Pakistan knitwear exporters seek emergency support as freight to key markets jumps up to 2.5 times

The Pakistan Hosiery Manufacturers and Exporters Association (PHMA) has warned that the country's knitwear export industry is losing competitiveness and asked the government for urgent relief, The Express Tribune and Business Recorder reported on 8 October.

In a letter to the federal commerce secretary, PHMA central chairman Zia Alamdar Hussain said freight rates to some major international markets have risen by 1.5 to 2.5 times. Exporters are also facing higher production and energy costs, delayed tax refunds, tight liquidity and rising regulatory and compliance expenses, according to the reports.

PHMA proposed a temporary Duty Drawback on Local Taxes and Levies (DLTL) incentive worth 6% to 8% of free-on-board value, paid per shipment for a limited period. It asked the Ministry of Commerce to convene an urgent meeting with the Ministry of Finance, the State Bank of Pakistan, the Federal Board of Revenue and other agencies.

Business Recorder reported that the association also complained that banks are not applying the announced 4.5% end-user rate under the Export Financing Scheme uniformly. Hussain warned that once a buyer moves sourcing to another country, winning that business back "can be extremely difficult."

Pakistan's overall exports grew strongly in September, but the knitwear sector says its margins are now too thin to absorb the latest cost increases.

What it means for Egyptian exporters

Pakistan competes directly with Egypt in knitwear, cotton basics and home textiles for European and US buyers. A sharp rise in long-haul freight erodes Asian suppliers' cost advantage and strengthens the case for sourcing closer to Europe. Egyptian knitwear makers should use their shorter shipping routes to the EU as a selling point now, as buyers who see Pakistani suppliers under strain may look for alternatives for upcoming seasons.