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					                                                                   M.Idrees Ahmed
                                                                 Textile Commissioner
                                                                        June - 2004
                         GOVERNMENT OF PAKISTAN
                   MINISTRY OF INDUSTRIES & PRODUCTION
                   TEXTILE COMMISSIONER’S ORGANIZATION
                                   ******

SUBJECT:- FUTURE SCENARIO OF TEXTILE INDUSTRY


        Textile Industry is the major economic sector of Pakistan and for quite some time
to come it will continue to be the main driving force in the industrial and agriculture area.
It contributes more than 66% to the total export earning of the country, accounts for 46%
of the total manufacturing and provide employment to 38% manufacturing labor force.
The availability of cheap labor and basic raw cotton as raw material for textile industry
has played the principal role in the growth of the Cotton Textile Industry.

Potentials of Textile Industry.

        During the boom periods Pakistan has emerged as the major supply source of
cotton textiles in the world market confirming its competitive strength. Pakistan’s share
in the world yarn trade is about 30% and the share in cloth is 8%. This describes its
competitive position in international market and future potentials for improvements &
growth. The Textile Industry has an in built potential for performing better both in
production as well as in export by virtue of its inherent competitiveness in the
international market for its conventional products. However, to sustain its position and to
move in high value added products as well as for the increased market share, a large
investment in machinery equipment and new technology is essential.

Textile Vision – 2005

       In order to revitalize the Textile Industry the Government of Pakistan has
developed a Textile Vision – 2005 to serve as broad target to aim at ;

       An open, market driven, innovative & dynamic Textile Sector which is :

       -       Internationally integrated.
       -       Globally Competitive
       -       Fully equipped to exploit the opportunities created by the MFA phase out.

Current & Future Investments.

       Textile Vision – 2005 has envisioned an investment program of approximately
US$.6 Bln. by next five years. The current trend is for establishment of Air jet Looms
unit & open width Textile Processing Units. In printing the major strength is of Rotary
                                            -2-

Printing Machine. Trends is the past had been for wider width fabrics, however, recent
tread is for continuous bleaching, dyeing in medium width to cater to Garment sector.
The processing industry is catering the needs of both “Home Textiles” & Readymade
Garment Industry (local & export). Besides processed fabric is also exported in bulk.
Introduction of Cad-Cam & laser techniques in Printing & Garment Units is recent
phenomenon however, “Inkjet-Direct Printing & Weave – Gate network system” are
being studied with interests.

        Almost all the major machinery manufacturers of E.U.& Japan in Spinning
Weaving – Bleaching – Dyeing – Printing – Finishing – Knitting – Readymade Garments
etc. are quite active through their agents in Pakistan. Major imports are from Germany –
Holland –Switzerland – Italy – UK – France & Japan. The local agents have good liaison
with their principals and also have back up service facilities.

Industrial Policy:

        Developing countries, regardless of their ideologies have in the recent year been
re-assessing their industrial development policies with the basic aim of facilitating
industrial change and re-develop competitiveness. With the onset of trade liberalization
under W.T.O. and phasing out of quota restrictions under Agreement on Textile &
Clothing’s a highly competitive Textile Trade environment is anticipated by the year
2005 and beyond. It is clear that between developed and developing countries no one is
prepared to lose its international market positions. The restructuring programs in future
would thus aim at not to meet low-cost competition, but to meet high efficiently
competition. The Industrial Development Policy should therefore stress on shifting the
emphasis from creation of industrial capacity to the encouragement of more efficient use
of resources, with the aim of increase in supply response in the short term, and broader
industrial base that can sustain growth in output employment and productivity in the long
run. Besides grooming the domestic industry another way is to develop strategic alliance
with internationally progressive foreign firms in the form of joint venture with equity
participation, technical know-how or marketing tie-up. In textiles Japanese and Chinese
firms can be persuaded for setting-up of joint venture in Pakistan.

Performance of Textile Industry:

        The performance of Textile Industry during the last four years had been
satisfactory. The market was responsive, the Govt. Policy was supportive and inputs were
viable. The industry made profits and re-invested in new machinery for BMR and
Expansion. This resulted into substantial increase in capacities of all products.
Consequently yarn production has increased by 6%, cloth production by 14% and
synthetic fibers by 26%. The exports showed positive improvements and textile export
grows from $ 5.9 billion last year to 7.4 in 2002-03. The Fabrics – Bedwear – Knitwear
                                               -3-

& Garments crossed billion dollars level and consequently the share of made-up and
clothing increased to 57% while share of yarn & fabric was 43%. The industry though
followed “Low Road Scenario” but was moving in the right direction and preparing itself
for the 2005 Scenario when a highly competitive environment would develop.

                Robin Anson a renowned consultant on textile in his address in at ITMF
gave an overview of world textile trade and production trends, and highlighted the
regions which would be most at risk after the elimination of quotas in 2005.China is one
sure winner. The country possesses almost unlimited human resources and very low
labour costs. In general terms, its people are hard working and motivated by a desire to
improve their living standards. And the surge in China's exports to the USA and EU in
2002 and early 2003 was spectacular. Chinese exporters are equipped and able to respond
quickly and flexibly to increases in demand. China has given companies in other
developing countries a very loud wake-up call. They are worried about China's potential
to exploit the world's markets when quotas are eliminated at the end of 2004. The
conscious and forward looking entrepreneurs are pursuing one are more of the following
strategies to prepare themselves for the competitive scenario of 2005.

      improving production efficiency through increased automation;
      re-engineering of production systems;
      expanding capacity and integrating operations;
      collaborations with foreign companies;
      backward and forward integration of operations;
      moving up the value chain; and
      enhancing marketing capabilities.


