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Textile sector warns of protest on untimely clearance of imported cotton

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  • APTMA chief says textile exports will be limited to $16-17bn this year.
  • He reveals industry exports raw cotton four times compared to imported value.
  • Industry player warns 7m people will be unemployed in January.

LAHORE: As Pakistan struggles to boost depleting foreign exchange reserves, the textile owners threatened the government of staging a protest due to the delay in the clearance of imported cotton containers at Karachi port, The News reported Friday. 

All Pakistan Textile Mills Association (APTMA) Chairman Hamid Zaman said: “The textile industry will be forced to protest if the government doesn’t clear the imported cotton coming to Karachi.”  

The textile industry would fail to meet an export target of $25 billion in the current year on the non-availability of raw materials, mainly raw cotton, he said during a programme organised by the Lahore Economic Journalist Association. 

“This year, textile exports will be limited to $16-17 billion,” he predicted. 

The textile industry imports raw cotton and after value addition exports it at four times the imported value. Thus, the government should allow exporters to import 35% of the export value.

The APTMA chief, however, warned that if things are not controlled, seven million people associated with the industry will be unemployed in January.

“The industry was left with 60 days’ of raw materials only and if timely clearance of already arrived cotton will not start from the port, textiles will completely shut down. This will result in unemployment of 25 million people across the country,” he warned.

Zaman informed that almost 30-50% of the textile industry of Punjab, Khyber Pakhtunkhwa, and Sindh had already been completely or partially closed.

“The textile industry has so far ordered 1.7 million bales of cotton from the US, out of which 0.531 million cotton bales have been dispatched while 100,000 bales have already arrived at Karachi port with a value of more than $300 million.”

APTMA chief urged the government to instruct commercial banks as well as the State Bank of Pakistan to ensure the timely opening of letters of credit for the cotton importers to avoid any export crisis. 

In response to a question, Zaman admitted that some exporters could not bring their export amount back to Pakistan due to the instability of the exchange rate. He also urged the government to take action against those who were hoarding the US dollar, vowing that the APTMA would support the cause.

Zaman further pointed out that demurrages and detention charges on imported goods had exceeded the value of the goods that foreign companies had to pay. 

“So far, Rs2 billion in demurrages and detention charges have been charged, which are increasing with time, and since last few days the traders and banks will be at odds with each other.”

APTMA Senior Vice Chairman Kamran Arshad said a severe shortage of raw cotton was there in the local market as the country had produced only 4.6 million cotton bales. 

He mentioned that 15 million cotton bales were required to achieve $20 billion in exports. 

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The KSE-100 Index rises following a sharp decline in the previous session.

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The government is considering filing a treason case under Article 6 against PTI founder Imran Khan, former president Arif Alvi, and former deputy speaker Qasim Suri. On Tuesday, the KSE-100 Index was up more than 1.3% during early trading, following a day of roughly a 2 percent loss due to growing political unrest and the potential banning of the party.

However, the benchmark index of the Pakistan Stock Exchange was trading at 79,074.63 by 11:49 a.m., having gained 535.45 points, or 0.68 percent, after reaching an intraday high of 79,578.04.

Market analysts said that political tensions were the primary cause of the KSE-100’s earlier Monday decline of 1578.71 points, or 1.97 percent.

They did point out, though, that a correction was a reasonable reaction to the protracted upswing that allowed the benchmark mark index to reach 81,839.86 on July 18.

As a result of interest rate cuts and the possibility of another IMF program, the Pakistan Stock Exchange has gained 22.97 percent so far this year. The cycle began on June 10 with a 1.5 percent decrease in borrowing costs.

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In interbank trade, the US dollar crushes the Pakistani rupee.

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During interbank trade on Tuesday, the US dollar’s value increased by 15 paisas, reaching Rs 278.45.

It is important to remember that Fitch Business Monitor International expressed concern about the possibility that Pakistan’s economic stability may be jeopardized by the ongoing political unrest.

The fragile situation of Pakistan’s economic recovery was emphasized by Fitch in its most recent Pakistan Country Risk Report, which also noted that economic activity has been impeded by urban protests.

(PTI),In spite of multiple successful judicial appeals, the founder of Pakistan Tehreek-e-Insaaf (PTI) is expected to stay behind bars, the article notes, underscoring the fragile political environment.

With no urgent plans for new elections, this scenario suggests that the coalition administration will remain in office for the next 18 months.

Fitch also described an eventuality in which the government could change and be replaced by a technocratic administration. This suggests that the government of Pakistan would carry out the reforms demanded by the IMF, contributing to the 3.2% GDP growth expected in 2024–2025.

The policy rate has stabilized above projections, while the research predicted it may reach 16 percent this fiscal year and 14 percent the following year.

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Pakistan’s gold prices per kilogram dropped.

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When 24-karat gold dropped by Rs. 500 to Rs. 250,500 per tola on Tuesday, the price of gold fell once again on both the local and international gold markets.

By Rs429 to Rs214,763, 10 grams of gold cost less, according to the Gold Sellers Association.

Gold’s price per ounce dropped to $2391 on the international market by $11.

At Rs2920 per tola, the price of silver did not change.

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