Pakistan’s poor performance in textile exports

Considered worldwide an important cash crop, cotton has played a significant role in the industrial growth of many countries. According to Australian economist J.A. Schumpeter, England owes its ascendance to a single industry – the textiles. The same can be said of China and the rest of East Asia.

Japan used cheap labour to surpass England to become the leading exporter of cotton garments by 1930. When Washington forced Tokyo to accept ‘voluntary’ quota in 1955, Japanese investors’ instinct to stay in business impelled them to fund garment companies in Hong Kong, Taiwan and South Korea. Japanese intervention in East Asia led to the up-gradation and modernisation of garment industry in the region. In due course, labour-intensive garment factories laid the seeds for broad-based industrialisation in East Asia, working spectacularly in China after its opening up in 1980s.

With an annual harvest of around 12-13 million bales, Pakistan is the fourth largest producer of cotton, producing about 10 per cent of the total global production of the silver fibre. Cotton provides raw material to Pakistan’s 337 textile mills, some 1500 ginning factories and about 5000 oil mills. Cotton and its value added products chain contribute about 56 per cent to Pakistan’s annual export income. A couple of indigenous industries, such as pharmaceutical, soap, chemical and feed, rely heavily on cotton by-products also. Besides, cotton provides a livelihood to 1.5 million farming families and jobs to about 40 per cent of the country’s labour force. In view of its contribution to the economy, cotton is often called the life-blood of Pakistan’s economy.  

Keeping in view the importance and contribution of cotton to its national economy, Pakistan government constituted, a Ministry of Textiles to deal with this sector exclusively. Since then, their has been a lot of rhetoric about shifting the ‘textile sector from commodity to specialty, value addition, skills and vocational training programmes, establishing textile cities, model garment factories, modern textile laboratories, textile research institutes and special economic zones to facilitate export specific textile industries. However, the export of Pakistan’s textiles, despite a subsidy of 40 billion rupees and many other concessions to the textile industry from 2005-08, has declined from 62 per cent to 56 per cent of the country’s overall exports. During the fiscal year 2007-08 alone, Pakistan’s cotton exports declined by 2.5 per cent standing at $10.5 billion against $10.78 billion a year earlier.

Still in the process of optimising benefits, Pakistan’s textile industry, experts believe, has the potential to add some $25 billion to the export regime through value addition of the country’s entire cotton crop. Furthermore, Pakistan loses over $2 billion every year over a want of a well-established cotton standardisation system in the country.

Sixty eight per cent of the country’s textile exports are to the United States and the European countries where per unit rate of Pakistani textiles is the lowest when compared with other countries. Currently, the per square metre rate for the textiles in the US-European block are: Pakistan $0.91, India $1.9, Bangladesh $2 and Vietnam $3.

The country’s textile tycoons are themselves responsible for the sorry state of affairs in this sector because despite availing subsidies in billions of rupees, they have neither been able to improve the quality of their products nor bring this sector in conformity with the modern day requirements. However, the influential textile lobby is now, once again, engaged in efforts to get another subsidy of Rs30 billion for R&D. In view of the lacklustre performance of this sector, it would be prudent to link such subsidies to the quality of the product and the actual performance of a unit.

For competing globally, the industry also needs to adopt trendy technology being practiced in the west. This can be possible only if we have highly skilled and educated manpower and also develop industry-academia linkages.

Although cotton is the mainstay of Pakistan’s economy, it is astonishing that the country does not have even half-a-dozen Ph. Ds. in textiles at present. This last aspect speaks volumes about the seriousness of leaders in making a fuller use of Pakistan’s silver fibre.

While Pakistan’s textile sector has been confronted with problems, like high cost of production and energy shortage, other players in the South Asia region have succeeded in creating a niche in the international markets by exporting quality products, augmenting textile exports and earning rich dividends due to surge in the export of their cotton products.

Traditionally, over 60 countries had been exporting garments to the west. After expiry of the quota regime on January 1st, 2005, the exports of several dozen of them had been witnessing a decline as the trade and manufacturing consolidated in nations that excelled in skills, machinery, marketing techniques and the ability to cater to the rapidly changing global market trends and fashions.

As regards for Bangladesh, the recent global economic turmoil has proved to be a boon for its garment industry, which is growing rapidly despite recession in some other countries. Following massive diversion of orders from China. Bangladesh’s garment sector has been more than compensated for the initial setback, which impelled the country’s about 5,000 apparel makers to seek government help when US and European buyers postponed and cut orders in the wake of global financial crisis. But, a massive diversion of orders from China – the world’s largest producer of apparel, has more than compensated Bangladesh for the earlier losses.

Source: The News, 11th January, 2009

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