By  on November 7, 2007

LAHORE, Pakistan — The state of emergency imposed by Pakistan President Pervez Musharraf has not yet adversely affected the apparel and textile sector, but there is concern about the long-term impact from civil unrest and the country's tarnished image.

"Stability allows business to grow, while instability is an enemy of business," said Shahid Butt, chief executive officer of Shahkam Industries here, which supplies knitwear to retailers such as Macy's, Old Navy, Kohl's and Belk.

Pakistan is the second-largest exporter of apparel and textiles to the U.S. behind China. Shipments fell 10.3 percent for the 12 months ended Aug. 31 to 3.3 billion square meter equivalents. In apparel, the country's shipments account for 3 percent of the export market and rose 6.3 percent to 693 million SME, valued at $1.5 billion.

"The political situation has not affected us yet, but it will be detrimental regarding future bookings,'' Butt said. "We have been answering phone calls and e-mails all day as U.S. importers heard the news and became concerned about deliveries. Though no delays are expected and production will not slow down, our image has suffered, business-wise. U.S. importers want a clarification of the situation from us."

Yusuf Abdullah, director of Sapphire Textile Mills in Lahore, said clients are anxious about delayed shipments, although normal operations are continuing.

"Those that have already placed orders with us are dependent on us, but...ground reality here is not as harsh as it is thought to be in the West. Though we have reassured our existing clients of minimal fallout to them of the political situation here, potential importers may decide to diversify their country risk."

Babar Yazdani Khan, managing director of The Clothing Co., which supplies urbanwear to firms such as Mecca, said, "Our business has suffered already as buyers have decided to employ a wait-and-see approach. They don't want to visit here and are waiting until things settle down."

Khalid Tiwana, senior director of sourcing, South Hub, of Levi Strauss & Co., said, "There is no impact on our sourcing out of Pakistan....Our business in Pakistan remains stable."Musharraf, the general who took power in a 1999 coup and who is also the head of Pakistan's Army, declared emergency rule on Saturday night ahead of a Supreme Court ruling on whether his recent reelection as president was legal. Insisting that his declaration was necessary to fight terrorism, Musharraf suspended the constitution, dissolved the supreme court — removing Chief Justice Iftikhar Chaudhry and six other justices — and four provincial high courts.

Under the constitution, Musharraf couldn't run for another term while serving as president and military leader. He had until Nov. 15 to resign as the army's chief of staff and general elections were to be held by Jan. 15. They have been postponed. All privately owned television news channels and radio stations have been silenced.

Pakistan's internal security has deteriorated sharply in recent months with a wave of suicide bombings by al Qaeda-inspired militants, including one that killed 139 people. Only the most determined foreign clients visit textile mills here.

During a second day of protests by lawyers on Tuesday, Chaudhry, who is under house arrest, urged defiance of Musharraf. As many as 3,500 people have been arrested, government opponents said.

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