1. Top Three Export Commodities of Pakistan
Rice:
Rice Export in 2012-13:
PAKISTAN‟S basmati rice exports are showing signs of an upswing after suffering a
plunge in the first six months of this fiscal year because of domestic higher prices,
poor marketing and lower prices of India‟s basmati.
In January 2013, basmati exports were up by 15 per cent, reaching 43,718 metric
tonnes compared to 38,294 tonnes in January 2012. Traders are optimistic that the
commodity would regain normal levels before the end of the current fiscal year as
the price gap between Indian and Pakistani basmati rice has started narrowing. India
has been selling rice at a price lower than Pakistan‟s – at $100 per tonne against
Pakistan‟s $1,100-1,150 per tonne.
According to Rice Exporters Association of Pakistan (Reap) Pakistan exported
21,000 metric tonnes basmati rice during the first week of March 2013. Total rice
exports during July 2012 to February 2013 have already touched more than $1
billion mark, and during the July-March period, the country exported around 350,000
tonnes, and two million tonnes non-basmati rice. Meanwhile, China has become a
major market for Pakistani non-basmati rice, and a record sale of 72,623 tonnes,
worth $30 million, took place in January 2013 alone. Besides, another country buying
Pakistani rice is Tanzania.
Basmati exports, according to figures of Pakistan Bureau of Statistics (PBS), have
been on the downward trail earlier, and during the July-December 2012 period,
declined by 31 per cent to 239,765 tonnes from 349,970 tonnes exported during the
same period in the previous year. But Reap put the decline at 60 per cent during July
1 to November 28, after India lifted a ban on its rice exports last year and sold the
commodity at lower prices. India kept basmati exports banned for two years, and
keeps doing so from time to time to protect domestic market.
Pakistan‟s non-basmati rice exports also dropped by 39 per cent during July-October
period. One reason for basmati‟s poor performance abroad has been its high price in
the domestic market because of hoarders and profiteers. The price of basmati in
wholesale market has seen a rise of 30 per cent since March 2012. Some exporters
have felt so depressed that they tried to seek subsidies from the government in their
efforts to revive falling exports.
President of the Basmati Growers Association of Pakistan (BGA) says research is
almost non-existent as no new high-yield variety has been evolved in the past
decade that could replace the Super Basmati introduced in 1996, which is still
planted in more than 90 per cent of the basmati growing area. In contrast, India has
been very active and doing a lot of research and introducing new varieties.
Besides, another setback that Pakistani basmati has suffered is the continuous
depletion of the area under cultivation, as growers are finding the crop unprofitable
and are shifting to other crops. According to official figures, area under cultivation in
Punjab, which has so far been producing over 90 per cent of the country‟s total yield,
has declined by 34.5 per cent to 1.89 million acres in 2012-13 from 2.89 million acres
planted in 2008-09. It is a loss of one million acres of basmati area in just five years.
India‟s total rice exports in the current fiscal year (April 2012 to March 2013) are
expected to cross 10 million tonnes for the first time in history, increasing by 30 per
cent from previous year‟s export figure following strong demand for its rice in West
Asia, Africa and South East Asian countries.

2. Although being rivals in the rice export market, Pakistan and India have also been
seeking each other‟s cooperation to protect their precious rice variety which is
unique for its aroma, taste and texture. Pakistan has asked India to work out a joint
strategy on marketing the premium basmati rice to counter the non-tariff barriers
imposed by other countries.
Trade Development Authority of Pakistan‟s (TDAP) chief executive, who was on a
visit to the neighbouring country in April 2012 while heading a delegation, told
Indians in bilateral discussions that it was high time the two countries, which share a
common heritage of basmati, worked together to formulate a strategy for marketing
the much sought-after rice variety to other parts of the world. He also talked about
registering basmati as a Geographical Indication (GI) of the two countries under
WTO‟s Trips regime. Several attempts had been made in the past for that but without
much success, because Pakistan has no GI law.
Basmati rice exporters in Pakistan feel frustrated over the government‟s indifference
and delay in enacting the law of geographical indication. Unless it is done, basmati
cannot be protected, nor a joint strategy worked out with India to jointly protect the
unique rice variety. The current Trade Marks Ordinance for basmati rice is
inadequate, and may cause long-term harm to its exports. According to media
reports, a draft of the GI law prepared by TDAP is lying buried in the files of the
ministry of law despite repeated appeals by the exporters to get it passed by the
parliament.
The proposed law has to be first approved by the ministry of law before it is placed
before the cabinet for consideration and approval. The varieties of basmati rice,
which are countless and grown in several countries, can harm basmati exports. So,
there is need for legislative measures to protect country‟s rice industry. The only
other country that produces basmati and is Pakistan‟s competitor, India, has already
passed a GI Act.
The urgency to protect basmati rice comes in the wake of two recent developments.
Firstly, Philippines had earlier announced that it will begin basmati rice cultivation
soon and start exporting it in 2013. And secondly, Bangladesh rice exporters have
said that Bangladesh must also be registered for geographical indication (GI) for
basmati rice since this rice variety is being grown and consumed in the country for
centuries. But officials in Pakistan say they are opposed to countries other than India
and Pakistan for growing or exporting rice under the basmati label. They insist that
basmati is a common heritage of Pakistan and India only, and they should adopt a
joint strategy for the registration of basmati rice as a geographical indication in the
international market.—Ashfak Bokhari
TDAP support can up rice export to $3b:
The rice exporters are eying to achieve $3 billion export target annually with the
support of TDAP, as the authority‟s role is vital to boost export and earn foreign
exchange.Ch Samee Ullah, Vice Chairman REAP, hoped that TDAP will solve the
problems instead for creating hurdles in the way of exports. “We also hope that in
future TDAP will sit together with the stakeholders whenever need so as to ensure
growth of exports.
In a statement, he appreciated the dynamic role of Abid Javaid Akbar, Chief
Executive Trade Development Authority of Pakistan (TDAP), for boosting up
Pakistani rice exports across the world.
He informed that TDAP Chief Executive has announced to develop comprehensive
program focused on promoting rice export to Central Asian States. Exhibition would