For Mexico, quota-free access to the US market will cease to be a competitive weapon.
However, Mexico will continue to enjoy the competitive advantages of market proximity,
preferential tariffs and low labour costs. In addition, it will continue to benefit from close
links and production-sharing arrangements with US manufacturers. Although China has
taken over as the USA's leading supplier -- and stands to make further gains in 2005 and
beyond -- Mexico should be able to retain a high share. The same applies to Caribbean
countries, which have been granted enhanced benefits in recent years. For suppliers in
Central and Eastern Europe and the Mediterranean Rim, including Turkey, quota-free
access to the European Union will similarly cease to be a competitive weapon once
quotas have been eliminated for all. This is likely to lead to falls in market share at the
expense of Asian suppliers. But major exporters in the region will continue to benefit
from market proximity, duty-free access and low costs. Also, ties with importing
countries will be strengthened for a number of the region's exporting countries in 2004
when they join the European Union. Hong Kong is a likely loser but is a different case.
Once quotas go, Hong Kong's advantages as a major quota holder will become worthless.
Market proximity will become an increasingly valuable competitive advantage as
customers demand better quality of service, timeliness and reliability of delivery from
                                          -4-


their suppliers. As product life cycles become shorter, the risks of being left with unsold
merchandise become ever greater. Market proximity can also help suppliers to carve out a
competitive advantage by building close relationships with their customers. Furthermore,
when quotas end, lower prices may even encourage consumers to buy more clothing --
which would benefit everyone in the industry worldwide.

Textile City

        Textile Vision 2005 proposed establishment of Textile City. To give boost to
export of value added Garments at a quicker pace. The concept of Textile City is based
on designing an exclusive production are specializing in production of value added textile
products and making available all support activity and infrastructure to facilitate the units
for concentrating on production activity with high level of productivity and quick
delivery response of export orders. Infrastructure facilities such as sufficient water – gas
– Stable voltage power and waste water disposal as well as treatment of waste water is
planned and cleaner environment can be ensured. Further it is easier for the foreign
buyers to visit and place orders for particular products with the units of their choices,
economizing of their time traveling and hence ease in contacts with local manufacturers.
The proposal is to create a board and integrated free Trade Zone specializing in textile
companies particularly dyeing factories in order to gather the scattered textile companies
together in the Textile City FTZ as much as possible. The proposal is to locate the FTZ in
somewhere physically near or having good access to a seaport like Port Qasim in
Karachi. Common facilities for wastewater treatment to be used collectively at reasonable
fee will be provided to allow participating companies to meet ISO 14000 certificates as a
requirement from their buyers in Europe and the US that is envisaged to be escalated
after the elimination of the MFA quota at the end of 2004. It is critically necessary for
Pakistan to provide infrastructure for Textile Industry to compete with China & India in
the international market after the elimination of MFA quota by 1st January, 2005.

        The industry has potential to perform better. There is need that both Government
and industry should realize that sincere and appropriate approach has to be made to meet
the challenges of the present day competitive environment and future scenario when
Textile & Clothing sectors are to be fully integrated into the GATT – by 2004 where
quality of product would be the major aspect to customers satisfaction besides price and
after sales service. Investment in knowledge of markets, training of workers,
improvement in labor productivity and product development would be immediate areas
for each company to concentrate.

                                      *********
                         GOVERNMENT OF PAKISTAN
                   MINISTRY OF INDUSTRIES & PRODUCTION
                   TEXTILE COMMISSIONER’S ORGANIZATION
                                  ******




SUBJECT:-


         Textile Industry is the major economic sector of Pakistan and for quite some time
to come it will continue to be the main driving force in the industrial and agriculture
area., it contributes more than 66% to the total export earning of the country, accounts for
46% of the total manufacturing and provide employment to 38% manufacturing labor
force. The availability of cheap labor and basic raw material for textile industry, cotton
has played the principal role in the growth of the Cotton Textile Industry.

Potentials of Textile Industry.

        During the boom periods Pakistan has emerged as the major supply source of
cotton textiles in the world market confirming its competitive strength. Pakistan share in
the world yarn trade is about 30% and the share in cloth is 8%. This describes its
competitive position in int6ernational market and future potentials for improvements &
growth. The Textile Industry has an in built potential for performing better both in
production as well as in export by virtue of its inherent competitiveness in the
international market for its conventional products. However, to sustain its position and to
move in high value added products as well as for the increased market share, a large
investment in machinery equipment and new technology is essential.

Textile Vision – 2005

       In order to revitalize the Textile Industry the Government of Pakistan has
developed a Textile Vision – 2005 to serve as broad target to aim at ;

       An open, market driven, innovative & dynamic Textile Sector which is :

       -       Internationally integrated.
       -       Globally Competitive
       -       Fully equipped to exploit the opportunities created by the MFA phase out.

Current & Future Investments.

      Textile Vision – 2005 has envisioned an investment program of approximately
US$.6 Bln. by next five years. The current trend is for establishment of Airjet Looms unit
& open width Textile Processing Units. In printing the major strength isof Rotary

				
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