ROBUST GROWTH OF TEXTILE INDUSTRY
The main contributor in meeting the export target would be the textile sector
By AMANULLAH BASHAR
July 28 - Aug 03 , 2003
Pakistan's exports for the first time in its history have crossed the psychological barrier by earning over $11 billion during the outgoing financial year ended June 30, 2003. However, credit for achieving such an impressive export performance goes to the textile industry which contributed over 65 per cent of the total exports.
The most significant feature of the textile sector was the growth of three segments of the textile sector namely, bed-wear, readymade garments, and the knitwear sectors which have appeared as the three frontline players of the textile sector as each sector has earned more than one billion dollar exports during the said financial year. The cotton yarn which once used to be top export earning sector has been left far behind by these emerging sectors.
In order to facilitate the exports of the textile products, the government on its part has taken various steps during last six months which include the lower export refinance facility that was now available only at 3.5 per cent mark up besides amendments made in the DTRE scheme and devising rules and regulations to suit the exporters by discussions at various forums of the industry.
According to textile experts, the above three sub-sectors of the textile industry have the potential to go far ahead of the current status in the coming years as heavy investment is being made in these sectors both from the local investors as well as in collaboration with the foreign partners. The future of the bed-wear sector seems much bright as it has already carved a respectable place in the world market by grabbing at least 4 per cent of the total export market of the world. Quality-wise it is far superior of what it is being produced in neighboring India hence the much talked about trade relations with India posing no threat to this sector, rather it may take a large chunk of the Indian market, said the experts. The huge investments made in the textile sector during last three years in Pakistan have already started producing results reflected in the outstanding performance in the export market.
The textile sector has made an impressive investment worth $2 billion during last four years for Balancing-Modernization-Replacement (BMR) and expansion of the existing units. It is worth mentioning here that bulk of the investment has come from industry's own resources while financing from banking sector has a very little share in the investment.
The robust growth in the textile sector is indicated by various developments including arrival of new textile units besides a general trend of expansion in the production capacity of the existing units. According to industry reports, at least five new textile units with local and in collaboration with foreign investors are coming up in different parts of Karachi as well as in the Industrial Zone of Nooriabad, adjacent to Karachi. The investment in the new textile units appears as the strong signals about the business opportunities for the textile products in the international market. It may be mentioned here that the United States has already decided to get out of the textile business which also offers opportunities for the investors in the relocation process of the textile units from the US industry. The new units being set up in Karachi will equipped with the most modern Compaq spinning system and are being desired to produce yarn free from contamination. One of the industrialists behind these projects says that China will be the main contender for Pakistan in the world market after implementation of the WTO regime in 2005. Keeping in view the challenges and successfully compete with the competitors, the new textile units have been designed to compete with products from China or for that matter from any country in the hi-tech textile products.
Another leading textile industrialist and exporter observed with a sense of confidence that textile industry is the only sector in the economy that is not looking for foreign investment as the industry has the depth to meet the future requirement for meeting the exports demand. The only support, this industry was looking from the government side was the timely refund of duty drawback and other tax refunds as the uncalled for delay in the payments of the refunds creates cash flow problems for the industry.
Since Pakistan is cotton based economy and the textile sector which is considered as the spread head of the national economy, is getting prepared to face the challenges of globalization and free under the rules of World Trade Organization to be implemented with effect from January 1, 2005. Currently, the textile sector is passing through a qualitative change and the continuous to make heavy investment in order to face the growing market demands quality products.
The government has set an export target of $12.1 billion for the year 2003-04. Obviously, the main contributor in meeting the export target would be the textile sector, textile industry sources said and added that the textile industry have the potential to take the exports earnings even beyond $15 billion provided a strong infrastructure facilities especially, electricity were provided at an affordable rate to cut down the input cost of the manufacturing sector. Surely, the industry is not asking too much to produce even better results, the people at the helm of affairs should give a serious thought to remove the irritants in the way of economic growth of the country.