3. be arranged with collaboration of rice exporters to showcase Pakistani rice. It is a
good sign by TDAP for rice exporters and we always stand by TDAP. Central Asian
states have huge potential of export and Pakistani Basmati is an integral part of
Turkish cuisine.
It would help exporters to earn more foreign exchange for the country. He said that
Punjab Government would soon hand over 5 acres of land for the establishment of
Rice Technical Training Institute, where we would produce skilled manpower for the
rice industry. We expect that TDAP would give our due share from EDF for the
establishment of Technical Training Institute.
He stated that TDAP has promised involvement of REAP into EDF Board of
administrators and also given his due support for release of funds of Rs200 million,
as asked by REAP, for the construction of Rice Technical Training Institute.
Pakistan’s MY 2011/2012 rice production:
Pakistan‟s MY 2011/2012 rice production is estimated at 6.5 million tonnes, 30 per
cent higher than the 2010/11 flood affected production level of 5 million tonnes. MY
2012/13 production is forecast at 6.8 million tonnes.Rice exports in MY 2012/13 are
projected at 4 million tonnes based on the expectation of a good harvest.
Pakistan expects orders from Indonesia for rice soon:
Pakistan expects Indonesia to place orders for its rice in
coming days, said Irfan Ahmed Sheikh, the outgoing
chairman of the Rice Exporters Association of Pakistan
(REAP), as the Southeast Asian country seeks alternative
sources of the grain.
“There will be a potential for Pakistan in coming days. We are expecting orders from
Indonesia,” Sheikh told Reuters on Thursday, but added that the Indonesian side has not
approached them yet. “We are one of the cheapest sources and we have a natural edge.
Our IRRI-6 prices on average are less than $500 a tonne, FOB.” The price of Thailand‟s
benchmark export-grade rice was $627 a tonne this week, up from $619 last week, exporters
said on Thursday, ahead of a government intervention scheme likely to push the price
further up from next month.
And Vietnam‟s rice export prices rose nearly 1 per cent on Thursday, with the 5 per cent
broken grade hitting $575 a tonne and heading towards $580, the highest in more than three
years.
Indonesian Trade Minister Mari
Pangestu said on Wednesday the
country has alternative sources of rice
from Pakistan, India and Vietnam,
even as it tries to iron out the reported
cancellation of a proposed Thai
government sale to Indonesia.
Sheikh said Indonesian officials had
approached Pakistani commerce

4. ministry about three months ago for a government-to-government deal but were told to go to
the private sector.
Commerce Ministry officials were not immediately available for comment. REAP handles the
bulk of rice exports from the South Asian country.
Heavy monsoon rains have caused little damage to Pakistan‟s rice crop and traders are
expecting output of up to 6.5 million tonnes. Pakistan, the world‟s fifth-largest rice exporter,
is hoping to export 4.5 million tonnes of rice in the 2011/12 (July-June) fiscal year.
Pakistan to export up to 4.5 MT of rice in FY11/12-trade:
Pakistan is likely to export up to 4.5 million tonnes of rice in the 2011/12 fiscal year
on an expected bumper crop, traders said on Thursday, adding to an amply supplied
rice market.
The world‟s fifth largest exporter of rice, Pakistan‟s rice exports fell to about 3.7
million tonnes in the fiscal year to June 2011, from 4.6 million in the year before,
after it was lashed by devastating floods in summer 2010.But farmers and traders
are expecting a bumper crop of six million to 6.5 million tonnes this year. Harvesting
of non-basmati rice begins in late September and basmati a month later. “So far
things are going in the right direction and we are expecting a bumper crop … We
should be able to export between four million and 4.5 million tonnes this year,”
Taufeeq Ahmed Khan, vice chairman of the Rice Exporters‟ Association of Pakistan
(REAP), told Reuters. The country also has a carryover stock of more than one
million tonnes, according to traders. Annual consumption is about 2.3 million tonnes.
Pakistani rice will enter a market already well-supplied by Vietnam, which is
expected to export up to 7.3 million tonnes; India, which is lifting an export ban in
place since 2008 and Thailand, which expects to export more than 10 million tonnes.
Khan expected “decent prices” for this year on expectations of Thailand, the world‟s
largest rice exporter, boosting its prices. “Thailand has increased their prices and
chances are that with the new government there, prices will go up further,” he said.
Thai prices have started rising in recent weeks with the new government in Bangkok,
which promised higher prices to farmers. On Wednesday, the benchmark 100 per
cent B grade Thai white rice which has jumped nearly four per cent from last month
because of hoarding on speculation about aggressive intervention by the incoming
government, was steady from last week at $550 per tonne.
Vietnam‟s five per cent broken rice stood at $505-$510 a tonne on Wednesday,
which was up from $495 last week but still well below the same grade of Thai rice,
offered at $530.
Pakistani traders see enough market for their grains. Pakistani basmati goes mainly
to the Middle East, Europe and the United States. Non-basmati is sold all over the
world.
In 2010/11, Pakistan sold about 2.6 million tonnes of non-basmati rice and 1.1 million
tonnes of basmati, according to REAP‟s provisional data. Rice is Pakistan‟s third
biggest crop after wheat and cotton, and accounts for about eight per cent of
Pakistani exports. It contributes about 1.6 per cent to the country‟s gross domestic
product.

