Exports declining due to growing costs, liquidity crunch: APBF

Exports declining due to growing costs, liquidity crunch: APBF

ISLAMABAD, NOV 4 /DNA/ – Raising serious concern over the constant decline of Pakistan exports the All Pakistan Business Forum (APBF) has said that the country’s textile exports fell for third month in a row due to growing production costs and liquidity crunch, indicating that the government has failed to win the confidence of the business community due to multiple reasons. In the first quarter of FY24, the total exports dipped 3.63pc to $6.91bn this year from $7.17 billion over the last year.

APBF President Syed Maaz Mahmood advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current poor level. He urged the trade officers to explore opportunities to diversify exports of goods and services in their respective areas, asking them to meet the challenges faced by Pakistan in European markets. He also suggested the ministry to devise strategies for promotion of Pakistani products, calling upon trade officers to take advantage of opportunities offered by China-Pakistan Economic Corridor (CPEC).

Quoting the figure, APBF Chairman Ibrahim Qureshi observed that the textile and clothing exports shrank 9.95 per cent in the first quarter (July-September) FY24 to $4.12 billion from $4.58bn in the corresponding period last year. In September, the textile and clothing exports contracted 10.88pc to $1.36bn from $1.52bn in the same month last year.

The Caretaker Commerce Minister last month announced that the government would soon offer regionally competitive energy prices to textile exporters and resolve their cash flow issues by releasing pending sales tax refunds. However, the decision was yet to be implemented. The exports of textile and clothing contracted by 14.63pc to $16.50bn in FY23. However, the total merchandise exports dipped 12.71pc to $27.54bn from $31.78bn in the preceding year.

The PBS data showed the exports of readymade garments shrank 11.21pc in value in July-September but grew by 8.24pc in quantity, while knitwear dipped 15.83pc in value but grew 34.14pc in quantity, bedwear posted a negative growth of 10.02pc in value and but grew 1.39pc in quantity.

However, towel exports slightly increased by 2.89pc in value and 16.24pc in quantity, whereas those of cotton cloth dipped by 18.15pc in value and 7.50pc in quantity.

Oil and eatables imports dipped 29.41pc in the first quarter of the current fiscal year to $5.35bn from $7.58bn a year ago, PBS data showed.

A noticeable decline was observed in both the quantity and value of major imports during the period under review amid the economic slowdown and a steep fall in the purchasing power of consumers.

In dollar terms, the oil import bill dipped by 28.03pc to $3.50bn during 3MFY24 from $4.86bn in the same period last year.

In rupee terms, the decline was relatively lower at 5.86pc because of massive currency devaluation and amounted to Rs1.02tr this year, compared to Rs1.08tr last year.

As a consequence, exports of petroleum products were down by 82.82pc in 3MFY24 from a year ago. The foreign sales of crude oil and petroleum products were down by 100pc and 39.43pc, respectively.

According to the PBS data, the imports of petroleum products declined by 36.55pc in value during July-September and 26.03pc in quantity.

Import of crude oil decreased by 18.36pc in quantity while the value decreased by 30.10pc.

Similarly, liquefied natural gas imports dipped by 7.36pc during July-Sept FY24 on a year-on-year basis. On the other hand, liquefied petroleum gas imports declined 7.79pc in the months under review.

The reduction in import quantities of crude oil and petroleum products is a clear indication of reduced transportation amid slowing down economic activities.

This also suggests lower capacity utilisation of local oil refineries, compared to the last year, resultantly affecting their profitability.

The food import bill also fell by over 32pc to $1.85bn in the first quarter from $2.72bn in 3MFY23 with a major drop in the arrival of palm oil and pulses.