Pakistan: Basic textile industry hanging by a thread

LAHORE: The true potential of the textile sectors lies in value-added apparel exports, for which the government should solve the problems of the garment and knitwear exporters to ensure sustainable textile exports.

As Pakistan entered the textile field through basic textiles (yarn and fabric) the All Pakistan Textile Mills Association (APTMA) is still considered the apex body for consultation in addressing the textile related issues.

The association encroaches upon the domain of apparel producers to advice the government on garmenting industry also. Government functionaries including the prime minister give more time to APTMA than any other association.

There is no doubt that the basic textile sector is facing some problems –the primary problem is its inability to keep up with the technology in the last decade. It has become inefficient.

More than 100 textile mills have closed down for good mainly due to obsolete technology. The surviving mills got a breather through massive devaluation and supply of power and energy at subsidised rates.

This sector should be facilitated in upgrading its technology. But for matters relating to garments and knitwear the policy makers should listen to the representatives of their registered association.

Director Trade Organisation has registered different trade associations from textile subsectors that should facilitate the economic planners to interact with them and remove the bottlenecks in exports. No association should be allowed to encroach in the others’ domain.

The APTMA has lately started offering its membership to the garment and knitwear exporters as well. However, an overwhelming majority of readymade garment and knitwear exports are still the members of their respective associations.

There is a reason for registering the subsector association of textiles. There is a conflict of interest in each subsector.

For instance the yarn manufacturers desire that there should be duty on import of yarn, while the apparel sector wants this basic raw material to be imported without any duty. In the same way, fabric manufacturers want protection against imported fabric and the apparel sector opposes it.

APTMA members have lately realised that the long-term survival lies in adding garmenting and knitwear units in their basic textile units. They rightly point out that Pakistan has very few larger apparel units.

They express the desire to setup 500-1,000 garmenting units. To establish these units they want some concessions from the government.

Most of the basic textile industry was established on government concessions. Exports of the multibillion dollar, basic textile industry (yarn and fabric), is less than the exports of apparel (readymade garments and knitwear) established at 1/100 the cost of basic textile mills.

The apparel sector is also the main provider of jobs in textiles. The apparel units were established without government support at smaller levels that have now graduated to medium and large concerns.

These entrepreneurs carved out the international market through dedicated hard work. They lack bank support.

Almost all apparel exporters have established their own water treatment plants and comply with the global and Pakistani standards on labour, environment and social welfare. All this was achieved without any government support.

Very few APTMA members graduated from basic textiles to apparel sector. About a dozen have established their credentials as reliable apparel exporters but majority is still struggling.

They lack the patience needed to market garments or knitwear. All apparel exporters that are members of APTMA are also the members of their respective apparel associations.

Apparel sector associations should be strengthened and the economic planners should give more time to these associations to address their issues. They are unable to avail the duty tax remission for export facility (DTRE) because of cumbersome procedures.

APTMA rarely highlights this issue of small apparel manufacturers that could double their exports if fair and transparent facilitations are provided to them without any subsidies.

China, Bangladesh, Vietnam and India are four of the largest garment exporters in the world. Of 348 garment importers, 61 percent of global textile importers source garments from at least one of these countries.

Of the four, China and India have a basic textile base and they also produce cotton and manmade fibre. Vietnam and Bangladesh are non cotton producing countries that are gradually developing basic textile base.

Pakistan has the potential to edge these two countries out through proper planning. The economic managers would have to address the apparel exporters’ genuine problems to achieve this objective.

It is worth mentioning that Vietnam’s human capital eclipse China’s that has best human resource. India lags behind, Bangladesh, and Pakistan is even behind India in this regard.

Source: The Pakistan Today, Pakistan
Tuesday, 07 January 2020

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