5. International trade of Rice:
International rice trade is estimated between 25 and 27 million tons per year, which
corresponds to only 5-6 percent of world production. It makes the international rice
market one of the smallest in the world compared to other grain markets such as
wheat (113 million tons) and corn (80 million tons).
Besides the traditional main exporters (Thailand, Vietnam, India and Pakistan), a
relatively important but still limited part of rice traded worldwide comes from
developed countries in Mediterranean Europe and the United States. There are two
major forces behind this: new food habits in developed countries and new market
niches in developing countries.
World's main importers of rice (all types), average from 1998 to 2002, in millions of tons
Source : UNCTAD Secretariat from the Food and Agriculture Organization of the United Nations (FAO) data
World's main exporters of rice (all types), average from 1998 to 2002, in millions
of tons
Source : UNCTAD Secretariat from the Food and
Agriculture Organization of the United Nations (FAO)
data
The Middle East is the leading import and
export region, accounting for 35 percent of
the world's rice imports and about 75 percent of total exports.

6. It is projected that the global market will increase 3 percent per year over the mid to
long term. However, there are uncertainties about this projection because importers,
normally low to lower-middle income countries, have vulnerable economies.
The map below shows the main importers
and their suppliers. Each color represents
an importer (either a country or a group).
The values correspond to imports of
different types of rice (paddy, brown,
white, broken), in thousands of dollars.
The major importers are Indonesia,
Bangladesh, Nigeria, the Philippines, Iraq
and Brazil.
Textile
Pakistan‟s textile exports grow 7% in first three quarters
Textile exports from Pakistan jumped 7.09 percent year-on-year during the first three
quarters of the ongoing financial year that started on July 1, 2012.
According to the figures released by the Pakistan Bureau of Statistics (PBS), the
country exported US$ 9.63 billion worth of textiles in the first three quarters of the
current fiscal, against exports worth US$ 8.993 billion made during corresponding
period of last fiscal year.
Posting a 29.17 percent year-on-year growth, cotton yarn stood to be the biggest
contributor to textile export growth during the nine-month period.
Other textile items that registered positive growth include cotton cloth, whose exports
grew by 11.56 percent year-on-year, knitwear by 2.84 percent year-on-year and yarn
other than cotton yarn by 13.79 percent year-on-year.
Towel exports grew by 18.11 percent year-on-year during July-March 2012-13, while
exports of made-up articles except towels and bedwear grew by 6.31 percent year-
on-year; tents, canvas and tarpaulin by 30.89 percent y-o-y; bedwear by 0.09
percent y-o-y; and other textile materials by 44.83 percent y-o-y.
Items with negative export growth include raw cotton, whose exports dipped by
65.07 percent y-o-y, synthetic textile by 25.33 percent y-o-y and cotton carded or
combed by 93.86 percent y-o-y.
During March 2013, Pakistan‟s textile sector exports posted a 13.21 percent year-on-
year and 17.77 percent month-on-month growth.
Exports of Pakistani textiles are vulnerable to a few world economies. The
country exports 70 percent of its cotton yarn to China and Hong Kong, while
United States and European Union account for 78.5 percent of its bed wear

7. exports, 83.3 percent of knitwear and 79 per cent of readymade garments
exports.
“We will have to expand our export markets to ensure a sustained and shock free
textile exports,” said Gohar Ejaz group leader of All Pakistan Textile Mills
Association. He said cotton yarn, cotton cloth, knitwear, bed wear and garments are
the five categories in textiles that earn more than one billion dollar foreign exchange
a year.
“Together these four categories accounted for $9.606 billion (78 percent) out of
$12.357 billion textiles exports in 2011-12,” he said. Baring cotton cloth where
exports are evenly distributed exports in other four categories are concentrated to
few economies.
He said in cotton yarn out of total exports of $1.79 billion in 2011-12 China and its
controlled territory Hong Kong accounted for yarn exports worth $1.27 billion, which
was 70 percent of total yarn export from Pakistan.
He said after Pakistan‟s inability to fulfill China‟s demand for yarn it is increasingly
importing Indian yarn. Gohar said that currently we enjoy competitive advantage over
India and are preferred the world over in the type of yarn we produce. However, he
warned that the Indians are catching up fast in efficiency and technology and the
competition would be tough in coming years.
“We simply have to increase exports to other countries like Indonesia, Vietnam and
Turkey,” he added.
In cotton cloth, Pakistani exports are better spread as out of $2.454 billion exports
made last fiscal Bangladesh was the largest buyer with imports of $350 million (14.8
percent). The other major buyers of Pakistani cotton cloth were China 11 percent,
Turkey and Italy 5.6 percent each and remaining was destined to 20 different
countries. “In fabric, there is no dependence of Pakistani exporters on US, China or
EU,” said Mian Anjum Nisar, a textile miller.
“Pakistan‟s bed wear exports in 2011-12 were $1.748 billion. Out of which, $1.363
billion went to European Union and United States,” said A Siddiqui, a bed wear
exporter. He said despite frequent no tariff barriers imposed from time to time on
Pakistan bed wear the exports by EU were $850.91 million last fiscal equivalent to
49.5 percent of total bed wear exports. He said United States accounted for 29
percent of $551.7 million of bed wear exports.
He said Pakistan enjoys competitive advantage in bed wear world over but Pakistani
exporters are shy of moving south. All they have to do is to find out designs and
needs of market in China and Asia Pacific and they could triple their exports of this
category.
In knitwear, the US market alone accounted for 51.3 percent of total knitwear with
exports of $1.092 billion out of $1.974 billion in 2011-12,” said Adil Butt, chairman of
Pakistan Hosiery Manufacturers Association Punjab. He said 32 percent of knitwear
exports went to EU, while the share of rest of the world was only 17 percent. He said
any economic downturn in these two economies impacts knitwear exports badly. He
said Latin America, Canada, Australia and New Zealand are lucrative economies
that remain unexplored to date.
In readymade garments, the largest market is EU having a share of 54 percent
equivalent to $884.5 million in total exports of $1.634 billion in this category in 2011-

