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Express Tribune
24-05-2025
- Business
- Express Tribune
Ceasefire brings no relief for exporters
Listen to article Nearly two weeks after Pakistan and India agreed to a fragile ceasefire, the Pakistani business community, particularly exporters, remains gripped by anxiety. With no clear timeline for peace talks between the two nuclear-armed neighbours, fears of renewed tensions loom large. "War-like situations are disastrous for countries like Pakistan," said Ijaz Khokhar, a textile exporter from Sia PHOTO: REUTERS lkot. "Uncertainty is our biggest enemy right now. Export shipments are stuck, buyers are nervous, and every day without clarity costs us millions." The ceasefire, brokered after four days of intense border clashes, has done little to ease the strain on exporters. Even before the conflict, they were grappling with the aftermath of Trump-era tariffs. International buyers had initially cancelled orders when the US imposed tariffs on Pakistani goods, only to rush back after a 90-day pause was announced. "Now, buyers want us to absorb half the tariff costs," Khokhar explained. "But our profit margins are already razor-thin. How can we survive like this?" Compounding these challenges, a recent protest by Sindhi nationalists on the Indus Highway over water disputes brought logistics to a standstill. "Trucks carrying export goods were stranded for days," Khokhar said. "We are racing against the clock to clear pending shipments before the US tariff pause expires. Delays could mean losing buyers permanently." Misinformation during the conflict further rattled global clients. Fake news spread by Indian media claiming Karachi Port had been destroyed caused panic. "International buyers froze new orders overnight," said Nazir Saeed, a Karachi-based exporter. "They don't want their supply chains disrupted. Restoring their confidence will take months, if not years." While US President Donald Trump recently expressed interest in boosting trade with Pakistan, exporters remain skeptical. "Trade deals depend on private-sector partnerships, not government announcements," Saeed noted. "We already work with American buyers. Unless Pakistan diversifies its exports, like investing in value-added textiles or tech products, Trump's words won't translate into real growth." Pakistan's economic fragility adds to the gloom. Despite the military's bolstered image post-conflict, the economy continues to wobble. The International Monetary Fund (IMF) projects GDP growth at just 2.6% for the year 2025, far below the 5% needed to curb rising unemployment. A recent $3 billion IMF bailout has come with harsh conditions like tax hikes, energy subsidy cuts, and currency devaluation. "The IMF loan stabilised the rupee temporarily, but inflation is still at 28%," said economist Ayesha Malik. "Businesses are drowning in high input costs and low demand. Without structural reforms, recovery will remain elusive." For exporters, the stakes are existential. Textiles, which account for 60% of Pakistan's exports, face fierce regional competition from Bangladesh and Vietnam. "Global buyers demand sustainability and innovation," said business analyst Farhan Ahmed. "Pakistani firms lack the technology and financing to upgrade. Meanwhile, India and Bangladesh offer cheaper labour and better incentives." Ahmed warns that reliance on traditional exports like raw cotton and leather could backfire. "The world is shifting toward value-added goods. If Pakistan doesn't adapt, its share in the US and European markets will keep shrinking." However, despite the bleak outlook, some see a silver lining. The ceasefire, though precarious, offers a window for diplomacy. "Peace talks could revive regional trade, especially with India," Malik said. "A reopened India-Pakistan trade route would cut costs and boost exports for both sides." However, with elections approaching in India and political instability in Pakistan, few expect breakthroughs soon. For now, exporters are left navigating a storm of uncertainty. "We are tired of crises, tariffs, wars, protests," Saeed said. Pakistan's economy won't strengthen until leaders prioritise stability over short-term wins. "Peace won't fix our economy unless we innovate. Global buyers need value, not excuses. Without upgrading, Pakistan will keep losing ground," he added.
Express Tribune
17-03-2025
- Business
- Express Tribune
EFS amendments feared to harm apparel sector
The surge in cloth prices and tailoring charges has prompted most citizens to prefer stitched garments The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has opposed the recent amendments to the Export Facilitation Scheme (EFS), warning they will harm the apparel sector, particularly the small and medium enterprises (SMEs). In a statement, former PRGMEA chairman Ijaz Khokhar urged the Federal Board of Revenue (FBR) to take strict action against the companies that had misused the EFS facility instead of penalising the entire export sector. He emphasised that SME exporters were already struggling and there was a need to delay the amendments, which would prevent further damage. A major concern is the reduced utilisation period for the imported raw material, now capped at nine months, with extensions requiring approval of a board committee. The apparel production involves multiple steps including designing, sourcing, manufacturing and shipping. Such a restrictive time frame would make it difficult for the exporters to meet commitments, he said. Another issue is the requirement of bank guarantee for the enhanced face value, which disproportionately affects the SMEs. Many lacked financial resources to secure such guarantees, potentially barring them from essential export facilitation benefits, he said, adding that the policy limited their ability to expand into international markets. He voiced fear that the amendments introduced through the SRO 301(I)/2025 would weaken Pakistan's competitiveness in apparel exports. The industry is already grappling with rising production costs, energy shortages and logistical challenges. Additional regulatory burdens will only worsen the situation, threatening jobs and the export potential. Khokhar noted that global buyers were highly sensitive to the delivery timelines and bureaucratic delays could result in losing the orders. "The new amendments impose unrealistic restrictions on the utilisation of raw material and require bank guarantees that the SMEs cannot afford. These policies will negatively impact Pakistan's export growth and textile sector," he remarked. The ex-chairman also expressed concern over the increased compliance burden and policy uncertainty, which could weaken Pakistan's position against regional competitors like Bangladesh and Vietnam. The exporters need a streamlined, transparent system to facilitate trade rather than complex regulations that lead to delays and additional costs. They are already navigating economic challenges, including the fluctuating currency rates and increasing freight costs. Introducing more hurdles will only make it harder for them to sustain operations.
