LAHORE - The government should take preventive measures following the EU and Vietnam have reached an agreement for a free trade agreement, as the emerging economy can capture Pakistan export market, which has already shrunk due to high energy cost and discriminating import duties on industry raw material, experts say.

This agreement is the first of its kind that the EU has concluded with a developing country, which will definitely benefit from its FTA on very nominal duties. Experts feared that Vietnam will capture Pakistan textile value-added export market despite having status of GSP Plus because Pakistan is not availing this facility due to very limited product lines mainly due to strict import policy of government. The exports of textile and clothing have declined sharply during the last six months (July-Dec), industry experts said.

They said that Vietnam has achieved the milestone amid huge foreign direct investment due to attractive policies, which will surpass even the Bangladesh textile export of $27 billion, because the country has fixed the target of $30 billion textile export for current fiscal year.

Pakistan Readymade Garment Manufacturers and Exporters Association (PRGMEA) chief coordinator Ijaz Khokhar cautioned the government to address the issues of value-added textile sector, as the continued drop in exports may widen further due to Vietnam-EU FTA, massive decline in cotton production and high import duty on yarn.

He asked PM Nawaz Sharif to personally direct policy makers to work for reduction in all input costs otherwise the export-oriented industries would not only close down their operations but millions of workers would also lose their jobs. He said that the PM had committed to hold meetings with export-oriented industries on quarterly basis but no such meeting was held so for.

He said that the value added textile sector is burdened with multiple taxes with high cost of inputs, tariffs of gas, electricity, raw material, and is further harassed due to short supply of all these most essential utilities, he added.

Country is facing almost 35 percent shortfall in cotton production as cotton bales arrival has registered 9 million bales against the set target of 14 million bales, he added. Despite huge shortfall of cotton 10% regulatory duty on cotton yarn import from India is not understandable which will not only to encourage cartilization but also squeeze raw material availability in the country. Also there is no RD on yarn import from India, as the spinning sector has already booked orders for import of 2 million bales without any RD. This is discriminatory policy which will hurt garment export very badly.

"Vietnam is emerging market of garment and has become a major threat particularly for Pakistan value added textile sector after striking FTA with EU, as the country is already exporting $23 billion garments against Pakistan's just $5 billion textile value-added goods."

PRGMEA north zone chairman Sohail A. Sheikh underscored the need for formulation of sector wise policies with the consultation of stakeholders for bringing boom in export of the country.

He said that it would not only help in increasing exports but also supportive in minimizing problems confronted by the business community.

He said the government should take drastic steps for enhancing exports and addressing the problems of industrial sector on top priority basis.

Sohail A. Sheikh said that due to non-availability of latest fabric locally the garment sector currently has a limited product line for export market, adding that foreign buyers were demanding new garments on G3, G4 and technical fabric raw material which were not available and produced by Pakistani weavers.

There was a dire need of formulating an aggressive marketing plan at the earliest for garment exports to gain the maximum benefits of GSP status, he added.