PAKISTAN'S TEXTILE INDUSTRY

MUHAMMAD AQEEL KHAN
June 04 - 10, 2007

SECTOR OUTLOOK

Textile is Pakistan's premier industry and contributes two-thirds contribution towards total exports. Textile exports from Pakistan face tough competition from China and India in international markets since the elimination of the quota system on January 1, 2005. To counteract the abolition of the quota system, Pakistan's textile manufacturers invested about $6 billion during the past five years to boost capacity and take advantage of abolishing global quotas. Textile shipments rose to $8 billion in the first nine months of this fiscal year, from $7.5 billion a year earlier.

RECAP

Pakistan's export of textile products increased by 18.44 per cent to US$8.931 billion during the July-06 to May-07 period as compared to $7.541 billion in the same period last year. The import of textile machinery has declined by 34.8 per cent during July-April 2006-07. The official statistics of foreign trade reflected the import bill of textile machinery US$ 427 million (July-April) during the first 10 months of the present financial year indicating investment scenario in the textile sector in the current year which was US$ 656.6 million in the same period last year.

 

TEXTILE EXPORTS
Rs. million

COMMODITIES

APR-07

Cotton Cloth

8,755

Knitwear

8,550

Bedwear

8,434

Cotton Yarn

7,538

Readymade Garments

6,559

Art silk & Synthetic

3,588

Towels

2,679

Madeup Articles

2,499

 

KEY POSITIVES

The government has been trying to persuade the business community and investors to invest and establish new modernized textile units in the country by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI). The textile industry manufacturers are asking the government to announce special consideration and an incentive package including removal of Export Development Fund (EDF), levy and deferment of loan repayments for next 2-3 years, so that it can compete with India, China and Bangladesh in export markets and also sustained economic growth and achieving the set export targets. Taxes on raw material used by textile producers will be "modernized" in the coming budget and Russia, Turkey and Central Asian nations will be approached to buy more. The State Bank agreed to provide higher level of interest rate subsidy on export financing and long-term financing for exports.

KEY NEGATIVES

Measures for reducing the cost of doing business are urgently needed to ensure that Pakistani exporters stay competitive in the world market. The textile industry, in the near future, will face severe crisis due to ever increasing costs such as increasing labour costs, electricity, gas, raw materials, which not is shrinking the profitability of the textile sector, but also making the country's export products uncompetitive in the international market. The textile sector in the wake of reduction in anti-dumping duties by the South Africa and the decision may push falling exports up in this sector. Considering the very large part textile industry play within our trade accounts, immediate, serious and consistent attention is required to maintain a healthy growth rate within this sector.