During the first quarter of current financial year,
Pakistan has registered over 15 per cent increase in exports of textile
products as compared to the proceeds realized during the corresponding
period of last year. However, some sector analysts believe that the
increase is below the expectations because Pakistan now enjoys enhanced
market access to the European Union (EU).
Some sector analysts say that an increase of 15 per
cent is a remarkable achievement in the prevailing global economic
scenario. However, their point of view may not be correct because of two
1) World Trade Centre was attacked
on September 11, 2001 and had hardly any impact on exports for the
quarter and 2) the market access for
Pakistan for year 2002 is higher than the ceilings available for
different products for year 2001.
The data available on export of textile products,
falling under quota management reveals some alarming details. However,
the most disturbing fact is that unit price realization has gone down
despite claims of higher value addition by the government as well the
exporters. The increase in terms of total quantity exported is 19.22 per
cent, whereas increase in terms of base total ceiling is 12.25 per cent.
However, the increase in terms of total value is as low as 6.27 per
A closer look at exports to the US, the EU, Canada
and Turkey indicates even more interesting trend. In the US market,
there has been a significant increase in quantity exported but the total
amount realized has come down, so does the average unit price
realization. Contrary to this, there has been increase in quantity,
value and unit price realization for the products exported to the EU.
There was decline in quantity as well as overall proceeds from Canada.
As opposed to the above mentioned two major markets, Turkey witnessed
very substantial increase in quantity exported and total proceeds but
average unit price realization came down drastically, from as high as
US$ 3.16 to as low as US$ 0.29.
Some sector analysts have been saying that neither
the government nor the textile manufacturers are giving attention to the
quota phase out process. The GoP formulated Textile Vision 2005 way back
but was not able to create enabling environment for fresh investment.
The industry also made investment in spinning and grossly ignored
made-up manufacturing sector. These are the reasons local manufacturers
have been forced to bring down unit price realization to enhance
Some sector analysts had pointed out in the past that
to achieve higher export of value-added goods, local manufacturers of
textiles and clothing should give more attention to made-ups
manufacturing. Pakistan's textile tycoons have failed to capitalize
closure of textile made-ups manufacturing facilities in South Asia.
In this context Japan is a perfect case study.
Closure of made-ups manufacturing units in Japan started many years ago.
Japanese entrepreneurs were keen in forming joint venture with South
Eastern countries. While India, Thailand and Sri Lanka, even China,
succeeded in attracting Japanese investors/buyers, Pakistan failed
completely in attracting the Japanese investors.
It is understood that Japanese investors are once
again evaluating Pakistan as possible destination for investment in
textiles and clothing business. The beauty of entering into joint
venture with Japanese is that it will not only bring the FDI but also
induction of new technology. Japan is the manufacturer of
state-of-the-art garment manufacturing machines. The added advantage is
that these investors, themselves, will be the sole buyers of the
made-ups produced at these units.
The GoP must give attention to the US as well as the
EU markets. So far, the local manufacturers of textiles and clothing
have not been able to take advantage of exceptionally large quota
ceiling available to Pakistan. They have been exporting low quality and
low price products. Pakistan has the potential to enhance export
proceeds by producing better quality made-ups, which can fetch higher
Some of the sector analysts say, "We have already
wasted a lot of time and only two years are left, after which there will
be no quota restriction. Buyers will be free to buy as much quantity as
they like from any country. India is far ahead in this race and even
Bangladesh and Sri Lanka are eroding Pakistan's market share. If the
local manufacturers do not wake up now, it will not be possible for them
to retain their market share."
EXPORTS FROM PAKISTAN
(Value in million US dollars)