Japan International Cooperation Agency (JICA) has initiated `Industry Up-gradation Programme' in collaboration with Small and Medium Enterprises Development Authority (Smeda). According to a press release issued here on Feb 16, a meeting was held with Shahab Khawaja, Chief Executive officer of Smeda in the chair to review the progress as well as the future line of action in this regard.
The meeting was attended by Manabu Suzuki, co-ordinator, JICA, and the senior volunteers from JICA Kunihiro Sakai, Kotaro Otaka.
From Smeda, Anjum Ahmed, General Manager, DC& IL, Shahid Chaudhry, GM, TSG, Ijaz Majeed, GM, Sindh, Khalid Kifah, Head, SMEDA Punjab, Fayyaz Riaz, Assistant Manager and Asad Zahoor, Manager, Sector Strategy and Analysis Department attended the meeting. The Senior Volunteers to be deputed by JICA for this purpose would be stationed at Smeda office to provide assistance to the local industry in improving product quality, productivity, management systems and adopting the latest technology.
One JICA expert along with a co-ordinator has already arrived in Pakistan while a batch of three more experts would arrive in April. The technical expert and the co-ordinator, who arrived at Lahore in December last were visiting the industrial units in Lahore and Karachi.
They had also met with the trade associations concerned to have a clear concept of the state of the industry. The local industry had extended an overwhelming response to these experts.
The selection of the factories for up-gradation would be made in consultation with the associations concerned jointly by JICA and SMEDA.

Khalid Iqbal Siddiqui, Research Analyst at Brokerage Invest Capital and Securities, in his research report presented an analysis of the three textile sub-sectors (spinning, weaving, and composite) based on results of 15 textile spinning companies, 10 composite units, and 5 textile weaving companies. These 30 companies roughly make up 50% of market capitalisation of listed textile companies.
Spinning sector was faced with 14% higher average cotton prices during the year 2003. Spinning sales grew by 12% in 2003. Gross margins for the textile-spinning sector declined from 13.1% in 2002 to 11.2% in 2003. In absolute terms, the gross profit for the 15 spinning sector companies declined by 4% from Rs. 2.7 billion to Rs 2.6 billion, said the report.
The weaving sub-sector has been the one sub-sector whose earnings have declined in absolute terms (based on 5 companies). In absolute terms, gross profit of 5 weaving sector companies declined by Rs162 million (16%).
The operating margin for the weaving sector companies also remained lower than 2002, with a decline from 8.1% to 5.7%.
The textile composite sector saw good growth in revenues in 2003 (9.3%). However, it was the same story of decline in gross margins and rupee gross profit as was with the spinning and weaving sub-sectors.

The European Union has announced to withdraw General System of Preferences (GSP) duty-free concession on import of clothing from Pakistan from January 2005. Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Tahir Aziz said the EU has adopted Regulation No 2331 of December 23, which tends to remove duty-free concession for import of clothing from Pakistan.
The PRGMEA Chief said with the withdrawal of the GSP, Pakistan would lose its edge over India and Bangladesh in garment exports, and buyers would now turn to our rival countries in exports. He said when the duty-free status was accorded to Pakistan, the EU buyers refused to accept the exporters' request to share the benefit with them, but they had refused, saying that the benefit had been passed on to the consumers.

Investment and Privatization Minister Dr Abdul Hafeez Shaikh said the government planned to attract $1 billion foreign investment during the year 2004. He was talking to participants of the International Trade and Industrial Fair (ITIF) organized by the Ministry of Privatization and Investment at the Expo Centre.
He said the government was giving incentives to textile and agriculture sectors mainly because they were backbone of the economy. He said infrastructure facilities were also being improved to facilitate investment. Dr Hafeez said the Fair would help build the confidence of foreign investors to visit Pakistan. Earlier, Sindh Governor Dr Ishratul Ebad inaugurated the three-day exhibition.
A large number of companies from within the country had set up stalls in the Fair. A number of foreign countries, including Korea, Japan, Germany, Italy, Ukraine, Saudi Arabia, the UAE, China and Singapore, had also displayed their products in the textile, leather and engineering sectors.

A high-powered Pakistani delegation's visit to the European Union (EU) countries proved futile, as the EU refused to do away with the 14.1% dumping margins imposed on Pakistani bedlinen export, with effect from March this year. The EU has further refused to minimise the level of anti-dumping duties. Pakistan has also filed a review for the restoration of the abatement of duty. The delegation had also taken up the issue of withdrawal of GSP concession on Pakistani textile clothing and made-ups with effect from January 2005.

The delegation informed the EU Commission that Pakistan was not satisfied with their calculations and wanted that the EU's calculations should be done in collaboration with the Pakistani experts and emphasised that the GSP concessions should be available to Pakistan after January 1, 2005.

All Pakistan Cloth Exporters Association has demanded of the government not to change its policies so frequently and take into confidence the exporters views before issuance of any orders related to them. In a statement, APCEA Chairman Ahmad Kamal said that exports were passing through a critical phase of improving the quality of their products in order to face the challenges of 2005. Hence they deserve full government's support and patronage and hoped the government would continue to interact with exporters and pay a sympathetic consideration to their problems.
The APCEA Chief said that most of the small exporters were still importing raw materials under SRO as they were facing some practical difficulties in switching over the process from SRO to DTRE.

