Ill-planning of textile industry in Pakistan foresees disastrous era
Pakistan Times Business & Commerce Desk

KARACHI: In the absence of proper planning and focused approach towards emerging world textile scenario the local industry foresees a turbulent and a disastrous era beginning in 2007 when China fully avails WTO’s quota free benefits as at present it is being restricted at a growth of 8 per cent per annum.

Industry leaders strongly feel that if they do not work hard and tailor proper and pragmatic textile policy ensuring growth and required strength to value-added textile sector (apparel), after two years the country would be turned into semi-finished raw material supplying source for other nations.

“We have a two years period to set our house in order as there was urgent need to build critical mass of apparel industry which could face the challenge of 2007 when China fully avails the free market access under WTO quota free regime,” asserted most of textile industry leaders.

China and India followed by Bangladesh and Sri Lanka have already penetrated into world market of value-added textiles, whereas Pakistan even today is standing on the sidelines as far as apparel goods are concerned. Despite being the fourth largest cotton producing country, Pakistan has failed to get due benefit from its indigenous raw material.

The strong position of other nations in apparel was not achieved at random but on a well thought-out plans and focused approach from their respective governments and industry. Consequently, Pakistan is now the only country which is weak in apparel and strong on semi-finished raw materials such as yarn and fabric.

As a result of this the country is at loss on two counts: first, it cannot earn the real value through value-addition in the form of finished products and secondly its exporters stay away from market side where real action and trends emerge and enlighten the industry people.

It is a well known fact that when a country exports raw cotton it earns around 40 to 50 cents from one pound of cotton but when same is converted into yarn it earns $1 to $1.5 per pound. However, if further value addition is made and convert the fabric into apparel it fetches $5 to $10 per pound. Countries like China, India and Bangladesh are mostly involved in value addition.

The huge investment of around $4 billion made during last several years by our textile industry could be stated to be encouraging but in real terms it has not given the nation the return worth it. This investment did not generate the much needed employment in the country as most of the investment went into spinning, weaving or investment made by large industrial groups.

Similarly, this investment did not go to value addition sector which is also the biggest job provider to skilled and semi-skilled work force, including women. Above all, the industry has to pay huge amounts in interest on these funds and the end result was that it was only giving a profit of 3 per cent to the industry. It could be understood from the fact that raw material cost comes at around 60 to 70 per cent, 10 per cent energy cost and 6 to 7 per cent labour cost and some goes to spare parts, etc.

Another setback from this huge investment is that most of the weaving in the country is based on wide width which is mostly used in bed-linen only. Whereas small width fabric is used in apparel and other value added products.

Consequently, the country has become a semi-finished raw material source for those nations involved in value addition and apparel production. It could also be said that Pakistan is serving other nations to earn more foreign exchange on export of value-added products.

Irony of the fate is that if the government did not frame such policies which could have encouraged apparel industry the business community and textile industry also took it as easy way out to go for spinning and weaving industry.

Value-addition activity needs a lot of skills and entrepreneurship and initial costs are also high.●