TEXTILE VALUE ADDITION
Depressing share of 1.5 percent in world apparel trade
From KHALID BUTT, Lahore
Aug 29 - Sep 04, 2005
Despite a major contributor in textile exports which constitutes over 68 percent of the total exports of the country, the textile industry in Pakistan was lacking in capitalization on the available cotton. Though the exports performance of the textile sector were more than satisfactory as so far it is the only sector which earns the major chunk of our foreign exchange while remaining sector were still struggling to come up to the mark. However, when compared with the other textile exporting countries in the region, they are far ahead despite being a non-cotton producing countries.
Currently Pakistan has a depressing share of 1.5 per cent in world apparel trade conducted by developing economies. In comparison other countries of the region have larger share in apparel exports. Sri Lanka has 2 per cent share, Bangladesh 3.1 per cent that is more than double than Pakistan's share. India exports 4.7 per cent of the total $108.1 billion apparel exports conducted by all countries excluding EU, Canada and US. China including Hong Kong has loin's share of 43 per cent of world apparel trade.
Pakistan's performance in apparel trade has been the worst in the region despite containing competitive advantage, however, apparel exports from China, India, Bangladesh and Sri Lanka remained higher than Pakistan though the last two do not have basis textiles nor they produce cotton.
The World Bank data shows that global trade in textiles and apparel has set off to sixty-fold during the past forty years, from under $6 billion in 1962 to $342 billion in 2004. The textile and apparel trade represents nearly 6 per cent of total world exports. The more labour-intensive apparel export sector has grown more rapidly than textile exports, which has increased 128-fold, textiles 36-fold, whereas apparel accounts for more than half (57 per cent) of the total.
The main impact of quota free trade after December 31, 2004 added highest vale to textile showing on global apparel trade.
Pakistan being the third largest consumer of cotton in the world and as fourth largest producer has not made corresponding in roads in the world apparel markets during the past 14 years. The exporters would have to perform extraordinarily to face the challenges in textile trade quota free era.
The most disturbing aspect in this regard is that even those countries that do not have a solid textile base have outperformed Pakistan. While Pakistan's apparel exports in the last decade increased by 111.6 per cent. China excluding Hong Kong recorded an increase of 273 per cent. Bangladesh increased its apparel export during the same period by whooping 560 per cent and Sri Lanka showed a healthy growth of 360 per cent in its apparel exports. Both Bangladesh and Sri Lanka were far behind Pakistan in apparel exports. Bangladesh apparel exports are twice that of Pakistan and Sri Lanka exports 30 per cent more apparel than Pakistan. Indian apparel exports have increased by 138.4 per cent during the same period.
Pakistan has advantage of having the cheapest apparel labour in the world with average wage of apparel worker according to ILO was $0.23 per hour. The wages in Sri Lanka are more than two times higher at $0.57 per hour. The Indian and Chinese apparel workers get three times higher wages per hour being #0.71 and $0.86 per hour.
Despite having state of art apparel machines, experts pointed out to be better than India, which is fast catching up its own cotton and basic textile units and lowest wages the apparel exporters are most worried about China factor.
A latest study, "World Textile and Apparel Trade and Production Trends" discovers that US output fell in 2003 as clothing exports declined, textile exports slowed and imports, especially from China, continued to rise. EU output fell as retail sales slowed, import volumes rose and export values fell for the first time in years. China alone supplied 96% of the volume rise but Bangladesh, Turkey, Pakistan, India, Egypt and Romania also contributed. Mediterranean Rim exports stagnated from all countries except Turkey. 2003 was a bad year for South Africa as the hike of the rand hit exports, sucked in imports and depressed output. Japanese output fell across all sub-sectors as exports and retail sales declined, and imports took an even greater share of demand.
China continued to progress with output value up 21% as the domestic market stayed buoyant and exports rose by 28%. But raw material shortages are leading to price rises. In Hong Kong garments did better than textiles as rising exports to Europe offset falling sales to China. Exporters are looking to gain from the Closer Economic Partnership Arrangement (CEPA), China's first WTO-compliant free trade agreement. South Korea's industry declined for a third year but poor quality Chinese goods could persuade buyers to return. Taiwan's exports continued to disappoint and many firms are moving to China. Indonesia still suffers from rising energy and labour costs, poor productivity and unfavorable exchange rates, and some Malaysian firms are moving to China. But Thailand bucked the trend with output up and exports to China especially strong. Vietnamese exports to the USA continued to soar despite new quotas, and interest from US buyers is growing.