared to Pakistan’s cotton-dominated exports.

There is a lack of research and development within the sector, a factor highlighted by the State Bank of Pakistan’s 2016-17 annual report that flagged a decrease in textile exports to the United States. The report stated that textile players are still “excessively focused on cotton-based textile and apparel products” when the market is moving elsewhere.

This situation is exacerbated by the absence of a strong domestic polyester industry with demand for manmade fibres largely met by imports.

The share of cotton products in the US textile imports decreased from 40pc in 2010 to 29.7pc in 2017, indicating a changing preference of consumers in foreign markets. Pakistan’s share in the textile and apparel imports of the United States in 2016 was 3pc, as per the US Office of Textile and Apparel. It was 5pc for cotton-based products. The manmade fibre imports by the United States in 2016 were $52bn, of which Pakistan’s insignificant exports were $200 million.

Yet the sector opts to fixate on its cost of doing business woes without taking into account the evolving trends that have come after years of high cotton prices and improving synthetic technology. The polo shirts and assorted apparel manufactured nearly two decades back are still the bread and butter of the garment industry.

Admittedly, the macroeconomic and business environments are key variables for Pakistan’s textile export competitiveness. However, till firms move out of their comfort zones and take it upon themselves to improve operations and product offerings, any increase in exports will remain marginal at best.

Source: Dawn News

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