Boosting Textile Exports From Pakistan - Latest Fashion News

Textile and clothing industry has played a major role in achieving US$25 billion exports during last financial year mainly due to the hike in international prices of cotton, but this year cotton prices have come down by more than 30% from its peak. Therefore, if the country wishes to retain its market share in the global markets it will have to follow a new strategy. The objective should be to boost Pakistan's exports by enhancing volume as well as well as higher unit price realization through greater value addition

Around the world Pakistan is known as 'The Cotton Country'. It is among the top five largest cotton producers. Textiles and clothing industry contributes nearly 10% of the total GDP, earns 60% of total export proceeds, employs nearly one-third of the total work force. It was the major contributor in achieving US$25 billion exports during last financial year, but only because of the higher cotton prices, as increase in volume was nominal.

Now the country aims at achieving an export target of US$40 billion over the next five years to bridge the trade gap. The target may sound a little optimistic to those who believe in 'the glass is half empty' but looks achievable for those who have the faith in 'glass is half filled'. To achieve the target it is necessary to first examine the existing infrastructure, identify areas needing immediate remedial steps for undertake balancing and modernization and finally making substantial investment in the entire chain to bring change the way textiles and clothing are produced in the country.

Textiles and clothing industry has been playing a major role in earning much needed foreign exchange for the country. While the government has been providing various incentives, some of the players have attained the status of role model for others. Pakistan's textiles and clothing industry has blossomed under the 'Textile Quota Regime' but proved strong enough to face the competition even after the phasing out of the regime. For decades the country had enjoyed comparative advantage which has eroded partly because some of the stakeholders failed in adjusting to the changing harsh ground realities. Under the quota regime buyers had to buy some quantities from Pakistan, but after the integration of textile trade in the main regime they are now free to buy as much quantity as they want from a single country. It is true that our traditional competitors were smart enough to make timely investment to compete in the changed environment and Pakistan is suffering because it failed in making the required investment. The policy planners were confident that special concessions will be made to Pakistan in consideration of being the partner in ongoing war against terrorism.

It is true that textile and clothing industry has played a major role in achieving US$25 billion exports during last financial year mainly due to the hike in international prices of cotton, but this year cotton prices have come down by more than 30% from its peak. Therefore, if the country wishes to retain its market share in the global markets it will have to follow a new strategy. The objective should be to boost Pakistan's exports by enhancing volume as well as well as higher unit price realization through greater value addition. The entire chain starting from production of cotton to manufacturing of made-ups has to be revamped by removing bottlenecks and overcoming technical obsolescence to achieve greater synergy. Each sector has to be put under the microscope to identify the areas needing immediate rectification. However, the driving policy should be 'spend to earn'.

The policy should be based on: 1) overcoming energy crisis and 2) achieving optimum utilization of the existing capacities. Energy crisis has to be overcome without seeking any government help. Entrepreneurs have to stop complaining about electricity outages and install in-house power generation equipment. Since all the spinning, weaving and processing mills use a lot of steam, they can use it for running turbines of the power plants also. They will have to spend money on the procurement of turbines but will have to spend only a little extra amount on fuel for producing steam capable of running turbines. This process commonly known as 'co-generation' is being used in many industries and even commercial buildings in Pakistan. Investing in power generation is justified keeping in view the opportunity cost or loss of production due to electricity outages.

The entire textiles and clothing chain needs balancing, modernization and replacement (BMR) to achieve greater synergy and once the units attain optimum capacity utilization only then these can think about adding new capacities. However, there is a warning that instead of acquiring secondhand and obsolete machinery sponsors should buy state of the art machinery.

This to remind one gain that Pakistan can produce 20 million cotton bales without bringing additional land under cotton cultivation. The areas needing immediate attention of farmers are 1) using certified seed, 2) applying right dosage of various types of fertilizers, 3) ensuring adequate supply of irrigation water, 4) applying timely spray of insecticides/pesticides and 5) following best crop management practices. Improved yield will automatically bring down the cost of production, which will bode well for all the stakeholders i.e. growers, spinners, made-up manufacturers and above all the country.

 

Radical changes have to be brought in the spinning sector to contain production of yarn below 20 counts and enhance output of fine and superfine counts, blended yarn and dyed cones. To discourage production and export of below 20 counts yarn, the government should impose ban on their export as well as stop extending export finance. Production of course count is in fact negative value addition because fine counts can be produced from the indigenous cotton.

Power looms sector has witnessed mushroom growth due to tax exemptions and high cost of modern looms. Bulk of the cloth is produced on power looms which is inferior in quality. Since most of the looms lack standby power generation, they have emerged as the worst victim of electricity outages. Pakistan needs to revert hack to creation of 'composite units' capable of producing from yarn to made-ups under one roof. Textile processing units are fragmented and often based on obsolete technology which affects the quality of dyed/printed cloth. The most common complaint is that dye bleeds in couple of washings.

Made up manufacturing of both woven and knitted garments is also concentrated in smaller units. Use of secondhand machines is most common because of inadequate financing facilities. These units operate in unorganized sector and the workforce is not properly trained, which affects production and productivity. Since most of the units are involved in CMT, they remain heavily dependent on funding by the exporters and often payments are delayed for months. Therefore, these units are not able to retain quality workforce.

Exploring new markets and achieving product diversification have become a must because the United States, the European Union, Japan and oil producing countries are experiencing the brunt of double dip recession. The two booming economies, China and India, and even Bangladesh, have emerged as the major competitors of Pakistan in the global textile markets. Pakistani exporters can compete in the global markets by offering competitive prices and highest quality standards. They have to move with the stream or face stampede.