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By: Maliha Shahnawaz (SP06-BW-0006) Anila Irum (SP06-BW-0002)
Introduction Importance History Global overview Textile industry in Pakistan Distorted Economic Growth Processes – value chain Exports and Imports Trade Policy 2007-08 Investment and FDIs Factor of Production Linkages Special Organizations Textile Vision 2005 Textile City
Ancillary Textile Industry Reforms Target Markets Textile training Industry support program Cluster Development Globalization and WTO Future Prospects Budget and Policies Incentives SWOT analysis Environmental Hazards Problems and Challenges Conclusion and Recommendations
The textile industry is one of the most important sectors of Pakistan. It contributes to the country’s GDP, exports as well as employment. It is, in fact, the backbone of the Pakistani economy. Textile industry has the largest potential for boosting exports from Pakistan. Apart from its basic contribution of clothing the nation and at the same time earning largest foreign exchange through exportable items. The textile industry holds the key to the growth and expansion of the country's cotton economy, which continues to be the main cash crop. Textile Production is comprised of Cotton ginning, cotton yarn, cotton fabrics, towel, hosiery, knitwear and ready made garments.
Textile products are a basic human requirement next only to food 4th largest Producer of Cotton 3rd largest Exporter of raw cotton A leading Exporter of yarn in the World Availability of cheap labor and basic raw cotton
In 1947, 78000 spindles and merely 3000 looms that is too in the unorganized sector, with only one textile unit. In the late fifties PIDC came into being which had the main objective of industrializing the country in inauguration of the Valika Textile Mill at Karachi. In 1959, the 9 largest industrial houses accounted for 50 percent of the total production. The period between 1958 to1968, economy, especially industry experienced a relatively higher growth rate during the Ayub Regime. By the mid sixties there were about 180units of textile bleaching, printing, and processing units, mostly situated in Karachi and Punjab. A number of spinning units ( comprising of only 12,500 spindles) were set-up. Newly established mills were based upon imported technology but there was lack of technical staff and shortages of capital.
Between 1960 and 1970 Pakistan’s textile industry enjoyed over 11 percent of the world market share but today the corresponding figure is only slightly over 2 percent. By 1970-71 there was 113 units and the industry has 2,065 thousand spindles and 30 thousand looms. After the separation of East Pakistan Cotton Export Corporation of Pakistan was established which meant the most of the private sector work was taken over by the state. The textile industry suffered heavy losses because the export of cotton was controlled by the CEC. And the import of the machinery was made difficult due to shortages of foreign exchanges. The decade of development was followed by the Bhutto years from 1971 to 1977. His regime was characterized by the nationalization of the large scale manufacturing sector, insurance companies and banks.
The eighties brought a relief to the textile industry due to the industry friendly policies of the government. There was a rapid growth in spinning sector. Till 1980-81 spinning continued to expand to 4033 thousand spindles in 203 spinning units, and working capacity amounted to 2833 thousand spindles. During the nineties a combination of factors adversely effected the industry, mainly: Removal of export duty on raw cotton, increasing domestic prices to international levels and beyond. Infestation of the cotton crop by leaf curl virus, reducing supply sharply and increasing prices. Frequent changes in governments creating inconsistency in policies of the Government and Financial Institutions. Rapid expansion of the installed industry in the hands of new entrants who did not have the managerial skills or the liquidity base to succeed. Rapidly changing global markets, especially the shift towards man made fibers.
1. 2. 3. 4. 5.
World demand for good quality, wide width fabrics grew and replacement and modernization process started. With these developments, production and export value added items such as bed sheets and home furnishing started. Structural changes with the replacement of obsolete machinery and modernization in the industry still continued in view of the world competition. In the nineties and the early 2000s a textile manufacturers were making large profits by merely trading quotas rather that diversifying into higher value-added products where quotas were not required. “Textile vision 2005” has identified the present status and opportunities
TEXTILE INDUSTRY IN PAKISTAN
The nation is characterized as the single crop economy that includes cotton and textile and they contribute immensely in the Pakistan national economy. The textile industry in Pakistan has tremendous potential to grow, provided its comparative advantages are maintained. Pakistan has gradually emerged as world’s largest supplier of yarn, with china as one of the major buyers. Pakistan has potential to become a strategic supplier of textile products for world’s major malls and stores, which again want a guaranteed and timely supply from the source.
