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Pakistan's exports seen crossing $10 billion mark

KARACHI (January 15 2003) : The cotton trio – production, consumption and exports – is all performing well to attain the country's exports target of 10.4 billion dollars set for the current fiscal year, said textile millers and exporters here on Tuesday.

However, the ginners are divided over the cotton production estimates, finding themselves in a difficult position and not taking risk to accept a higher cotton production which may cause a decline in the cotton prices.

The July-December export figures have already reached 5.197 billion dollars, just about 50 percent of the target for the whole year.

Despite various claims about cotton production in the country, some ginners believe that the ex-ginned cotton would cross 10 million bales this season.

Ginners from both Sindh and Punjab have confirmed that the arrivals of phutti are continuing but could not give the estimate about the flow of phutti.

“The pace has slowed down but arrivals are continuing,” said a ginner from Sanghar area.

In the last figures issued by the Pakistan Cotton Ginners Association by end-December 2002, production, both from Sindh and Punjab, showed increase, compared to last year.

The country has so far registered a growth of 11.2 percent in cotton production, with Punjab 14 percent and Sindh 2.17 percent.

“These indicators clearly tell us that the production would go beyond 10 million bales and would be able to meet the requirements of the textile mills,” said a spinner.

The textile millers said that their consumption has gone to over 11 million bales because of over $ 1 billion investment in this sector.

“This is clear from the increasing exports of the textile sector. In the last six months, the textile exports grew by 16 percent,” said a textile exporter.

Though cotton prices are much higher, compared to last year, some ginners fear price crash because of the large size of unsold stocks.

Textile millers were not ready to accept the figures of unsold cotton bales, issued by the PCGA.

In the last report, the PCGA showed an unsold stock of about 2 million bales.

REUTERS ADDS: Pakistan's exports, which gained more than 16 percent year-on-year in the first half of fiscal 2002-03, are set to cross the annual $10 billion mark for the first time, exporters said on Tuesday.

Government has set an export target of $10.4 billion for the 2002-03 financial year compared with total exports of $9.1 billion a year ago.

Total July-December exports stood at $5.197 billion compared with $4.457 billion recorded in the same year-ago period.

The textile industry, which accounts for more than 60 percent of total exports, fared well in the last six months, with exports of $3.313 billion against $2.846 billion during the July-December 2001 period.

“We have come out from the shadow of the September 11 (2001) events,” said Majyd Aziz, a leading textile exporter. “Our exports are doing well on the back of increased orders from the European Union and the US”.

Exporters said trade measures by the European Union, which became effective in January last year, had helped exports recover.

The EU removed all tariffs on clothing from Pakistan and increased quotas for Pakistani textiles and clothing by 15 percent.

Pakistan's exports reached $9.1 billion in 2001-02, hit by a slump in orders due to a slowing global economy following the September 11, 2001 attacks and the US-led war on terror in neighbouring Afghanistan.

But Islamabad's relations with the West improved rapidly after President Pervez Musharraf backed the US-led war on terror.

The country not only won increased market access in the European Union, but received billions of dollars in grants and aid.

“Judging by the trend we have seen in the last six months, I believe our exports are poised to cross the $10 billion figure this year,” Aziz said of the $10.4 billion export target set by Islamabad in June.

REDUCED MARGINS: But exporters said that despite increased exports their margins had shrunk due to the rising value of the rupee, which has appreciated almost nine percent against the dollar since September 2001 to 58.20/58.22 currently.

This has been largely due to the global crackdown on money laundering that has forced Pakistanis living overseas to send remittances using official banking channels.

“Our profitability has been affected by the rising rupee value which had a negative impact on our cash flows and made it difficult for us to invest more on new marketing initiatives,” said another exporter, who asked not be named.

He said the central bank could do more to prevent the sharp depreciation in the dollar against the local currency.

Supporting the US currency at this level was “something better than nothing”.

Exporters, however, fear the global economy could be thrown back into recession if the United States attacked Iraq.

“This is a worrisome factor,” Aziz said. “A prolonged war in Iraq is going to hurt exports and could affect their momentum.”

“Pakistan has enjoyed a 'sympathy factor' which has helped us to secure more orders. If there is a war in Iraq, I think that sympathy factor would be missing.”

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