Chairman Banking, Credit and Finance Committee, Federation of Pakistan Chambers of Commerce and Industry Mirza Ikhtiar Baig has expressed the fear that if the European Union loses its case against the US on preferential treatment in the WTO, then the EU will withdraw zero-rated customs duty on Pakistani textiles. The preferential treatment by the EU has been granted under the Generalised System of Preferences or commonly called as GSP scheme of textiles.

Addressing a large gathering of businessmen at the Textile Asia Conference organised under the banner of International Trade and Industry Fair, he said that the potential threat to Pakistani exporters in 2006 or earlier is when the EU loses its case in the WTO (World Trade Organisation), then it will withdraw zero per cent duty granted under the GSP scheme. He said that the US had signed Trade and Investment Framework Agreement (TIFA) with Pakistan but it would not translate into preferential duties for textiles in the near future.

He predicted that Pakistan's exports of textiles and clothing would cross the $8 billion mark during the current financial year. Last year, the exports of textiles stood at $7.5 billion.

Pakistan's cotton growers are concerned about plans to build a buffer cotton stock in the country, a proposal floated by All Pakistan Textile Mills Association (APTMA) to maintain price stability and consistent supply at the local market.
Adil Mehmood, Senior Vice Chairman APTMA said the country should have buffer stocks for at least three months in order to keep prices under control and ensure availability of the commodity. It will help exporters to plan export strategies while keeping in mind stock availability and the prices.
Mohammed Ayub, President of Kissan Welfare Council (KWC), criticised the idea of building up cotton buffer stocks, saying proponents of this idea are not in favour of growers. How can a country create buffer stocks of cotton when it is already facing a shortage of crop and is importing cotton to meet local demand? Mr Mehmood said around 1.5 million bales have been imported in the country whereas 0.5 million are still expected to be imported from different countries. Growers are of the view that local farmers would face some competition following cotton imports from India but they are not likely to be adversely affected by imports.

Pakistani spinners and weavers are now being adequately compensated for higher cotton rates, as they are getting better per unit prices for their products compared with last year. Their main worry remains cotton procurement from world market as local production remains much below expectation.
Pakistan exported 9% more of yarn with 13% higher value during the first six months of current fiscal year compared with exports made during corresponding period last year. The country during first six months of fiscal year 2002-03 exported 956 million kg of yarn worth $622 million. The exports increased during the corresponding period of this fiscal to 1.04 billion kg that fetched $703 million.
Local production of cotton suffered badly this year. The government expected cotton production to be over 11 million bales this year. The projected production of cotton was brought downwards several times and finally government insisted that the cotton production this year would be a little over 10 million bales.

The Federal Government has launched production of contamination free cotton programme and the provincial governments have been directed to make all possible necessary measures to ensure production of high quality contamination free cotton. According to official sources the governments have been further advised to exercise their powers and ban the use of jute and Polypropylene bags for transportation of seed cotton.
The arrival of cottonseed in ginning factories must be in cotton cloth bags or open trollies and market committees of the selected districts should be mobilised effectively to check contamination of cotton by the traders during storage.

A large number of hosiery units have been closed down rendering over 0.4 million skilled and unskilled workers jobless. The high cost of cotton and cotton yarn in the domestic market since the start of new cotton season from September 1, 2003 is being blamed for the sudden closure of a large number of value-added textile industries, said Vice Chairman Pakistan Hosiery Manufacturers Association (PHMA) Akhtar Yunus.
Since the beginning of new cotton season, the value-added textile industry had been asking the government to impose ban on export of cotton and cotton yarn but no action has been taken to protect the domestic industry. He said that the textile ancillary industry also suggested to impose 10% export duty on cotton yarn so that prices in the domestic market could be brought down to meet the value-added textile industry's costing to keep its products competitive in the world market. Presently, out of $7 billion textile exports, four major value added textile products - bedlinen, hosiery, readymade garments and fabrics - are fetching over $1 billion in foreign exchange whereas cotton yarn exports are stagnant at around $1 billion for the last couple of years.

Unjustified delays and unreasonable objections raised by the custom officials of the manufacturing bond at the Karachi port is increasing cost of imported cotton, which indirectly would affect exports, said Adil Mehmood, Senior Vice Chairman, All Pakistan Textile Mills Association (APTMA).
Mr Mehmood said the government has introduced DTRE and Manufacturing Bond on the Karachi port to avoid sales tax delays, but regretted that government officials were creating problems for the exporters and were not clearing imported-cotton of exporters while raising unreasonable objections. He urged the member Customs Karachi and Collector Customs appraisal to check the problems of the exporters, which could severely damage cotton importers vis-à-vis Pakistani exports.

