Weaving a better future

KARACHI: Textiles, being one of the major components of the Pakistan economy, make up around 8.5 per cent of GDP and contribute around 60 per cent to the country’s total exports.

However, the textile sector underperformed during the last few years, owing to the power shortages, high manufacturing costs and the lack of research and development (R&D) work.

In a recent statement, Adviser to the Prime Minister on Commerce Abdul Razak Dawood said that the country’s exports will surge 40 per cent to a record $21 billion during the period ending June 2022.

“A lot of orders actually were shifted from Bangladesh and India to Pakistan during the pandemic,” he said, adding that the trade has already grown to $120 million in six months of the current fiscal year from $14 million in the entire preceding year.

Pakistan Apparel Forum Chairman Javed Bilwani said that the cost of doing business has significantly increased in the last couple of years that not only resulted in trimming of earnings but also made it difficult for the exporters to compete in the international market, especially with the regional peers.

“The export-oriented industries can’t afford power and gas outages. Production cannot be stopped, so we have to make alternative arrangements, which requires additional cost and energy,” Bilwani added.

“A momentum has been built and it is high time that the government supports the textile sector through ensuring uninterrupted supply of utilities at affordable rates,” he added.

The exporters were faced with certain other challenges such as shortage of export containers and unavailability of vessels.

“These problems are manageable but rising fuel costs due to insufficient supplies adversely impact the business,” he said.

Pakistan exports a diverse range of textile products from raw cotton to readymade garments but except the recent growth, the textile sector exports remained on the downward trend.

The Textile Policy 2021/25 aims at increasing the textile exports to over $25 billion by 2025 and $50 billion by 2030 against the existing $13 billion but achieving these ambitious targets remained a gigantic challenge for the government.

The global textile trade was recorded at $837 billion with an average growth rate of 0.1 per cent over the last decade. China dominated the global market for textile sector exports, accounting for over 32 per cent of exports worth $266 billion. Currently, Pakistan’s share is 1.6 per cent in the world textile trade, which will be increased to 3 per cent and the world’s textile exports will reach $843.35 billion by 2025.

Baig Group of Companies Chairman Mirza Ikhtiyar Baig said that the industries are getting orders.

“The cost of production is increasing due to the depreciation of the rupee because the export is import-based and around 70 per cent inputs are imported,” Baig added.

The government has to take measures for promoting high value-added products such as readymade garments and knitwear to get the attention of foreign buyers.

Since 2020, the Covid-19 pandemic has played havoc with the Pakistan economy but, at the same time, it has offered a window of opportunity to tap the actual potential of the textile sector after substantial value addition. This is only possible if the government makes efforts to overcome the challenges being faced by the sector.

Analysts expect the earnings of textile companies to remain robust in the near-term with the rupee depreciation and higher off-takes, as the global economies started reaching the pre-Covid levels and could keep the sector in the limelight. Hence, we maintain our bullish stance on the sector where any dip in the prices will provide an opportunity to take exposure in textiles.

Another factor, which needs immediate attention is the use of innovative tools so that the country can maintain its share in world trade. Pakistan needs to enhance the world share through innovation and research and development. Similarly, Pakistan textiles have the longest production chain with inherent potential for value addition at each stage of processing from cotton to ginning, spinning, fabric, processing, made-ups and garments.

The textile sector is facing immense problems due to the inconsistent and inefficient government policies and needs immediate government attention to overcome such challenges.

The analysts were of the view that the textile industry should focus on the quality and volume of the raw material, i.e., cotton. The quality is very poor. Over the last two decades, the area of cotton cultivation has decreased. The problem is not only the reduction in the cultivation areas but also contamination and poor quality.

To increase cotton production, the farmers should be provided high-yielding seeds, which will bring more profitability.

Provision of such seeds are possible after necessary research and innovation regarding the seed quality is carried out.

To realise the true potential of the sector and to improve the quality of cotton, there is a dire need to invest in machinery,

Pakistan has a lack of linkage between research organisations and industry, which resulted in a low quality of cotton in comparison to the rest of the region.

Owing to low profitability, the farmers are shifting to other cash crops. The depreciation of the rupee, increasing interest rates, double-digit inflation and the rising cost of doing business and raw materials have also placed major obstacles against the country.

The government should take initiatives to safeguard the domestic industry, which is the highest foreign exchange earner and provides employment opportunities to a large number of people.

In this highly competitive world, the textile sector of Pakistan needs to improve supply chain, productivity and maximise value-addition for its survival.