Distorted Economic growth
The 1960s, so-called ‘golden decade', era of industrialization, averaging 6.7% growth. On the one hand, this gave rise to the famous 22 richest families in Pakistan controlling most of industry and the economy. On the other hand, it created the sea of poverty in which 46% of the population was living. Agriculture is employing 44% of the workforce and contributing 20.9% of GDP in 2007-08 as compared to 21.8% in 2006-07. Feudalism, water shortages, highly expensive electricity, fertilizer and seeds, decreasing land for cultivation, very low output and yield, and old methods of farming, are the main reasons for crisis also Pakistan’s economy is largely dependent on foreign aid and loans.
The number of separate processes involved in production varies with each textile product. The initial stage of textile manufacturing involves the production of the raw material either by farmers who raise cotton, sheep, silkworms, or flax or by chemists who produce fiber from various basic substances by chemical processes. The fiber is spun into yarn, which is then processed into fabric in a weaving or knitting mill. After dyeing and finishing, the woven material is ready for delivery either directly to a manufacturer of textile products or to a retailer, who sells it to individuals for use in the making of clothes and such household articles as draperies, upholstery, and curtains.
TEXTILE INDUSTRY'S ECONOMIC CONTRIBUTION 2007-2008
Exports Manufacturing Employment GDP Textile Export Investment Source: Economic Survey of Pakistan 200708 53.8% 46% 39% 8.5% $6.3 billion $7.0 billion
Overall export recorded a growth of 10.2% during the first ten months (July – April) of the current fiscal year against a growth of 3.6% in the same period last year. In absolute terms, exports have increased from $13847.3 million to $15255.5 million. In Asia, Pakistan is the 8th largest exporter of textile products.
STRUCTURE OF EXPORT Particulars Textile Manufactures Raw Cotton Cotton Yarn Cotton Cloth Knitwear Bed Wear Towels Readymade Garments Made-up Articles Other Textile Manufacturers * Provisional Source: Federal Bureau of Statistics July - April 2007- 08* 8649.6 58.1 1070.6 1572.5 1504.3 1565 497.6 1200.2 428.6 752.7 2006-07 8875 45.3 1176.5 1717.5 1479.9 1634.7 506 1250.8 419.4 645 -225.5
($ Millions) % Change Absolute increase/ decrease -16
EXPORT OF TEXTILE MANUFACTURES (Share) Items Cotton Yarn Cotton Cloth Knitwear Bed Wear Towels Tents, Canvas & Tarpaulin Readymade Garments Synthetic Textiles Made-up Articles Others * July - March (Provisional) 2007- 08* 12.4 17.7 17.3 18.1 5.6 0.7 14.1 5.1 5 4 100 2006-07 13.6 19.3 18.7 19 5.7 0.7 13.2 4 4.5 1.3 100 2005-06 13.7 21.6 17.6 20.8 5.8 0.3 13.8 2 4.3 0.1 100
The textile machinery used in Pakistan is imported mainly from the countries of Japan, Switzerland, Germany, China and Belgium. Import during the first ten months (July-April) of the current fiscal year (2007-08) grew by 28.3 % compared with the same period of last year,reaching to $32.06.
Import of Textile Machinery Year 1999-2000 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 (Jul– Mar) Total Million US $ 210.9 370.2 406.2 531.9 597.9 928.6 771.5 503.0 318.2 4638.3 % Change 28.6 75.5 9.9 30.7 12.4 55.3 -17.0 -36.7
Source: Federal Bureau of Statistics
Textile industry has made an investment of about $7.0 billion during the last six years. This investment includes both investments through bank loans as well as own sources. This investment has been made in the form of BMR expansion and new capacity.
FOREIGN DIRECT INVESTMENT
57% FDI comes from 3 countries namely UAE , US, and UK. US investors are on the top with 33.4% investment in 2007-08.
Net Inflow of Foreign Direct Investment ( US $ Million) Economic Group July - March 2007-08 Textiles Source: SBP 22.3 2006-07 46.8 59.4 2006-05
FACTORS OF PRODUCTION Raw Cotton
Cotton is a natural vegetable fibre used primarily as a raw material for textiles. World cotton production is estimated at 118.8 million bales in 2007-08 – 3% lower than last year because of the decline in world area by 1.2 million hectares to 33.6 million hectares. In 2007-08, production is estimated to decline in the USA (12%), China (3%), Pakistan (9.3) and Turkey (12%). Production in 2007-08 is estimated to increase in India by 11.1 percent and in Brazil by 5percent. Leading producers of cotton include USA, China, India, Pakistan, Uzbekistan and Turkey.
