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Low AUP hindering Forex earning
Dec '08
Available statistics show that average unit price (AUP) of domestic products in the international market has declined sharply during the ongoing economic year.

Data show that during July to October period of present fiscal, the AUP of most of the value-added textile products registered plunge over the corresponding period of previous year.

The AUP of readymade garments fell almost 5 percent during the said period in comparison to similar period previous year. For knitwear, fall was nearly 10 percent. Bedwear registered decrease of over 9 percent; towel by 6 percent; Art silk and synthetic textile was down by about 4 percent.

In an exclusive interaction with Fibre2fashion.com, Mr Zubair Motiwala, Prime Minister Task Force member and former President Karachi Chamber of Commerce & Industry (KCCI), told, “The major reason is the uncertainty with the timely delivery of export shipments especially during the Christmas season in America and Europe, which is resulting in the low export price of local value-added textile products.”

Market experts opine that infrastructure problems like over crowding at the port region and deteriorating law and order situation are causing less demand for Pakistani finished products.

Mr Motiwala supported this by saying, “Foreign buyers are interested to import the raw material from Pakistan instead of finished products because of inability of the local exporters to deliver the orders in time.”

This year export volume of finished goods showed a substantial fall; instead there is a rise in grey fabric and yarn export.

Another reason for decreasing AUP is depreciation of Pakistani rupee against US Dollar. In last nine months, local currency value went down by 22 percent. “Due to this reason, foreign buyers have started demanding lower price as our importer now getiing more profit for the same product. This situation has resulted in to decline of 4 to 5 percent in over all prices,” lamented Mr Motiwala.

The incidents of terrorism are creating bad impression abroad, due to which buyers from other countries are avoiding coming to Pakistan for their business activity.

Falling cotton prices in the international market and the same rising in the domestic region can be attributed to decreasing AUP. The average unit price of raw cotton surged by 2.43 percent in July-October of this fiscal and cotton yarn was up almost 4 percent during the said period.

Thus, for a country that is in need of higher amount of foreign exchange to keep up its pace, low AUP in the international market has proved detrimental.

During the period from July to October, total export of textile products touched $6.4 billion compared to $5.7 billion last year. However, this figure is still 4 percent low against the export target for these said months.

Fibre2fashion News Desk - India

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