TEXTILE MINISTRY STILL LYING IN INFANCY
Industry leaders have sounded a word of caution about the future of Pakistan's textile industry despite its impressive performance during the last few years
From SHAMIM AHMED RIZVI, Islamabad
Sep 19 - 25, 2005
Ministry of Textile, which was created exactly one year ago in September last year, with an objective to facilitate and exclusively take care of the textile industry, the mainstay of the economy, was still in its infancy and facing its own teething problems instead of resolving the issues confronting the industry.
The newly created industry seems lying still in files and procedures in the absence of any premises of office to operate properly. This lack of interest in making this important ministry fully operational indicates how the officials responsible for promotion of export were indifferent to the issue.
It needs to be geared up to gain the momentum to come up to the expectation of the concerned industry enabling it to face the challenges in the quota free global trade and to avail the opportunities.
Addition of one portfolio in September 2004 i.e. the Ministry of Textile was hailed throughout the country as it met the old outstanding demand of the industry. All Pakistan Textile Mills Association (APTMA) described it as the need of the hour and hoped that now the textile sector in Pakistan would be able to resolve its problems with the help of an exclusive ministry. India, China, Bangladesh and Sri Lanka with whom Pakistan has to compete in the global market had already created a separate ministry of their textile sector which coordinates and monitors the activities relating to research and development in collaboration with the textile associations.
However, our textile ministry is still in a stage of infancy. It has taken some initiatives for selling textile and garment cities in the country and has held a series of meetings with stake-holders to prepare a national textile policy which the sources claim would be ready by the end of this year. The Textile Vision 2005-2010, which was prepared by Small and Medium Development Authority last year, has provided all the basic input for the textile policy under preparation. In the meanwhile, however, the industry leaders have sounded a word of caution about the future of Pakistan's textile industry despite its impressive performance during the last few years. According to them the country has only two years to make a place in the world of value-added textiles as things would become more difficult in 2007 when China fully avails the free market access under WTO quota free regime.
Textile industry has emerged as the most important industrial sector of Pakistan both from internal and external points of view. This sector showed an expansion of over 35 percent during the last financial year and contributed $ 9 billion in the country's total export earning of about 14 billion dollars. It still has a tremendous export potential and for that it needs further expansion and development. But at the same time it is faced with new challenges under the coming World Trade Organization (WTO) regime and for promptly dealing with the day to day problems and to undertake short term and long term measures to protect and promote the problems of this industry a separate ministry was highly advisable. Despite the gap between demand and supply of cotton lint, Pakistan's textile industry's exports fetched nearly $ 10 billion by the end of the current fiscal. It is, however, still far less and has a very meager share in about $ 332 billion global trade of textiles.
Pakistan's Textile Vision 2005-2010 prepared in collaboration with APTMA experts envisages an investment of about Rs. 300 billion with a raise in export of textile products to above $16 billion per year during the next five years. The All Pakistan Textile Mills Association (ATPMA) experts claimed that they have made realistic projections on the basis of an in-depth study of the textile sector which is of course the mainstay of the country's economy.
The assessment had been carried out on the basis of (a) historic expansion in the textile industry in Pakistan, (b) relocation of textile industry from high cost to low cost countries, i.e. China, Pakistan and India, (c) increased market access in EU, USA and Canada, (d) better revealed competitive advantages of Pakistan, (e) historic growth in domestic consumption of textile products i.e. yarn and fabrics, and (f) since textile industry is being relocated from developed countries, demand of basic items is increasing in these countries.
The textile experts are of the view that under globalization, textile industry is being relocated to cost competitive areas. Therefore, value addition in textile would take place where strong textile base exists. Therefore, textile industry and exports will expand in China, Pakistan and India. According to them Pakistan textile industry is relatively less sheltered (i.e. tariff protection and subsides); enjoys an edge in technology i.e. Western technology; better cotton yield per hectare than India; an opportunity to attract relocation of American, Korean and European textile industry; prospects of converting US cotton in Pakistan for export of textiles under duty free access (TIFA/FTA); and view prospects of alliances with Sri Lanka and Bangladesh.
Though the Textile Vision 2005-10 focuses on value addition and quality of the textile products which are the most significant areas and can help meet WTO challenges and hitting the targets of the textile vision, yet another area which is equally important to survive amidst the cut throat competition in the world market especially to cope with the onslaught of cheaper textile products from China and India is to ensure cost competition effectively. It is high time that our industry should take concrete steps to put the textile industry on the tract of economic scale which is the open trade secret to bring down the cost of production and thus survive in the world market.
The three textile city projects initiated by the Ministry of Textile are a good step in the right direction. The ministry with the collaboration of private sector is planning to set up three textile cities- one each in Karachi, Lahore and Faisalabad - and one garment city in Karachi. The land has been acquired in all the three cities for these projects, which are expected to be completed by the year 2008. With regard to the policy paper of these projects, China has made huge investment in modern equipment. It has merits of scale, productivity, quality and aggressive marketing. China has expanded textile exports from $ 75.0 billion by 2005 and has developed a large supply base for textile products. However, buyers are watching the global supply position and are looking for an alternative supply source and if Pakistan textile industry can meet the global requirements, it can become that alternative.
Pakistan's textile industry has a potential to increase volumes of textile exports and enhance earnings by shifting more and more towards value-added products. A comprehensive policy package is desired to support the textile industry to survive in the post-MFA (Multi-Fiber Agreement) competition by making available the necessary facilities and 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 by 1st January 2005.
It is, therefore, imperative to set up exclusive production area for large scale production of value added textile products, creating the textile city as a broad and integrated free trade zone specializing in textile industry, particularly dying factories in order to gather the scattered textile companies together in the textile city as much as possible, providing necessary infrastructure facilities such as sufficient water, gas, stable voltage power, and treatment of waste water that ensures cleaner environment in the textile city. The legislative status of the project would be as "Export Processing Zone', making available all the support activities to facilitate the units for concentrating on production activities with high level of productivity and quick delivery response to the export orders, easing the foreign buyers of visiting and placing orders for particular products with the units of their choice and contacting with local manufacturers.