Review of Domestic Cotton Situation
Cotton accounts for 7.5 percent of the value added in agriculture and about 1.6 percent to GDP. The cotton area sown in the Punjab Province in this season was less by 2.5 percent compared with last year. Secondly, the cotton area sown in Sindh was 6 percent higher than the last year.
Cotton prices this season in the country remained significantly higher than last year. The seed cotton prices during the season so far has averaged at Rs 1,422 per 40 Kgs, as against last year ‘s average price of Rs 1,171/-. In other words farmers received, on average, 21.4 percent higher prices this year. Cotton prices in the world market have also remained significantly higher than last year.
Area, Production and Yield of Cotton Year Area Production Yield % change -10.3
(000 % Change (000 % Change (Kgs/ Hectare) Bales) Hec) 2005-06 3103 -3 13019 -8.7 714
P = Provisional (July - March) Source: Ministry of Food, Agriculture & Liverstock, Federal Bureau of Statistics
Performance of Textile Industry on KSE
There were 209 companies listed with the KSE under group ( Textile spinning, textile weaving and composite and other textiles) in december 2007 as compared to 212 companies in 2006. The share index of cotton and other textiles was up by 11.6% and its market capitalization by 13% during July-April 2007-08. The profit before taxes of this sector was also reduced to Rs. 8.2billion in 2007 when compared to Rs. 9.3 billion in 2006.
All Pakistan Textile Mills Association is the chief organization that determines the rules and regulations in the Pakistan textile industry. All Pakistan Textile Mills Association (APTMA) is the premier national trade association of the textile spinning, weaving, and composite mills representing the organized sector in Pakistan. APTMA represents 391 textile mills out of which 309 are spinning, 45 weaving and 37 composite units. The total installed capacity of APTMA member mills accounts for 9,527,857 spindles, 61,256 rotors, 9,922 Shuttleless/Airjet Looms and 717 conventional Looms.
PRESENT STATUS OF PAKISTAN TEXTILE ENGINEERING SECTOR
The Pakistan Textile Engineering Sector is underdeveloped and under utilized. The Textile Engineering Units vary from small, medium and large in size. The Textile Engineering Industry comprises approximately 80% small work shops, 15% medium engineering Units and 5% large Engineering Units. On the basis of initial survey of Textile Engineering Units (Not complete yet), approximately 500 units are engaged all over Pakistan, employing approximately 50000 work force which is mostly skilled. Even under the present conditions and without any support, Pakistan Textile Engineering Industry is providing import substitution worth around one billion US dollars. This sector also exports to small and medium Textile Units in Bangladesh, Iran, SriLanka,etc.
The Pakistan textile industry is facing tough competition from the Indian, Bangladeshi and Chinese textile industries. The cost of power in Pakistan is high as compared to that in other countries. Bangladesh, India and China enjoy comparatively low interest rates than Pakistan. The prevailing rates are as following, 8.5 to 9.0 per cent in Bangladesh, 5.25 per cent in India (market rate is 10.25 per cent, however exemption of 5 percent is provided to the textile industry) and 5.58 per cent in China. Meanwhile, in Pakistan, the last three to four years has seen the interest rates to have risen more than 150 percent, to 13.25 percent. China has expanded textile exports from $ 39.5 billions in 1998 to $ 80.0 billions in 2003. Buyers are watching the global supply position & if Pakistani Entrepreneurs are not willing to change, the buyers will shift to China which has developed a large supply base for Textile Products.
TEXTILE VISION 2005
An Open, Market Driven, Innovative & Dynamic Textile Sector Which is Internationally Integrated Globally Competitive Fully Equipped to Exploit the Opportunities Created by MFA Phase Out And Which Enables Pakistan to be Amongst the Top Five Textile Exporting Countries in Asia.
Employment Generation in Textiles Textile Vision – 2005
Stitching Processing Knitting Weaving Spinning Total 734,805 61,206 47,221 294,213 201,151 1,338,597
New Employment % Increase
822,267 56,340 19,161 15,484 123,600 1,036,853
112% 92% 41% 5% 61% 77%
Pakistan’s Textile Industry has potentials to increase volumes of textile exports and enhance earnings by shifting more & more to high value added products. A comprehensive policy package is desired to support the Textile Industry to survive & win the post MFA competition by making available the necessary facilities & infrastructure in a timely manner. It is critically necessary for Pakistan to provide infrastructure for Textile Industry to expand in size and volume to compete in the international market after the elimination of MFA quota by 1st January, 2005.
