Non-compliance of several laws to impede Pakistani textile in free regime

Mar 21 - 27, 2005

Pakistani textile sector, the mainstay of the country's 12 billion dollars exports, is ready to compete international rivals in post-January quota free regime but finding difficult breaching non-tariff barrier.

Pakistani industrialists' disregard to labour and environment laws may pose threats to its exports to European Union and the US as Pakistani consignments would highly be susceptible to disapproval after 2006 when strict laws under World Trade Organisation (WTO) would be in place.

" Many a small cotton and textile units, which account for larger exports, are not compliant of international environment and labour laws, which could be a setback with the enforcement of the trade regime, " said a leading exporter Anjum Salim who is former chairman of All Pakistan Textile Mills Association (APTMA). He said: "Pakistani textile millers made heavy investments over past four years to upgrade their machines to meet world quality standards and became competitive in the international market but remained deficient in enforcing fair practices in labour and environmental fields."

"A significant investment of four to five billion dollars in past four years has lifted the textile profile to world standards and made it pretty competitive in the international market but other barriers still impede swift journey," said Salim.

"We could witness good increase in our textile exports to the EU and the US markets in the first year of free trade but may face a slow-down afterward," said the former chief of APTMA, the apex representative body of the millers.

But the prick of free quota regime and Generalized System of Preference has already started poking into the garment exports, which are said to be fallen by 20 to 25 percent during January, February (the first two months under WTO).

About 70 percent of garment factories are reporting under utilization in the northern part of the country as claimed by Muhammad Naseer Malik, former chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA). The initial estimates show that the utilization has come down to 65 to 70 percent from 90 percent till December 2004.

No statistical account, however, is available so far because of some irregularities in data compilation by the Federal Bureau of Statistics.

The US and EU cumulatively imports over 56 of Pakistani textile products.

With about 10 million installed spindles and thousands of dyeing and bleaching textile units across the country, environmental protection agencies are still trying to gather data about the industry but facing hurdles.

"We are trying to collect data but so far there is no comprehensive assessment of how many industries are complying with the environmental protection practices," said Irfanullah Tunio, deputy director of Environment Protection Agency of southern Sindh province.

"To my rough estimate 20 percent textile units, which are mostly bigger industrial groups, are taking care of environmental protection measures."

Environmentalists also complain about the non-availability of the data although skeptical of the statement of the agency saying a gross violation of environmental laws is going on in this port city, the largest industrial base of the country.

"There are very few industrial units which may have been practicing in accordance with the environmental standards but a large number of industrial units are being run ruthlessly," said a researcher at World Conservation Union (IUCN), Tahir Qureshi. He said a huge quantity of untreated industrial waste that is being dumped in the Arabian Sea daily, signifies the trend.

"Textile mills, tanneries, and pharmaceutical factories are dumping their untreated and hazardous waste at the colossal rate of 175 million gallons per day," said Qureshi. The waste comprises metals, chromium, lead, and mercury.

Implementation of labour laws yet also remains an area of concern for the Pakistani textile exports that account for about 67 percent of the total exports or over 11 percent of the GDP.

"We have the best legislative framework in South Asian region with regard to labour rights but unfortunately no effective entity exists to get them implemented making the laborers life ever miserable," said director of Pakistan Institute of Labour Education and Research (PILER) Sharafat Ali.

"Pakistani authorities, although not oblivious of the emerging challenges under WTO regime, still lag behind the timely steps to mitigate them as administrative hierarchy being the main caveat bottlenecks are there. The policy is framed at the federal law whereas provinces are responsible for its implementation that erupts several anomalies," said central labour advisor to the Pakistani Ministry of Labour and Overseas Pakistani, Raja Fuzail Hassan. But, the planners attach hopes to an Asian Development Bank funded programme, which is expected to ensure labour rights in medium term. "Currently we are devising a Labour Protection Policy and this ADB assisted project has two-year term which after completion is expected to bring in positive change," said Hassan.

However, the short-term gains of the free trade enthrall exporters of the textile made-ups who are counting on the free trade virtues.

"We see a jump of 15 to 20 percent in our garment exports after the tariff barriers are done away with," said Dawood Usman Jakhora, chairman Pakistan Readymade Garment Manufacturers Association (PRGMA). Readymade garments account for over one billion dollars of total eight billion textile exports. Nevertheless, visionaries are not complacent.

"We are faced with a make or break situation in the next couple of years," the former chief of APTMA said.


The government is set to announce an elaborate relief package for the textiles and apparel industry in a coming days. The first ever federal minister for textile industry, Mushtaq Ali Cheema, is reportedly going to announce removal of sales tax on textile industry. The government is also considering allowing zero-rated import of raw materials and ensuring smooth flow of working capital for the textile units in the country. Spinning and polyester units would be directly benefited from the zero-rated import of raw materials and the value-added sector would get a relief with the removal of GST.