8. 12. The United States was the next largest market with exports of $409.4 million, or
25 percent, of total knitwear exports in 2011-12.
Cotton yarn, cotton fabric, bed wear, knitwear and readymade garments together
accounted for $9.606 billion out of total textile exports of $12.357 billion in 2011-12.
The share of rest of textile exports is only 22 percent.
Pakistan fetches $10.2 billion of its $12.5 billion textile export revenue from 20
countries. However, it accounts for merely 5.7 percent of their total textile
imports, suggested an analysis of the trade statistics of last fiscal year.
United States is the largest importer of textiles and clothing from Pakistan, importing
$2.98 billion worth of textiles in 2011-12, which was 24.1 percent of total Pakistan‟s
textile exports. However, these exports were equivalent to only 2.98 percent of total
US textile imports of $100.93 billion.
Industry players point out that Pakistan‟s share in the US textile market has been
continuing to decline in recent years. “We lost many corporate US buyers during
recent years and the exports were maintained at past level by luring new buyers,”
said Adil Butt, chairman of Pakistan Hosiery Manufacturers Association, Punjab. He
said if we could lure back buyers lost due to bad image of the country and travel
advisories issued by the US government we could simply double our exports to the
US market.
Further, China is the second largest buyer of Pakistani textiles, importing $1.527
billion of textiles last fiscal. Unlike US where mostly value added textiles are
imported, Chinese buy only cotton yarn and cotton fabric from Pakistan.
“The textile exports to China could be tripled with better understanding of Chinese
market,” said Gohar Ejaz, group leader of All Pakistan Textile Mills Association. He
said under free trade agreement the Chinese government provides several
concessions to Pakistan that our entrepreneurs have failed to avail.
He said for instance there is no duty levied by China on Pakistani bed wear. Pakistan
is the cheapest supplier of cotton bed wear in the world but “we have not exported
even a single bed sheet to China”.
“Pakistani entrepreneurs have never explored the Chinese bed wear and home
textiles market,” he said, adding that they have no idea about designs, sizes and
colours popular in China in home textiles. He said China could be a big market for
our home textiles if entrepreneurs overcome language barriers and do proper home
work. As far as cotton yarn and fabric are concerned, the demand in China is
unlimited. “Our production is limited due to energy shortages and orders that we
cannot execute are being diverted to India,” he added.
He said Pakistan‟s textiles account for only 12.4 percent of total Chinese textile
imports of $37.19 billion. European Union as a block accounts for $3.6 billion textile
exports from Pakistan led by the United Kingdom that imports $951 million worth of
textiles and clothing from Pakistan, which is 7.7 percent of total textile exports of
Pakistan but only 3.03 percent of $32.39 billion textile imports of U.K.
Similarly, Pakistan‟s textile exports to Germany are worth $809 million, being 6.5
percent of total textile exports from Pakistan and 1.6 percent of $55.14 billion textile
imports of Germany.
Leading knitwear exporter M I Khurram said that Pakistani exports to EU are limited
due to high duties imposed by the trading block on Pakistani textiles.

9. He hoped that Pakistan would get generalised system of preferences (GSP) plus
status in 2014 after which there would be an appreciable surge in value-added textile
exports from Pakistan.
In fact, developed economies have lucrative value-added textile markets, while
demand for yarn and fabric in these markets is waning.
Bangladesh imports $520 million (4.2 percent) of Pakistani textiles, which is $2.57
billion (5.53 percent) of Bangladesh‟s textile imports. Other top importers include
Belgium, Spain, Italy, Netherlands, UAE, France, Turkey, South Africa, Vietnam,
Korea, Saudi Arabia, Sri Lanka, India and Kenya.
Interestingly, India is the 19th largest importer of Pakistani textiles worth $88.8
million in FY12, 0.7 percent of Pakistani textile exports and 0.8 percent of India‟s
total textile imports of $4.155 billion.
Though the year 2012, which is about to end, like past few years confounded
the problems of the industries with severe energy crisis, textile sector is still
optimistic at the prospect of the opportunities knocking boisterously at the
door.
One such is the inability of Chinese textile manufacturers to produce efficiently basic
textiles, while the GSP Plus status from European Union is another. The propensity
to add value was also a positive sign in 2012.
Gohar Ejaz Group Leader All Pakistan Textile Mills Association (APTMA) said yarn
exports from Pakistan to China are growing at an astonishing pace. “Two years
back, our average monthly yarn exports were 40,000 tonnes, while average exports
during last three months stood at 65,000 tonnes per month. The growth was mainly
because of growing appetite for yarn in China,” he added.
“This is just beginning since yarn and fabric demand in China will continue to scale
up because of closure of basic textiles,” he said and added the labor costs in China
are very high, making it unviable to produce low value added textiles.
He said in order to meet the Chinese demand the industry will have to invest in new
machines. However, „at 13-14 percent markup, it would not be possible to add new
machinery,” he added. He said the energy crisis is another drawback. He warned
that if the planners failed to resolve these two issues, India would replace Pakistan
as main yarn supplier. In fact, he added, India is already making inroads into
Chinese yarn market, as the Pakistani spinners are working on reduced capacities
due to energy and power shortages.
“Yes the textile sector is buoyant,” he admitted, saying but buoyancy is limited to the
relatively larger mills that have resolved their energy issues through investment in
alternate energy resources. However, smaller units of 25,000-30,000 spindles do not
have resources to invest in alternate energy, he added. “Thirty percent of the
production capacity is closed due to energy shortages,” he regretted. He said most
of the close units are otherwise highly efficient but they cannot run without power.
There is a need to revive these units urgently, he added.
A spinner and knitwear exporter M I Khurram said that besides Chinese demand the
industry is also expecting higher market share in the EU block at the start of 2014
when we are expected to be granted the GSP plus status. “We will have to plan now
to avail that golden opportunity. We will need more yarn for local production and the