In order to give a boost to export of value added textile products at a quicker pace, Textile Vision 2005 proposed establishment of
PROJECTS - TEXTILE INDUSTRY DIVISION
Name & Status of the Scheme S.No. Ongoing 1 2 3 4 1 2 3 4 Pakistan Textile City Karachi Lahore Garment City Karachi Garment City Faisalabad Garment City New Implementation of Export Plan Establishment of Fibre Testing Laboratory Phase II Up-gradation of Cotton Fibre Testing Laboratories Providing & Laying Delicated 48 inch Diameter mild Steel Water main for Textile City Karachi
Cost (Million Rupees)
1000.000 Billion (Share of Federal Government) 497.640 1291.000 498.82 22000.000 68.860 28.656 636.585
The concept of textile city is based on supply of industrial infrastructure like natural gas, water, electricity, sewerage and waste disposal mechanism to prospective investors, through one-window operation, so that they are facilitated to focus on investment and production without having to worry about arranging the infrastructure requirements. Pakistan Textile City is an industrial zone dedicated to the textile processing and related industry. Comprising of a total area of 1250 acres, the estate is located in the Eastern Industrial Zone of Port Qasim Karachi, 6 km from the National Highway. Pakistan Textile City will offer the textile processing industry the desired state-of-theart environment to achieve cost effective high productivity. The facility will provide uninterrupted power, clean and continuous water supply, natural gas, effluent treatment and efficient transportation systems. Services will be streamlined as a one window operation and managed in a highly efficient and professional manner.
The forecast is that 30 millions jobs will be put on hold. Employing 40 million workers worldwide, most of them in poorer countries, textile sector generates trade worth $400 billion annually, both in clothing and textiles. In the global production China, has a share of 17.5 per cent, Pakistan 2.2 per cent, USA 4.5 percent and EU 12 per cent share. Pakistan employs four million in textile and clothing sector that could rise to 15 million in the absence of quotas. When in full operation, Bin-Qasim Textile City is expected to generate 80,000 job opportunities.
HIGHLIGHTS OF THE TEXTILE CITY
Exclusive production area with excellent infrastructure. Location Infrastructure Land : Water : Gas : Power: Compliant to WTO standards for social, health and environment Port Qasim, Karachi 1250 acre 18 MGD 40 mmcfd 100 M.watt.
Capacity of one dying (knitting) Unit Average 40 MT/day (Min. 20 MT/day) Capacity of one dying (woven) Unit 100,000 meters/day Minimum No. of dyeing units in the Zone 35
Salient Features of Pakistan Textile City Project
Exclusive Textile Environment One Window Operation without Red Tape Synergistic Environment Stable Power Supply Consistent Water Supply (tds quality) Gas for Processing and Power Generation Effluent Treatment Plant Sewerage and Storm Drainage System Roads and Advanced Telecommunications infrastructure Security and Fire Fighting Systems Proximity to Modern Port Facilities Amenities Proximity to Workers Residence
Weaving Bedlinen Denim Knitwear Towel Apparel Dyeing
Services Textile Processing Lab Advanced IT infrastructure Technical Training Centers Computerized Weigh Station Banks, Freight Forwarders, Travel Agent, Courier Company, Post Office Restaurants Public Transport, Mosque, Fire Station, Private Security Support Industries Zips, Buttons, Thread Printing, Packaging Engineering Workshops
ANCILLARY TEXTILE INDUSTRY
Textile production is comprised of cotton ginning cotton yarn, cotton fabric , fabric processing (grey, dyed, printed), home textiles, towels, hosiery and knitwear and readymade garments. These components are being produced both in the large scale organized sector as well as in unorganized cottage / small and medium units.
i) COTTON GINNING SECTOR
Leading producers of cotton include USA, china, India, Pakistan, Uzbekistan and turkey. The current market share of cotton in 56 percent in all fibers. Textile fibers are divided into three basic types according to their sources such as cotton fiber, man made fiber and wool. In last ten years the percentage share of cotton has shrunk from 48 percent to 39 percent in the total fibre consumption. there are 1221 ginning factories in the country. Ginning industry has installed capacity of more than one million bales on a single shift basis and total capacity of around 20million bales on three shift bases.
ii) COTTON SPINNING SECTOR
Spinning is the process of converting fiber into yarn. Pakistan has the third largest spinning capacity in Asia with a spinning capacity of 5% of the total world and 7.6% of the capacity in Asia. Pakistan growth rate in this sector has been 6.2% per annum. At present, cotton-spinning sector is comprised of 421 textile units (50 composite units and 471 spinning units) with 10.1 million spindles and 114 thousand rotors in operation with capacity utilization of 89 percent and 60 percent respectively, during July-Mar 2007-08
iii) WEAVING AND MADEUP SECTOR
There are three different sub-sectors in weaving i.e, Integrated, independent Weaving Units, and Power Loom Units. This sector is producing comparatively low value added Grey Cloth of mostly inferior quality. However, the performance of cloth sector remained far better than last year and charted a growth of 12.6 % during July – March 2007-08 .
