Garment exporters face tough times as Pakistan gets European GSP

[Sugarcane]

Competition is set to intensify for Bangladesh's apparel sector as the European Union has granted trade privileges to Pakistan.

The duty waiver scheme, known as generalised system of preferences, will come into effect for Pakistan from January 1 and will apply to 75 products, mostly garments. It ends in 2017.
Bangladeshi garment makers said the duty privilege will boost Pakistan's exports by $1 billion a year to the EU market, which now consumes 60 percent of Bangladesh's total garment exports.

At present, Pakistan exports garments worth more than $6.1 billion to the European bloc, and once the duty benefit takes effect, Bangladesh will have to compete with Pakistan in the market. Under the same scheme, Bangladesh as a least developed country enjoys complete duty waiver from the EU for all products except arms.

Without GSP, Bangladesh would have to pay 12.5 percent duty on its $12.57 billion garment exports recorded last year. “A good number of orders, especially knitwear, have already shifted to Pakistan from Bangladesh as retailers knew about the award to Pakistan from before,” said Shahidullah Azim, acting president of Bangladesh Garment Manufacturers and Exporters Association.

The EU started considering the GSP status for Pakistan in October 2012, after the country was affected by devastating floods in 2010. “Our garment sector is already being affected by the current political deadlock. Eroding competitiveness will only mean trouble for us,” Azim said. Retailers do not want to continue work in a risky environment in Bangladesh; Pakistan will be their next best choice as the South Asian nation has an important raw material, cotton, he added.

If Pakistan can impress the retailers, they will not go to other destinations, he said. Bangladesh's garment sector is already losing its competitiveness due to the falling Indian rupee and an appreciating taka against the dollar.

Normally, such a move by the EU would not have affected Bangladesh, said Mustafizur Rahman, executive director of Centre for Policy Dialogue. “But timing is a factor, as the garment sector is passing an unstable political situation now.”

Earlier, Bangladesh urged the EU to set a cap on the import of Pakistani products, as both the nations produce some common items. But the EU did not set the cap, and awarded the GSP status to Pakistan on December 12.

Bangladesh exported garment products worth $12.57 billion to the EU in fiscal 2012-13 and $11.38 billion in fiscal 2011-12, according to data from Export Promotion Bureau. Due to the GSP, Pakistan's textile exports to the EU may increase by $580 million-$700 million a year, said Pakistan Readymade Garments Manufacturers and Exporters Association.

Pakistan's exports to Europe totalled $6.1 billion in fiscal 2012-13, accounting for 25 percent of the country's total exports, according to the association.

Garment exporters face tough times as Pakistan gets European GSP

Well - Some good news for Pakistan. Hope our govt. will be able to provide energy to industry and materialize this opportunity.

 

[farhan_9909]

Bangladesh Total export in 2007 was 12billion dollars and now they are at 28billion dollars..More than 100% increase in last 5 years

Pakistan Total Export in 2007 was 17-18billion dollars and now after 5 years it is just 26billion dollars which means merely a 30-35% growthr ate in the past 5 years

 

[Truth Finder]

Currency depreciation=Export growth=Improved CAD=Economic recovery=Low inflation=Infrastructure development.

If Pakistan misses this golden chance this time, none but God can save the country.

 

[Contrarian]

Bangladesh Total export in 2007 was 12billion dollars and now they are at 28billion dollars..More than 100% increase in last 5 years

Good!
We need Bangladesh to move up the economic ladder very fast!

 

[Truth Finder]

Good!
We need Bangladesh to move up the economic ladder very fast!

Economists believe BD to surpass Pakistan within 15 years.

 

[Contrarian]

Economists believe BD to surpass Pakistan within 15 years.

They need to surpass India.
The only way to stop immigration from BD to India is to make BD economically vibrant.

 

[Truth Finder]

They need to surpass India.

That's not happening in the next 99999 years.

 

[farhan_9909]

Economists believe BD to surpass Pakistan within 15 years.

Not possible

Becaxce Pakistan GDP growth rate has just recently surpassed 5%

and According to forecasts Pakistan GDP will cross 300billion dollars by 2015 while Bangladesh will be more likely at 130billion dollars

In 1970s pakistan GDP was 1.8% of India and still it took india decades to surpass pakistan in 2008

Pakistan | Economic Forecasts | 2013-2015 Outlook

Bangladesh | Economic Forecasts | 2013-2015 Outlook

NOTE:This is based of last year predicted growth rates of 3.6% for Pakistan which will surely change this year as first quarter growth rate has already surpassed 5%.WHich means the 300billion mark could be repalced by 320billion dollars or even more since if 5% growth rate is achieved this year than expect 6% next year while the base for the above forcast is based at less than 4%

For Bangladesh they had considered more than 5% growth

After half a decade,We got a govt now who can atleast focus on economic front.Watch our growth rate after just 2 years

 

[Luftwaffe]

Bangladesh Total export in 2007 was 12billion dollars and now they are at 28billion dollars..More than 100% increase in last 5 years

Pakistan Total Export in 2007 was 17-18billion dollars and now after 5 years it is just 26billion dollars which means merely a 30-35% growthr ate in the past 5 years

Surprised? that is because more than 30-40% garment factories moved from Pakistan to Bangladesh due to non availability of electricity deliberately by every government and rishwat % asked in every export consignment.