10. demand for fabric would also increase,” he added. “Would we be able to grab this
opportunity or miss the bus again as we did in the past,” he questioned.
“Pakistan has got inherent advantage in basic textiles. It has not been able to grab
its due share in the global market,” said Shahzad Ali Khan chairman of APTMA
Punjab. He said the country failed to cash in on opportunities that came its way
during last two decades.
“The first opportunity came during the East Asian crisis when the entire processing
sector of Hong Kong was willing to relocate their industries in Pakistan,” he said. “We
missed that bus as our entrepreneurs were not prepared to enter into partnership
with foreigners. Moreover, our planners lacked the vision to lure the prospective
investors to Pakistan,” he added.
The second bus was missed when Pakistanis invested over $5 billion in balancing
and modernisation of their units on the firm assurance of the then finance minister
that the interest rates would remain in single digit, he said. He said the markup
increased in few years to 15 percent. The entrepreneurs that took bank loans at 4-5
percent to import machines suddenly found themselves in hot water as they were
unable to service their loans at exorbitant mark-up. So, instead of consuming their
energies of growth they spent most of their time trying to save their enterprises from
bank defaults, he added.
Chairman APTMA Ahsan Bashir said the other regional countries shielded their
textile sector from the financial crunch by facilitating them through subsidies on
machine import and lucrative duty drawbacks on exports. India, China and
Bangladesh used this period of great opportunity to strengthen their textile sector, he
added.
Bashir said Pakistan added 1.8 million spindles and 3,179 shuttle less looms in basic
textiles since 2006 against an increasing addition of 6.2 million spindles and 21,850
shuttle less looms in Bangladesh, which now has 3/4th spinning capacity and higher
weaving capacity than Pakistan. He said the statistics of International Textiles
Manufacturers Federation reveal that in past six years during 2006-11 periods, India
added 15.33 million spindles and 30,850 shuttles less looms. The statistics also
reveal that China has added 38,290 spindles and 360,100 looms in its spinning and
weaving industries, he added.
It now has total of 120 million spindles and 587,500 shuttles less looms. All these
additions in capacities were possible due to prudent policies of the competing
economies, he said.
Chairman Pakistan Hosiery Manufacturers Association Punjab Adil Butt said that
energy and power crisis was a wakeup call for the textile sector. He said most of the
industries in textile sector improved their efficiency to global level to cut costs
particularly in 2012. In addition, they concentrated on value addition.
He said though the textile exports have remained much below in quantity terms from
the peak achieved in 2008, the exports in value jumped by over $3 billion due to
higher value addition.
Pakistan added 1.8 million spindles and 3,179 shuttle-less looms in the textile
sector since 2005, against 6.2 million spindles and 21,850 shuttle-less looms in
Bangladesh, according to official statistics.

11. Bangladesh now has three-fourth spinning capacity and a higher weaving capacity
than Pakistan.
The drying up of investment in basic textile is playing havoc with the local textile
sector, which is still the most efficient among the South Asian countries according to
Werner, a globally renowned textile consultant. It is, however, slowly losing its
competitive edge to its less efficient neighbours.
According to official statistics, since 2005 installed spindles in Pakistan are 11.9
million and the total number of shuttle-less looms stand at 24,000.
The International Textile Manufacturers Federation (ITMF) reveal that during 2006-
11 India added 15.33 million spindles and 30,850 shuttle-less looms to its textile
sector, which is larger than the total size of the Pakistani textile industry. As per
official Indian data, it now has 41.27 million spindles and around 38,000 shuttle-less
looms.
Bangladesh added 2.830 million spindles and 21,850 shuttle-less looms in the same
time period, which led to a total of 8.7 million installed spindles and more than
28,000 shuttle-less looms. Thus, Bangladesh has a higher weaving capacity than
Pakistan today. Statistics also reveal that in 2004, Pakistan had 24,000 shuttle-less
looms and Bangladesh had only 3,200 shuttle-less spindles.
Another interesting fact revealed by the ITMF is the huge advantage that China has
over the three South Asian countries mentioned in textile machinery. According to
various statistics, China added 38.290 spindles and 360,100 looms to its spinning
and weaving industries. It now has a total of 120 million spindles and 587,500
shuttle-less looms. The spinning capacity of the Chinese is two times more than the
cumulative spinning capacities of India, Pakistan and Bangladesh. It has added four
times more shuttle-less looms since 2006. Currently, it has six times more shuttle-
less looms than the combined shuttles installed in India, Pakistan and Bangladesh.
During 2000-12, Pakistan attracted the lowest foreign direct investment (FDI) of $367
million in textiles among the South Asian Association for Regional Cooperation
countries, against $1.162 billion in India and over $1 billion in Bangladesh, according
to the official FDI statistics of the three countries.
Group leader All Pakistan Textile Mills Association (APTMA) Gohar Ejaz said that it
is a pity that Pakistan is losing its efficiency advantage to it neighbours because of
issues that could be resolved through proper management. “The war on terror has
neither impacted our efficiency or the appetite to grow,” he said, adding that the
energy crisis has crippled the textile sector‟s productivity. “We are still the most
competitive sector in yarn and fabric both,” he said, revealing that Pakistan is
exporting 68 million kg of yarn every month against an average of 48 million kg in
2010.
He added that fabric exports are also up by 25 percent as compared to 2010. “This is
despite the fact that 30 percent of the production capacity in textiles is closed,” he
said, adding how impossible it is for the industry to expand due to energy crisis.
Chairman APTMA Ahsan Bashir said that textile is the only sector that could take
Pakistan out of the present economic turmoil.
“It could reduce trade deficit, create employment opportunities and boost
downstream value chain if its energy needs are fulfilled,” he added. Foreign investors