Installed and Capacity Worked in Weaving Sector (Nos.) Category Installed Capacity Effective/ Capacity Worked
Integrated Textile Units Independent Weaving Units Power Loom Sector Total Source: Textile Commissioner Organization
7599 27500 295442 330541
3471 27000 285442 315913
iv) COTTON CLOTH
Production of cloth, both from mills and non-mills sector have a registered growth of 2.7% during July-March 2007-08. However, it recorded negative export growth for July-March 2007-08 (11.0%) as compared to 2006-07.
v) TEXTILE DOWN STREAM INDUSTRY
This is the most dynamic segment of textile industry. The major product groups are towels, tents and canvas, cotton bags, bed wear, hosiery & readymade Garments including fashion apparels.
a. HOSIERY INDUSTRY
There are about 12,000 knitting machines spread all over the country. The capacity utilization is approx 70%. The sub sector remained under pressure form its competitors during the year amend tough competition emerging from the newly inducted members to the European union belonging to the former east European bloc.
b. READYMADE GARMETS INDUSTRY
The garment industry provides highest value addition in textile sector. This industry is distributed in small, medium and large scale units most of them having 50 machines and below; The industry enjoys the facilities of duty free import of machinery and income tax exemption during the year under review the sector recorded a healthy growth in exports (7.3%) as compare to last year.
c. TOWEL INDUSTRY
There are about 7500 towel looms in the country in both organized and un organized sector. Towel industry showed a negative growth of 3.9% in FY08 against FY07.over 300% increase in export of towels in past indicate that tremendous possibilities exist for future expansion providing the existing towels manufacturing factories are up-graded to produce better quality towels so that they have a fair chance in international market.
Canvas exports can be subdivided into five categories i.e. tarpaulins, awnings,& sun blinds, tents sails pneumatic mattresses and camping goods. Being the highest raw cotton consuming sector its production capacity is more than 100 million square meters. Around 60% of its production is exported while 40% is consumed locally by armed forces food department. During( July-march) 2007-08 canvas exports showed a decline of 3.1%.
e. SYNTHETIC YARN MANUFACTURING SECTOR
It registered vigorous export growth of 41.0% during July – March 200708. Presently, there are 7 polyester fiber units with production capacity of 640,000 tons per annum,
vi. FILAMENT YARN MANUFACTURING INDUSTRY
The synthetic Filament Yarn Manufacturing industry picked up momentum during 5th Five Year Plan when demand and hence import increased and private sector was permitted to make feasible investment in the rising market conditions. Only about 6 units with operational capacity of 55,000 tons is supplying polyester filament yarn.
Capacity of Synthetic Filament Yarn Type of Yarn Acetate Rayon Yarn Nylon filament Yarn No. of units 1 Units 2 Units Production of Capacity (Metric. Tons) 3000 2000 95000
Polyster filament 21 Units Yarn
Source: Textile Commissioner's Organization
vii. ART SILK AND SYNTHETIC WEAVING INDUSTRY
Art Silk and Synthetic weaving Industry has developed over time on cottage based power looms units comprising of 8-10 looms spread all over the country. There are approximately 90,000 looms in operations of which 30,000 looms working on blended yarn and 60,000 looms on filament yarn. This sub-sector showed a export growth of 40.9% during July-March 2007-08 and earned $396.1 million for national exchequer.
Reforms in the Textile sector
The MINTEX has taken number of proactive measures since its inception. These includes, Federal Textile Board (FTB) Textile Skill Development Board Textile Training Institute Management Board (TTIB)
Federal Textile Board (FTB)
Federal Textile Board (FTB) is functioning under the Ministry of Textile Industry. In order to prepare textile industry for post quota scenario the government in Sept, 2000 set up FTB. It has been tasked with clean cotton program, labor , social and environmental laws , modernization of ginners, rationalization of tariff, facilitation in sales tax issues and to develop packages to promote garments sector by improving their competitiveness in global market.
