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PRGMEA voices concern over declining garment exports
27 Dec '11
2 min read
The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has voiced serious concern over the declining trend in the country's garments exports.
In the initial five months of financial year that began in July this year, garment exports from Pakistan declined by 9 percent year-on-year, and if the same trend persists, it may result in a decline of nearly 17-20 percent by the end of the fiscal year, Mr. Bilal Mulla, acting President of PRGMEA said.
Mr. Mulla cited energy shortages and high cost of finance, among the reasons that led to the decline in exports of garments.
He explained that the factories fail to execute orders on time owing to shortage of gas and power, which lead to a dip in productivity levels, making the country's garment exporters unable to compete with their counterparts from Bangladesh, China or India.
The high cost of finance also makes it difficult for exporters to seek loans from banks for their working capital needs, he said.
As a result of high borrowing cost, entrepreneurs avoid taking big orders as executing them would require a similarly high amount of working capital, he revealed.
He said there is no substantial reason for the State Bank of Pakistan (SBP) to maintain interest rates at higher levels. Such a policy harms the corporate sector as it deters the entrepreneurs from approaching banks for their capital requirements, the PRGMEA official added.
In the initial five months of financial year that began in July this year, garment exports from Pakistan declined by 9 percent year-on-year, and if the same trend persists, it may result in a decline of nearly 17-20 percent by the end of the fiscal year, Mr. Bilal Mulla, acting President of PRGMEA said.
Mr. Mulla cited energy shortages and high cost of finance, among the reasons that led to the decline in exports of garments.
He explained that the factories fail to execute orders on time owing to shortage of gas and power, which lead to a dip in productivity levels, making the country's garment exporters unable to compete with their counterparts from Bangladesh, China or India.
The high cost of finance also makes it difficult for exporters to seek loans from banks for their working capital needs, he said.
As a result of high borrowing cost, entrepreneurs avoid taking big orders as executing them would require a similarly high amount of working capital, he revealed.
He said there is no substantial reason for the State Bank of Pakistan (SBP) to maintain interest rates at higher levels. Such a policy harms the corporate sector as it deters the entrepreneurs from approaching banks for their capital requirements, the PRGMEA official added.
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