12. are hoping that the government would take prudent steps to take advantage of the
competitive edge that Pakistan enjoys in the textile sector.
Cement:
The cement industry in Pakistan is composed of 24 players with annual production
capacity of around 40mln MT. The sector is dominated by six major players – Lucky
Cement Limited, Bestway Cement Limited, D.G. Khan Cement Company Limited,
Maple Leaf Cement Factory Limited, Gharibwal Cement Limited, and Kohat Cement
Company Limited – constituting over 60% of the total production capacity. The
industry maintains a positive correlation with GDP growth, which stood at around 7%
during last five years. The major domestic demand drivers are Public Sector
Development Programs (infrastructure), real estate and industrial construction.
Conducive economic environment not only fueled the local demand but also
provided impetus for capacity expansion. Resultantly, the industry added significant
capacity and several new production lines are scheduled to commence operations in
2009. The sector is currently facing stern challenges emanating from a wide
spectrum of socio-economic risks including contracting domestic economic activity,
slowdown in GDP growth and construction activity and heightened security risks.
Due to the commodity nature of the product, differentiation and brand equity is
minimal. Furthermore, manufacturers as well as major consumers in the local market
are reluctant to enter into exclusive supply contracts. Hence, the possibility of
gaining captive markets through long-term contracts is nonexistent.
3. Lately, profitability of the industry came under pressure due to high energy costs
(comprising around 50% of total raw material costs) and increasing financial
expenses. Although international energy prices have receded from their 2008 high,
the beneficial impact on margins was largely negated by substantial
depreciation in Pak Rupee. However, with commodity prices expected to remain low
and declining trend in the interest rates anticipated, the operating margins would
improve in the near term. This would provide price cushion to manufacturers.
Nevertheless, dwindling local demand and resultant low capacity utilization could put
further pressure on pricing.
4. During 2007 and 2008, the cement manufacturers also established export
operations by capitalizing on the growing demand in regional economies. Cement
exports predominantly targeted Afghanistan due to established trade channels.
However, in recent years, exporters have established a foothold in Africa and the
Middle East as well. Clinker exports to the Middle East offers competitive margins,
too. The significant export volumes, while stabilizing the local cement prices, had a
positive impact on capacity utilization and the bottom line. However, sales in
lucrative export markets, including India, Afghanistan and the Middle East, are likely
to be reduced due to the global slowdown. The downturn has narrowed the export
window, which was regarded as a limited time opportunity otherwise, too.
Meanwhile, decrease in local demand coupled with the increase in capacity may
precipitate into a price war amongst domestic cement producers. The looming supply
overhang scenario in the sector could potentially worsen the situation. Furthermore,
regional markets – mainly India, Saudi Arabia and Iran – may emerge as competitors

13. in the export market, following a slowdown in their domestic economies and/or
enhanced production capacity.
5. On the domestic front, cement demand is expected to improve (on MoM basis)
with peak construction period (summers) approaching and large part of Public Sector
Development Programme (PSDP) still unutilized. However, with a sharp cut in PSDP
expenditure (from PKR 400bln to PKR 219bln), the allocation of these funds for
infrastructure development remains to be seen. Thus, the local demand is likely to
lag its recent high growth trends.
The Indian authorities are intentionally creating non-tariff barriers (NTBs) for
Pakistan’s cement sector, despite the fact that Pakistani cement is of better
quality as compared to Indian cement, said sources.
“Discouraging the entry of cement trucks from the Wagah-Attari border to India by
limiting them to seven to eight trucks as compared to 50 trucks of gypsum – a basic
raw material for cement – is also a NTB for Pakistani cement,” said Chairman All
Pakistan Cement Manufacturers Association (APCMA) Aizaz Mansoor Sheikh.
Highlighting another NTB, Sheikh said that the Truck Association at Attari charges
Rs25 (Indian rupee) per bag to transport cement from Attari to Amritsar as compared
to Rs3 to Rs4 per bag to transport another product from the border to Amritsar.
Another leading cement manufacturer also has similar observations while doing
cement trade with India. He mentioned that technically, only one truck moves once a
day to transport cement to India from Pakistan. “Every cement truck moving towards
India takes at least four hours due to multiple checks imposed by the Indian customs
and border security force officials and the same amount of time is spent when trucks
return back,” he said. He added that even though the border opening hours have
been increased to 10 hours from eight hours a day, real time trading occurs for eight
hours only.
Thus, one truck can cross once in a day only. On the other hand, Indian customs
officials fully facilitate trucks carrying gypsum. No extra security checks apply to it,
which is why 40 or 50 gypsum trucks enter India from Pakistan‟s side of the border.
This exposes the interests of the Indian high-ups to discourage the entry of finished
goods from Pakistan. He mentioned that the trucks loaded with gypsum cost almost
$50 to Indians, inclusive of all costs of transportation, handling and customs
clearance.
On how to address the situation, Sheikh said that Pakistan‟s customs officials could
discourage gypsum exports from Pakistan so that India would automatically create
space to increase cement imports from Pakistan with pressure from their importers
and to fulfill domestic needs.
However, Pardeep Sehgal, vice president of Indian Importers Association, while
talking to The News admitted half of the NTBs faced by Pakistan‟s cement exporters.
He admitted that the truck union was very strong at the Attari border and no importer
could confront it. However, he said that no uniformity exists in freight charges at
Attari as the union defines its own rates.
However, while criticising Pakistani cement exporters, Sehgal believes that
Pakistan‟s cement exporters have not been doing business with direct dealers and
thus, Pakistani exporters are also selling cement at almost 30 percent below the
market price, while the middleman is benefitting.