Progress Made by the Board
Changes in Labour Laws Seminar on Cotton Clean Cotton Programme Inclusion of weaving sector in long term financing scheme Exemption from Sales Tax on import
Textile Skill Development Board
It was set up in the Ministry of Textile Industry in pursuance of the Trade Policy 2005-06 initiative for support to the textile garment sector wherein garment manufacturing units were to be declared as skill development training institutes. The objective of board was to train of 10,000 to 12,000 operators in one year. The scheme has been launched 34 garments unit have joined the stitching machine operators training (SMOT). In which 15 units in Karachi, 11 units in lahore,7 units in Faisalabad and one unit in Rawalpindi. About 3800trainees have been trained of which 2700 are females and 1100 males.
Textile Training Institute Management Board (TTIB)
Pakistan's human resource development profile needs major reforms since there is an acute shortage of skilled manpower in country thus TTIB was created. Due to which elimination of quotas to intense competition from china and India, up gradation of value chain, line supervision, machinery maintenance, factory floor performance, better technology, and research and innovation. TTIB train youth work force according to needs of textile.
TEXTILE TARGET MARKETS
YARNS: • China • Bangladesh • Mauritius • Madagascar • Vietnam • EU • Mexico • Morocco •Russia •others
GREY FABRICS: • China • Hong Kong • Bangladesh • Mexico • Malaysia • Russia •Canada •Poland •Korea • others
Dyed/Print Fabrics: 1.Garmenting lands Bangladesh, Laos, Cambodia, Dubai, Bahrain, S. Africa, China, Mauritius, Lesotho, Kenya, Madagascar, Sri Lanka, 2. Furnishings: EU, EFTA, USA, Norway, Australia, Russia, New Zealand, Others
HOME TEXTILES: • EU/ EFTA • USA, Japan • Norway • Australia • New Zealand • Russia •Others
ASSISTANCE OF PRESENT INSTITUTIONS
To encourage the local textile industry an access to the modern practices in the specialized areas of manufacturing processes, productivity enhancement and quality control, an institutional mechanism should be set up which provides the industry an adequate and industry-friendly assistance.
Textile Industry Training
Textile Institute of Pakistan (TIP) S.M.A. Rizvi Textile Institute Pakistan Bed Wear Design Training Institute Pakistan Readymade Garment Technical Training Institute Fashion Apparel Design & Training Institute Institute of Textile Technology & Management PHMA Institute of Knitwear Technology
Pakistan School of Fashion Design Pakistan Knitwear Training Institute Pakistan Readymade Garment Technical Training Institute National Textile College Allied College of Textile Management & Administration (ACTMA) University of Management and Technology (UMT) Preston Iqra University
National Textile University
College of Textile Engineering, Bahauddin Zakaria University
National Exhibitions held annually can be very helpful in bringing out the skills, the range of products and opportunities of group collaboration. It will help the planners and large scale engineering industry in defining the way for developing skills in order to make this sector strong and viable. The interaction between the foreign textile manufacturing industry could also be enhanced by facilitating the indigenous Textile Engineering Industry to participate in the specialized Exhibitions and fairs being held in those countries.
E-commerce Gateway MoU with Chinese Co.
The E-commerce Gateway has signed a memorandum of understanding (MOU) with a Chinese company Global Enterprise Consulting to launch a business a match making' service in Pakistan and China. According to E-commerce Gateway Pakistan. "This service includes seeking of agents, distributors, buyers, suppliers or joint venture partners in Pakistan or Middle east for Chinese companies that intend to do business in these markets". The service will include all kinds of facilitation required to help increase the Chinese exports to the Middle East and South Asian markets.
INDUSTRY SUPPORT PROGRAM (Textile Sector Pakistan)
SMEDA and JICA (Japan International Cooperation Agency) have initiated an Industry Support Program in Pakistan. These two organizations are working together to provide technical support to Textile Industry in Pakistan. An Industry Support Cell (ISC) has also been established at SMEDA. This cell comprises of textile professionals who have worked closely with Japanese Experts and acquired a first hand knowledge transfer and technical expertise. A total of 166 factories in different sectors of textile industry (including 33 Spinning, 41 Weaving, 30 Knitting and 54 Garment factories) received the direct benefit of this program in all over the country.