Punjab Governor Lieutenant General Khalid Maqbool (Retd), while chairing a meeting of the working group of higher employment, said that the Federal Government has planned to establish 'Garments Cities' at Lahore and Faisalabad.
He stated that land measuring 1500 acres have already been acquired for this purpose at Lahore, while at Faisalabad this land would be marked shortly in Faisalabad Industrial Estate. He said that half a million unemployed would benefit from these 'Garments City' ventures. The Governor further pointed that land has also been marked for Export Processing Zones at Sargodha and Multan.

Textile quota exports to European Union (EU) have registered 11% increase in quantity and 26% in value during 2003, when compared with previous quota year of 2002. EPB sources said that despite restrictive export policy to avoid over-programming, exports of textile quota items to EU have been increasing over the years, and the quota year 2003 was no exception.
Consequently, like other countries, our exporters had reached a level of over 95% in utilization of quota in several categories. In view of the negative effects of over-programming in the past, the government took all necessary measures this year to enhance exports.

All Pakistan Textile Mills Association (APTMA) called upon the President of Habib Bank to liberalize the financing in order to enable the textile industry to face post-quota world challenges. An APTMA delegation, led by its Chairman, Waqar Mannoo during a meeting with the President of Habib Bank Limited and bank's senior management, said after the abolition of quota in 2005 the textile industry needed Habib Bank’s support to face the challenges. He also urged for liberalization of project financing.
The President, HBL, Zakir Mehmood, promised all possible help to the delegation.

Federal government may 'buy back' the sovereign guarantee given to the country's largest manmade fibre producer to protect its PTA productions, making textile exports competitive, industrialists said. The textile industrialists were lobbying to see an end to the 15% duty on import of PTA, which protects Pakistan PTA - one of the major but financially, troubled business arms of ICI Pakistan.
We have asked the government to withdraw duty on PTA import, said Waqar Mannoo, Chairman, All Pakistan Textile Mills Association (APTMA).

The Government of Pakistan had given a 10-year sovereign guarantee to ICI Pakistan that at least a 15% duty will remain imposed on PTA imports till 2008.

This is a form of subsidy, which affects our competitiveness, said Iqbal Ebrahim, Director, Al-Karam Textile Mills, one of the country's largest textile composite units. Reports indicate that the government may use a large share from export development fund for making payment to the ICI Pakistan.

Chinese companies are keen to set up export-oriented industries in Pakistan. With Pakistan's raw material combined with the Chinese expertise and machinery, the two countries could develop a strong industrial base to earn foreign exchange, said Yu Bo, a local businessman.
Since, China is rapidly facing restrictions on its export quota from western countries including the US, the entrepreneurs particularly in private sector are looking forward to seeking help of their friendly countries to achieve their export targets. Some of the Chinese are even prepared to shift their industries to Pakistan. Pakistan's move to set up a special economic zone for the Chinese investors has special attraction for us, said another Chinese investor Ma Xian.

Improving relations between India and Pakistan could open a window of opportunity for commodities trade and greatly benefit the neighbours, traders said. Pakistani mills have booked about 150,000 cotton bales from India for the first time in several years after local prices touched record highs in recent months.

Traders said India's cotton exports to Pakistan could gradually rise, as the neighbouring country does not grow some of the cotton varieties sown in India. Naseem Usman, a broker in Karachi, said Indian cotton had started making its place into the Pakistani market because of its quality and competitive price.

Deputy Economic Counsellor of USA in Pakistan Joel Reifman has said that the US government was considering to review its subsidization policy to comply with the WTO obligations. He was responding to the queries of the Chairman and Members of All Pakistan Textile Mills Association (APTMA) regarding subsidies to US growers during his visit to APTMA principal office.
According to APTMA, Mr Reifman informed the meeting that the US government was interested in streamlining the Pakistani's economy particularly textile which is the major contributor and suggested that the Pakistan government should create investment-friendly atmosphere to encourage US investment in the country.
Chairman APTMA Waqar Monnoo gave a presentation on the textile sector in which the growth of the textile industry particularly emphasizes on the spinning, weaving and value-added exports to US.

South Asian States will start breaking down trade frontiers from 2006 under an agreement approved at the SAARC summit to create a free trade zone in one of the world's most populous and poorest regions, Pakistan's Foreign Minister Khurshid Mahmud Kasuri said while announcing agreement on the SAFTA framework.
The South Asian Free Trade Area agreement will take effect from January 1, 2006 in all SAARC countries simultaneously. The agreement envisions a free trade regime among Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka, home to one-fifth of the world's population and almost half its poor. They make up the South Asian Association for Regional Co-operation (SAARC), which was founded in 1985 to forge economic solidarity and boost standards of living. Implementation of the new tariff regime offers three sets of deadlines according to member states' varying economic prowess.

The government has made progress to a great extent in establishing joint investment companies with the governments of Iran and Turkey, said Finance Minister Shaukat Aziz. He said the government was making hectic efforts to boost economic activities on domestic and international levels to improve bilateral trade with other countries for boosting exports.

Shaukat Aziz said the government would announce second generation of reforms in the coming budget for 2004-05. These reforms will not be confined to financial institutions but would also include health and education sectors as well. He said exports have crossed $ 12 billion while imports of machinery have also surged and that is a clear indication that investment activity has picked up significantly.