14. He said that Indian Punjab‟s cement manufacturing units have also started, which is
the main reason for the reduction in Pakistani cement imports. However, he also
admitted that Pakistani cement is much better in quality as compared to Indian.
Pakistani cement exports to Afghanistan and India declined by $20 million in
the first-half of the current fiscal after the Afghan government increased the
transit fee and Indian authorities refused to renew export licences of some
Pakistani manufacturers, sources in the ministry of industries said on
Thursday.
The Afghan government increased the transit fee by 100 percent at Torkham border
for each truck that carries cement from Pakistan, they said.
Indian businessmen played a cardinal role in pursuing the Afghan government to
increase the transit fee and they succeeded in their designs, they added.
The Afghan government had earlier been charging Rs9,000 transit fee on a truck,
which has now been doubled to Rs18,000. The decision was taken 14 days ago and
the cement industry so far has lost $14 million worth deals.
The concerned ministries of commerce and foreign affairs remain unmoved over this
development. However, the businessmen engaged in exporting cement to
Afghanistan, including cement dealers, transporters and some representatives of the
cement industry, are scheduled to hold talks with the Afghan authorities on Monday
to resolve the issue of transit fee.
In 2008/09, Pakistan exported 3.18 million tonnes of cement worth $150 million to
Afghanistan, which surged further to four million tonnes, valuing $200 million in
2009/10.
However, during the first six months of the current fiscal year, Pakistan‟s cement
exports stood at 2.265 million tons worth $110 million.
Similarly, Pakistan suffered a decline of $6 million in its exports to India because of
the non-renewal of quality licences by the Bureau of India Standards (BIS), the
sources said.
An official said that in 2008/09, Pakistan exported 0.634 million tonnes cement worth
$35 million to India which increased in 2009/10 to 0.723 million tonnes worth $40
million. But during the first-half of the current fiscal year, the country exported only
0.215 million tonnes of cement worth $12 million.
The cement companies of Pakistan are required to obtain quality certification from
the BIS. Between 2007 and 2008, BIS had granted quality licences to 22 Pakistani
cement companies. Some of these licences, such as those obtained by DG Khan
Cement and Maple Leaf, expired.
These companies, according to the All Pakistan Cement Manufacturers‟ Association
(APCMA), have approached BIS for renewal, but their applications remain pending
for the last four to five months. The BIS did not reply to an emailed query.
“Pakistani cement has been well received in India. The BIS should renew licences as
early as possible after completing the formalities,” said a spokesman for APCMA.
Since 2007, Pakistan has exported 2.32 million tonnes of cement to India and more
licences would expire in the coming months, he added.

15. According to Anudeep Singh Madan, president of the Amritsar-based Cement
Importers Association, the region is getting good quality cement from Pakistan at a
lower price.
After taking into account the cost of rail transport from Wagah to Amritsar and further
transportation within the country, the Pakistani cement is delivered to Indian buyers
at Rs220 per 50kg bag, Rs30 less than the Indian cement.
Diminishing local demand also remains a concern for the Pakistani cement industry,
which has been particularly hit hard by few projects in public sector development.
In 2008/09, Pakistan exported 6.06 million tonnes cement, earning $600 million. In
2009/10, it exported 5.6 million tonnes of cement, valuing $530 million. During the
first six months, the industry exported 2.08 million tonnes worth $230 million.
The local cement consumption has surpassed 2.24 million tons, registering a
growth of 11 percent in December 2012, which is the highest-ever local cement
despatch for the month of December, said sources.
However, the slump in exports continues as exports in December declined by 10.55
percent to 0.580 million tons.
A spokesman of All Pakistan Cement Manufacturers Association termed the cement
sector‟s performance in the first half of FY2012-13 as a good omen. He said that the
local cement despatches increased to 11.728 million tons, registering an increase of
7.61 percent. However, exports remained under pressure and declined by 5.28
percent to 4.22 million tons.
“During the first half of FY2012-2013, cement units located in South registered a
growth of 7.98 percent in the local market but posted an even higher 16.34 percent
decline in exports,” he said. “The majority of the cement capacity, however, is
located in the northern part of the country where the industry posted a growth of 7.52
percent in domestic market, while exports declined by 1.31 percent only.” He added
that the hype created on trade with India has so far not materialised and exports to
that market stood at 0.209 million tons only during the last six months, which was
well below the expectation of the cement sector and declined by 40.41 percent.
Exports to India, in fact, have been on a constant decline ever since the two
countries opened their borders for liberal bilateral trade. “The decline is not due to
lack of cement demand in India but because of very stringent non-tariff barriers
created by our neighbour,” he said, adding that Pakistan‟s cement is preferred by
Indians because of better quality.
Cement exporters, with a potential to export a large quantity to the Indian market,
have been facing strict resistance by the Indian government as non-tariff barriers
have not been removed even after having been specifically mentioned during the
different rounds of official and unofficial talks between the two countries.
During the last six months, Afghanistan‟s market remained stable and the cement
sector exported 2.41 million tons to Afghanistan. Exports to other destination through
sea, excluding India, also remained stable in comparison with the last six months of
2011-2012.
Pakistan can earn additional $6.5 million through cement exports to
Afghanistan if it fixed the minimum export price at $55 per ton instead of