CLUSTER DEVELOPMENT PROGRAM
There is an establishment of textile industry cluster in Faisalabad region of Pakistan. In 2005-6 the country was the fifth largest producer and second largest exporter of cotton yarn in the world. It was also the fifth largest exporter of woven fabrics in the world. Faisalabad area has traditionally been the hub of textile industry in Pakistan. Of the estimated 225,000 shuttle power looms installed in the country, for weaving textile fabrics, more than half (150,000) were located in Faisalabad district in 2003. In the past four decades, growth in the number of firms entering in Faisalabad textile industry has been enormous, particularly at the small and medium industry scale. Faisalabad also boasts the largest yarn market in Asia.
EFFECTS OF GLOBALIZATION
The globalization of Textile and APPAREL Trade has intensified during the last three decades. The textile industry world over has experienced highly significant and irreversible changes as a result of globalization of both manufacturing and trade in the recent years. Though the demand concentrated in developed countries the manufacturing has been shifting to the developing countries. Although global demand continued to grow, supply expanded considerably more quickly. These changes are expected to continue and so will constitute a challenge to the textile industry in developing countries like Pakistan.
The basic fact of the matter is that with the given economic conditions and limitations Pakistan like any developing country rely on foreign aid on one end, and the whatever is earned through exports in terms of foreign exchange, the major chunk is paid back to the international lenders leaving little room and money for the drastic economic growth cycle to be ignited. In addition, with the appreciation of dollar, or devaluation of local currency the standard of living of an American may increase as the Pakistani goods become cheaper from him or her, but for Pakistan this devaluation hits directly the purchasing power of a common man burring into the cycle of poverty. The major impact of WTO is on textile Sector. The developed world has also introduced new forms of barrier like the countervailing duty, antidumping duties, social, labor, and security issues. Pakistani industry will have to strive hard to reach the requirement levels of social compliance.
FUTURE PROSPECTS Bright prospects ahead
FUTURE of the textile industry in Pakistan seems bright as lots of opportunities are available in the wake of rising world demand for textiles. The rise in demand is estimated at around 2.5 per cent. Thus creating greater opportunities for the fourth biggest cotton producer country of the world. There are number of other factors which can contribute to the growth of industry for instance the ban on cotton import from India has been lifted and spinners would be allowed cotton import from India. It does not need to import cotton from other parts of the world which helps decrease the cost of production as compared to other countries. Moreover, the textile ministry was giving training to the workers and giving Rs2500 stipend per month to each worker and this programme was going on successfully.
'Pakistan's New Textile Policy Targets 40% Increase in Exports'
The proposed new Textile Policy (NTP) of Pakistan will help increase the output of textile products, improve global competitiveness and generate employment in the industry. The new policy targets a 40 percent increase in exports and meet the growing domestic demand. It will help create 3.5 million new jobs. The first important step is to increase domestic cotton production. Other measures include - improvement in value addition, increase in the number and variety of value-added products, enhancement of productivity of manpower, stepping up efficiency of its existing plants and equipment, and extensive use of the imported machinery. Five new model garment factories will be established. A textile park will be set up to serve as a special economic zone for tax free production and export. A weaving city will be established.
The financing facilities include subsidized credit and refinance facilities provided by SPB through the commercial banks, Export Finance Facility (EFF) for textiles. The SBP has allowed swapping of costly long term bank credit, obtained previously by the industry, with cheaper Long Term Finance for Export Oriented Projects (LTF-EOP) for machinery and equipment. Pakistan plans to raise its overall exports to $ 40-45 billion by 2013, by expanding industrial, agricultural and services sectors, including textiles. The proposed Textile Industry Development Policy 2007 is expected to offer four tax incentives to attract foreign direct investment (FDI) in upcoming textile and garment cities in Karachi, Lahore and Faisalabad. At present, tax authorities are charging a minimum of five percent custom duty on the import of machinery. The proposed incentives include a general sales tax exemption on utilities to those investing in upcoming textile and garment cities. The government has already allowed general sales tax at zero rating on electricity and gas consumed in the production process of the textile sector. The exports of textile products have increased by 5.27 percent at $10.757 billion in 2006-07. The government has fixed a growth target of 12 percent for textile exports for the current fiscal year 2007-08.
Pakistan has shown appreciable progress in policy frame work. Appreciating the importance of Textile Industry and its contribution to the economy the Government announced Textile Packages and then launched its Economic Revival Programme backed by radical reforms in Textile RegimeIncentives for exports – Trade Policy Investment. Policy and Revival of Sick Mills with the sole objective to accelerate the production and exports. Efforts are in progress to pursue further structural changes in line with resources. The new ‘Industrial Policy’ lays emphasis on ‘Foreign Investment’ in ‘Value Added Textiles’ especially from developed countries who had been the major textile players and still hold larger market share in international market. Evidence shows that a sustainable textile industry base can exist, but through private, for-profit initiatives and investment based on economic self interest and genuine competitive advantages.
