TEXTILE INDUSTRY

Inclusion of 10 more countries into EU zone may double the market for Pakistan textiles

By AMANULLAH BASHAR
May 10 - 16, 2004

Pakistan's textile industry, which is leading the rally of strong macroeconomic indicators, is about to make history by hitting the mark close to $10 billion at the end of the current financial year.

According to figures available, the textile exports have already crossed over the export target of $8.7 billion set for the current fiscal and the total exports during the said period was estimated at $8.9 billion at the end of the first nine months of the current year. Keeping in view the exports pattern during the first nine months, one can safely calculate that the total volume of textile exports would be close to $10 billion which will certainly be a mile stone in the economic growth of the country.

The outstanding performance of the textile sector in fact is the beginning of the scenario where this prime industrial sector is going to assume a dominating role over other export-oriented sectors in the country.

Though the incentive of duty free export of products under textile quota may be phased out by the European Union in coming January 2005 with the implementation of WTO rules, yet it would affect the growing role of the textile sector in EU as the textile quota would be granted to Pakistan textiles to enter into the market of new addition of ten East European countries into the EU fold from May 2004.

The newly available market in the East European countries might have more appetite for Pakistan textile products in view of the identical demand of fabrics produced in this country as compared to the extremely choosy market in the Western European countries. Experts are of the view that inclusion of ten more countries into EU zone which would be required to give MFN status to Pakistan are expected to double the existing volume of textile exports to the EU zone.

With the start of WTO next January, the withdrawal of generalized System of Preferences (GSP) which allows duty free access to EU market which according to an estimated initially hit the exports by 25 percent to the EU market. However this reduction in exports can be overcome by entering to the additional market of 10 more countries into EU fold.

Besides noticeable expansion in the EU and the US market, another opening was also visible in South Asian market especially in India, Sri Lanka and other countries which call for serious attention of capacity building of the textile and other export-oriented industries in Pakistan. Though the textile leaders were conscious of the situation and have done exceptionally well by investing at least.

The project of Karachi Textile City was in an advance stage as a large piece of land spread over 1250 acres has already been acquired near Port Qasim where large scale textile units would be operating by the private sector in a free zone style. The entire produce of this textile city would be meant for exports which expected to add another $2.5 billion to the export regime of the country.

According to textile commissioner, Mohammad Idrees, a joint stock company has been formed to run this project and a ten member board of directors has also been appointed which would be headed by the Federal Secretary for Production and Industries. The joint stock company has been formed with a seed money of Rs one billion while the total cost of the textile city project was estimated at Rs9 billion. This project besides reinforcing the textile exports would create job opportunities at least to 80,000 people directly or indirectly in Karachi.

COTTON CROP

The size of cotton crop is generally estimated at 10 million bales per year, which so far was suffice to cater to the need of the textile industry. However, with the expansion in the capacity, the demand for cotton has also increased and currently the industry requires at least 12 million bales a year creating a shortfall of at least 2 million bales. This shortfall in demand and supply may further aggravate in future if the steps were not taken for per acre yield in the country and bring more land under cotton cultivation.

Balochistan which has recently entered into cotton cultivation has produced commendable results by producing contamination free cotton in certain areas. In order to enhance the size of cotton crop more land can be brought under cultivation in Balochistan provided the basic need of water was made available to the farmers.

Agriculture can turn the vast uncultivated land tracts into gold mines provided water, the life giving factor was made available to the farmers in Balochistan. There was a suggestion that saline water after treatment can be used for cultivation Balochistan on the pattern of what it is being done in some Gulf countries for raising different crops in their deserted areas.