16. existing $42, which will still be less than other countries, an official of the
industry said on Thursday.
Even if the minimum export price is fixed at $55 per ton the country would earn $50-
60 million additional foreign exchange annually, the official said.
In an SOS to the economic planners, he said that the cement industry is in dire need
of immediate government action.
He said cement would cost $60 per ton in Afghanistan if imported from any other
country. “We are exporting cement at $42 per ton due to competition between
cement plants situated in the Northern parts of the country,” he said.
Operational capacity of cement mills situated in the North is 34.26 million tons (2.855
million tons per month) and the operational capacity of cement units in South is 6.97
million tons (580,875 tons per month).
Saigol said that the mills in the Northern Region of the country exported 372,048
tons of cement to Afghanistan in February, which was 13 percent of their operational
monthly capacity of 2.855 million tons. The total production of the North-based mills
in February was 1.385 million tons.
The total production of cement in the North in February was seven percent less than
1.494 million tons production recorded in the corresponding month last year.
He said declining uptake in the domestic market was the main reason for decline in
cement production in the North.
Another Cement mill-owner said that in order to maintain minimum production level,
a few North-based mills have been forced to export cement by sea though it is not a
commercially viable option due to high transportation cost.
According to APCMA, cement units situated in the South exported bulk of 337,476
tons of cement through sea, which was over 40 percent of their monthly operational
capacity of 580,875 tons.
The South-based mills produced 393,287 tons of cement in February. The mills in
South, he said, would have caved in without exports as the demand in the local
market, which picked up in February, was still very low.
The cement units in South posted a production increase of 37 percent over 283,395
tons they produced in February 2010.
A spokesman of APCMA said that the cement production declined by 8.49 percent
during the first eight months of this fiscal year, ending in February.
During July-Feb, the cement production was 15.073 million tons.
Cement exports declined during the same period by 14.81 percent from 6.930 tons in
July-Feb 2010 to 5.904 million tons during July-Feb 2011.
However exports during February increased by 6.22 percent that helped the industry
post a nominal growth of 0.04 percent, he added.
Cement Industry set to break records:

17. Acceleration in regional constructional activities and other exogenous factors like war
in Afghanistan have created unprecedented demand for rehabilitation during last 5
years. Pakistan has come under lime light as the a major exporter of cement which
has not only fostered the industry but also earned precious foreign exchange to
mitigate the budget deficit. There are 29 cement production units in the country.
Pakistani cement sales surged 25 percent in the first ten months of the 2007/08
fiscal year. Cement sales totalled 24.6 million tonnes, compared with 19.7 million
tonnes sold in the same period last year. Government expenditures become a major
stimulator in creating tremendous demand for cement, thus resulting in the
expansion of production.
The 2007/08 budget earmarked a record 520 billion rupees for the public sector,
which meant more construction as development spending is channeled into sectors
such as health, education and infrastructure. During the July-April period, cement
exports from Pakistan jumped 142 percent to a record 5.95 million tonnes, compared
with 2.45 million tonnes shipped a year earlier. From 2003 to 2007 cement industry
of Pakistan had registered an average growth rate of 20pc. Cement export is
expected to reach 6.6 million tonnes in financial year 2008 in the light of growing
regional demand for construction.
Orascom Telecom, a leading mobile telecommunications company with various
international operations, has shown intent to invest in cement sector realizing its
tremendous growth potential. This will further the production capacity of the sector in
coming years. On the other hand, cement export to Middle-East counties is in full
swing. Regional outlook has gone in favor of Pakistan in terms of ever increased
demand for cement in especially two neighboring countries, namely, India and
Afghanistan. India's exponential growth in all sectors augmented its construction
Million Tonnes 9MFY08 9MFY07 % change
Local Sales 16,610,096 15,380,297 8.0
Export Sales 6,819,964 2,145,951 217.8
Total Sales 23,430,060 17,526,248 33.7
appetite. Faced with demand supply gap, India has to rely on Pakistan for its cement
needs for several years. This bodes well for the expansion of the industry. Likewise,
Afghanistan, having been reduced to rubble, will depend of cement imports from
Pakistan for a decade or so. The country has unprecedented thirst for infrastructural
growth and construction which will be satiated by none other than Pakistan. Apart
from these two countries, rising cement demand and high construction activity in Sri
Lanka have led to a rise in cement prices in the island nation; as a result the country
is planning to import 10,000 metric tonnes of cement from Pakistan to meet its
requirements. According to Sri Lanka's Trade, Marketing Development, Co-
operatives and Consumer Affairs Minister Bandula Gunawardena, an agreement has
been signed with a company in Pakistan to import 10,000 metric tonne of cement to
the island country. "A high cement demand has been created in the country with the
commencement of many construction projects, including buildings and bridges".
Presently, the cement industry of Pakistan is heavily burdened due to levy of Federal
Excise Duty which is Rs. 750 per tonne and GST 15pc on duty paid price. In addition

18. to Federal Excise Duty and General Sales Tax, cement industry is also paying the
provincial levies (Royalties and Excise Duties) on acquiring of raw material for
production of cement i.e. lime stone and shall clay.
A comparison of taxation and retail prices with other regional countries revealed that
taxation in Pakistan is highest while cement retail prices are lowest. Housing sector
has been looked upon as stimulator of economic growth since there is a large
estimated gap of 5.38 million housing units against annual addition of 300,000 units
in the country, many tax exemption and incentives are provided to encourage new
construction activities in the country. This will stimulate growth of cement industry. If
negative factors are looked into, we find that hike in discount rate will mar cement
sector's growth. Increase in Oil prices globally and depreciated local currency
pushed forward State Bank of Pakistan to take decision towards enhancing the
discount rates from 10.50pc to 12pc per cent which will negatively affect cement
sector and construction activities. Due to bulk imports and high expenses of fuel cost
already hurting local cement manufacturers, increase in interest rates generate new
hurdles in paying their debts which have already been taken from the local banks.
During 2007 the total capacity of cement production was 32.7 million tonnes which is
now reached to 37 million tonnes and in future it will reach up to 42 million tonnes
per annum. To achieve these expansion targets, cement companies have taken
huge loans from the local and foreign banks and according to our valuations and
company reports, companies are to pay Rs. 26 billion to banks till 2012.
In the budget 2007-08, government has also made the outlay of Rs. 1,847 billion
where the target on PSDP at Rs. 520 billion with current expenditure at Rs. 1,353
billion where revenue is set at Rs. 1,475 billion will enforce it to avail credit from the
banks.
Increase in interest rates may hamper already sanctioned loans for the expansions
plans in the existing industry. It is in the view that most of the companies already
facing losses due to augmented fuel costs, and secondly, the step taken by the
government to help enhance the finance costs of the companies which is to be paid
over KIBOR.