Incentives for foreign Investment in Textile.
Investment in all sub-sector of Textile Industry is permissible without any Government permission/sanction/intervention. No permission of provincial Government is required for locating the unit in any area. Foreign Investment is permissible at 100% equity or Joint Venture with agreed terms. Full repatriation of capital – profits & dividends is permissible. No requirement of minimum investment in Textile Sector. Duty free import of Machinery for high technology – value added Export Industries.
• • •
• • • • • •
Availability of Local Cotton Availability of labor Domestic Market
Lack of a Strategic Plan Lack of Professional Manpower Old Plant and Equipment High Cost of Operation High Cost of Financing Inferior Quality Lack of Strategic Planning. High Cost of Operation. Multiplicity and high rate of taxation. High Cost of Financing. Lack of Project Financing. Inferior Quality. Lack of effective support from the Government.
• Growing Demand of Textile • Products. Share in the international textile trade • is less than 1%. As such, Pakistan • has an enormous opportunity to increase its market share in the global• • market. •
IMPACT OF CLIMATE CHANGES IN PAKISTAN
Climate change raises serious concerns for developing countries like Pakistan, with its tremendous social , environmental and economic impacts. The agricultural productivity in Pakistan will be affected due to changes in land and water resources. Although Pakistan has ideal climate condition for the growth of cotton providing a factor advantage to the textile industry, but it is also quite vulnerable to pesticides that can lower the yield per hector. The textile sector is largely dependent on the supply of raw material of agricultural sector and hence whatever happens to the agricultural sector like floods will adversely affect the textile industry rendering it even more vulnerable to environmental conditions.
From the early days of the industrial revolution, the textile industry has been seen as a major polluter of rivers . The facilities of sanitation and hygiene are available to limited urban population. An estimated amount of 17.5 million tons of solid waste is generated every year in Pakistan. The untreated water flows into stream rivers and irrigation canals. Deforestation is taking place in the country at a rapid pace. A large number of intermediate industrial processes are conducted through imported chemicals that produce effluents and emit hazardous gasses. Byssinosis
Textile processing is a water intensive process. Almost 1.08-0.15 m3of water is consumed to produce one kilogram of finished fabric, translating into 1,000-3,000 million cube of wastewater generation per day against a production of 12-20 ton/day of finished fabric. Currently the wastewater generated by the industry is discharged into the local environment without any treatment that serious negative effect on the environment. A wide range of chemicals are used by the processing industry for dyeing and printing operations. These include bleaching agents, vat dyes, azo dyes, sulphur dyes, disperse dyes and color pigments, which are manufactured by using chemicals such as formaldehydes, hydrochloric acid, ammonia, chromium salt, soda ash, caustic soda, sodium sulphate, sulphuric acid, etc. Extensive usage of these chemicals by the processing industry results in discharge of toxic elements as effluents, which if not treated properly have the potential to cause significant environmental degradation. working in a car garage or textile factory can expose a person to hazardous chemicals, dusts, and fibers that may lead to a lifetime of lung problems if not properly diagnosed and treated.
PROBLEMS AND CHALLENGES
Lack of Infrastructure Lack of R & D and Training. Inefficient industry
Under-developed weaving sector and unorganized processing units. Lack of efforts. international marketing
Frequent fashion changes Need to improve the quality of product. Anti dumping policies imposed by major importers. Comparatively poor image of Pakistani brands aboard. Low productivity
Higher rate of interest on loans for modernization and expansion. Less awareness in acquiring international quality certifications. Cost of power is high. Proportion of skilled labor is very less.
Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial valueaddition at each stage of processing; it is a major contribution to the country's economy. Its has a vast potential for creation of employment opportunities. If Pakistan overcome all the problems, definitely we can back on the position stands of Textile Market.
HUMAN RESOURCES DEVELOPMENT EXPORT TRADE PROMOTION BUREAUCRATIC PROCEDURES INTEREST RATES INFRA-STRUCTURE
MARKET ORIENTATIONS HUMAN RESOURCES DEVELOPMENT MANAGEMENT INFORMATION SYSTEMS EFFICIENCIES /PRODUCTIVITY PRICES LEAD TIMES NEW PRODUCTS QUALITY CONSISTENCY SOCIAL ACCOUNTABILITY / LABOUR SAFEGUARDS
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