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Opportunities and Challenges for Textile Producers and Exporters By Our Staff Reporter Pakistan has emerged as one of the leading textile producers and exporters. The analysts are of the view that by year 2010, Pakistan can become a leading exporter in South Asia and by year 2025, it could assume a sustainable leadership. But it is still a long way to go and there are many challenges which the government and the private sectors have to meet to achieve a distinguished position on the world textile map. These are the views of Dr. Mirza Ikhtiar Baig, Chairman, SITE Association of Industry. In an exclusive to The Nation, he has analyzed the potential, opportunities and suggested valuable recommendations. He said that the demand for textiles in the world is around $18 trillion, which is likely to increase by 6.5% annually. China is the leading textile exporter of the world’s total exports of US$ 400 billion in 2002. Country wise major market shares of the textile exporting countries are: China: $ 55 billion, Hong Kong: $ 38 billion, Korea: $ 35 billion, Taiwan:$ 16 billion, Indonesia:$ 9 billion. Pakistan has emerged as one of the major cotton textile product suppliers in the world market with a share of world yarn trade of about 30% and cotton fabric about 8%, having total export of $ 7.4 billion which accounts for only 1.2% of the over all share. Out of this Cotton fabric is 0.02%, Made-ups is 0.18% and Garments is 0.15%, but compared to China, Taiwan and Hongkong, we stand no where. This is mainly due to the laxity towards the promotion of value added sector. Pakistan should learn a lesson from Bangladesh, which, by importing yarn and fabrics from Pakistan and other countries, has increased the export volume of textiles made ups. If we desire to achieve the target of Textile Exports as envisaged in Textile Vision 2005, we will have to promote Value added sector in Textiles. Textile products are a basic human requirement next only to food. This industrial sector in Pakistan has been playing a pivotal role in the national economy. Its share in the economy, in terms of GDP, exports, employment, foreign exchange earnings, investment and contribution to the value added industry; make it the single largest determinant of the growth in manufacturing sector. Textile share of over all manufacturing activity is 46%, export earning is 68%, value addition is 9% of GDP and as a provider of employment 38%. In spite of the government’s efforts to diversify exports as well as industrial base, the textile sector remains the backbone of industrial activity in the country. Textile Vision-2005 has been directed towards an open, market-driven, innovative and dynamic textile sector, which is internationally integrated, globally competitive and fully equipped to exploit the opportunities created by the Multi Fibre Arrangement (MFA). Pakistan, at present, holds 8th position in textile exports in Asia. Pakistan can achieve the 5th position in Asia in the textile exports as has been targeted in the Textile Vision-2005. After nearly four decades of derogation in GATT and imposition of quotas, unilaterally, bilaterally, multilaterally and voluntarily, the trade in textiles will be integrated into GATT on 1/1/2005 , meaning there will be no quota restraints on textile products, except possibly in some categories for China’s exports to the USA and EU as a result of China’s terms of accession to the WTO. Some Specific Recommendations 1- Remedy though FDI As the result of measures taken under vision 2005, the fiscal year 2002-03 witnessed tremendous inflow of investment in value added expansion and BMR. FDI in textile sector during last four years has reached to US$4 billion which has led to improvement in productivity, both in terms of quality and quantity, in yarn, fabrics, home textiles and garments, besides generating more than 300,000 new jobs. However, the investment volume is not satisfactory as compared with the potential available in our Textile Sector. There is also an urgent need to set benchmark investment requirements for the creation of new capacity and up-gradation of the existing production base. 2- Image Building of Pakistan to Attract FDI The Ministry of Commerce, Ministry of Foreign Affairs and The Board of Investment should launch Joint Campaign to build positive image of Pakistan as a quality textile product supplier and to facilitate the international buyers in Pakistan 3- Focus on Value Addition Pakistan is a leading exporting nation in raw yarn, cotton, and fabrics. If we emphasis on the value added products like garments, Hosiery, knitwear and other textile made-ups, the export volume of textiles can be increased by manifolds. In this respect top priority should be given to stitching industry that leads to highest value addition and employment generation. 4- Creation of Ministry of Textiles instead of Textile Board The Government of Pakistan has established a high powered Textile Board for the promotion of Textile Industry as envisaged in Textile Vision 2005 but its performance is not up to the mark. It will be quite productive if the long-awaited demand of Private Sector regarding the creation of a Ministry of Textile is met on priority basis. 5- Technology Up-gradation & capacity building The establishment of Textile Cities in major Cities of the country is an appreciable move. Government should either set up joint ventures in textile related areas or should provide subsidized credit to textile manufacturers to upgrade their technology and capacity building through ‘Technology Upgradation Fund’. (TUF). It is also suggested that smaller units of power looms (up to 50 looms) should be upgraded to auto looms and power loom units larger than 50 looms into air jet looms. 6- Human Resources Development The Textile Board should establish a separate training wing as a Center of Human Resource Development where training courses should be conducted for the capacity building of labour. There is also urgent need to increase the number of such Vocational Institutions where modern technical education is provided. 7- Accreditation and Certification We are fast approaching an era of Free Trade Regime, which requires standadization complied with WTO regulations. At present due to non-availability of testing laboratories, Pakistani exporters have to spend huge money to get certification from abroad. If WTO recommended Labs were established in Pakistan a lot of valuable foreign exchange could be saved. Ministry of Commerce and BOI should set up such laboratories so that the exporters can get these standards at comparatively competitive prices. 8- Reducing the cost of doing Business in Pakistan At present cost of doing business in Pakistan is higher as compared to the regional countries, which has resulted in bitter competitiveness to Pakistani Products in Foreign Markets. China and India are the bigger competitors of Pakistan. We fear if cost of doing business in Pakistan is not brought at par with other Asian countries, our products would find no place in Market both in terms of quality and price. In the context of future trade, there is an urgent need to bring all the utility charges and levy of taxes down to the minimum level. 9- Need For Improving Textile Production There is an urgent need to bring improvement in textile production, especially in blended sector. Blended products made from a combination of natural and manmade fabrics, are preferred in clothing the world over. In Pakistan 20% protective duty on the import of Polyester Fibre is levied on account of which 25% polyester fabrics is blended with man-made fabrics, while a country like Bangladesh blend 35% Polyester. This scarcity has resulted the poor contribution by Pakistan in this sector.
"Opportunities and Challenges for Textile Producers and Exporters"