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Pakistan has miserably failed to take advantage of generalised scheme of preferences (GSP)

Written By Views maker on May 04, 2014 | 5/04/2014

          The GSP Plus facility is effective from January 1, 2014 and in the first three months the overall textile growth in the export to EU remained nominal against the estimated growth of 15 percent because of non-availability of gas, electricity and devaluation of dollar. The GSP plus granted to Pakistan is conditional on the ratification and implementation of 27 international conventions in the areas of human rights, labour standards, environment and good governance.

Adoption of these conventions will assist Pakistan in integrating into the cross-border supply chain, which will strengthen manufacturing activity and further promote its exports.  Pakistan has ratified almost all the conventions. The most critical aspect of these conventions is that the EU through the unnamed third parties from civil society or non-government organisations will strictly monitor the compliance.

The overall exports growth in the first quarter remained at two to three percent as compared to estimated seven to eight percent, but in the case of textile sector, the overall growth in the first quarter remained in negative zone, Aneesul Haq, secretary of the All Pakistan Textile Mills Association (Aptma), said that Punjab-based textile industry was on the verge of collapse because of non-availability of gas, electricity.  He said that the Punjab textile sector was exposed to the eight hours of electricity and five days of gas outages owing to which the industry in Punjab was encountering the mammoth loss of Rs80 billion per annum. The industry has to generate electricity on its own, which is too much costly, he added.

This has increased the cost of doing business manifold owing to which their products have become uncompetitive in the EU market despite the fact that Pakistan is enjoying GSP Plus status in the bloc of 27 countries of Europe.

Haq further said that the cost of doing business jacked up by 20 percent in the wake of energy crisis and depreciation of dollar in the country if compared with the cost of doing business of their competitions in the global market.

Textile sector needs availability of gas at least for five days a week and zero load shedding in electricity supply from independent feeders.

In quantity terms, there is some growth of 20 percent in value added textile products that mainly include knit wear, bed wears and readymade garments.

However, overall growth in textile sector is negative.

Pakistan’s textile exports are currently at $13 billion, 35 percent of which are for EU countries.

After the GSP plus facility, “we estimated to increase the textile exports to $14 billion, but it seems now a mission impossible,” said secretary Aptma.

To a question, he said that textile sector had projected to increase the textile exports to EU countries by two billion dollars till the limit of the GSP plus and one billion dollar in the first year of the facility.

“If the situation does not improve then there will be no increase in the capacity of textile sector to generate surplus export and at the end of the day, Pakistan will not be able to exploit the advantage of GSP+ status.”