Guess what those businessmen who went to BD are now crying for various reasons, ghar ki murghi daal barabar.

 

[Truth Finder]

In 1970s pakistan GDP was 1.8% of India and still it took india decades to surpass pakistan in 2008

Source please. Mainly for 1.8% figure. What are you taking about? It was between 10% to 18%.

 

[Chak Bamu]

Pakistan has a lot more potential and a lot more complications compared with Bangladesh.

For textiles, Pakistan is a totally vertically integrated set up. We have a lot more expertise available than Bangladesh, who excel in stitching garments.

If it were not for tax break available to Bangladesh, it would not have had much growth over the past 15 or so years.

Anyone who thinks that Bangladesh would out-pace Pakistan over the medium to long term can not be taken seriously.

 

[Sugarcane]

Pakistan has a lot more potential and a lot more complications compared with Bangladesh.

For textiles, Pakistan is a totally vertically integrated set up. We have a lot more expertise available than Bangladesh, who excel in stitching garments.

If it were not for tax break available to Bangladesh, it would not have had much growth over the past 15 or so years.

Anyone who thinks that Bangladesh would out-pace Pakistan over the medium to long term can not be taken seriously.

Exactly - Bangladesh got tax break and we got PPP, and in 2017 their tax breaks will be over and hopefully our energy problems will be reduced and hopefully law and order situation will be improved as well. But these 2 years are very challenging, all political parties and media houses should support govt. in their good initiatives and policies for sake of nation. Politics can be done later.

 

[Chak Bamu]

Exactly - Bangladesh got tax break and we got PPP, and in 2017 their tax breaks will be over and hopefully our energy problems will be reduced and hopefully law and order situation will be improved as well. But these 2 years are very challenging, all political parties and media houses should support govt. in their good initiatives and policies for sake of nation. Politics can be done later.

For sake of Bangladesh, I hope they diversify well and fast. As far as I am concerned, their garments industry keeps them afloat. Their garments industry, in turn is kept afloat by tax breaks and really cheap labor.

Given equal rates of electricity and similar stability, Pakistan would always steam ahead in Textile sector. We have some serious advantages.

By the end of 2016, we should have a much better energy situation here in Pakistan. The next two years are the toughest though, no question about it.

 

[lightoftruth]

The textile sector in the country is expected to witness improvement as the export demand has begun to pick up, according to Dun & Bradstreet India. “The recent pick up in export demand is expected to improve the fortunes of textile sector in the coming year,” as per Textile Sector Outlook 2014 by Dun & Bradstreet India Senior EconomistArun Singh.

Revival of demand from the US market along with continued weakness of rupee against US dollar is expected to aid in higher export realisation in rupee terms, the report said. In Dollar terms the total value of textile products exported from India touched $33 billion in fiscal year 2013, a decline of 3 per cent compared to previous fiscal.

Lower demand from key markets of the US and EU, which were reeling under recessionary condition was the major reason for the dip in exports during fiscal year 2013.

However, growth in textile exports have picked up since April this year compared to same period last fiscal year. During April-September 2013, textile exports from India reached $16 billion, which is 8 per cent higher than the exports during the same period last year.

Pick-up in demand from the US market is the prime reason for this reversal. “With economic scenario in the US showing signs of revival, demand for textiles from US consumers is expected to go up. This would help in the growth of textile exports from the country,” the report said. Developed markets of the US and select countries in the European Union region account for the bulk of textile exports from India.

Economic recession in these markets since 2008 impacted the textile exports from India. To reduce the dependence on these markets the government has incorporated several measures in the Focus Market Scheme.

As per the new measures, textile exporters would be able to avail duty credit scrip on export to 26 additional countries apart from existing destinations.

Continued government schemes in the form of policies like Focus Market Scheme would encourage exporters to explore markets outside the traditional destinations of the US and EU. These developments are expected to widen the export markets for textile exporters and gradually limit the over dependence on select markets.

However, the report further said with domestic economic growth expected to remain subdued during first half of 2014, improvement in domestic consumption of textile products is still some distance away.

For the most part of 2012 and 2013 the textile sector was besieged by twin impacts of slowing domestic consumption and slowdown in export demand.

Textile exports to improve in 2014 on rising demand | Business Standard

 

[AZADPAKISTAN2009]

Well for 5-10 years we won't make a dent a our Textile market is "THUP" no electricity in country
not sure what we will do with GSP status when we can't start factories