There are currently a multitude of major issues facing Pakistan. Of these issues, the economic crises are perhaps the most palpable to the average Pakistani. Below, Abida Mukhtar, a consultant currently based in Lahore, Pakistan, discusses the current problems with the Pakistani textile industry:
The Pakistan textile industry contributes more than 60 percent to the country’s total exports that sum around 5.2 billion US dollars. The industry contributes approximately 46 percent to the total output produced in the country. In Asia, Pakistan is the 8th largest exporter of textile products. The contribution of this industry to the total GDP is 8.5 percent. Moreover, it provides employment to 38 percent of the work force in the country, which amounts to a figure of 15 million.
However, the textile industry currently faces massive challenges. The All Pakistan Textile Mills Association (APTMA) needs to enhance the quality of its products, upgrade the technology used, and encourage effective Research and Development (R&D) in order to compete internationally. However, APTMA argues other factors such as high interest rates and cost of inputs, non conducive government policies, and non-guaranteed energy supplies hinder their competitiveness.
Critics argue that the indolent attitude of the industrialist in the 1990s has led up to the current crisis. If the textile industrialist had worked with the government towards implementing policies that prepared for the current international scenario, Pakistan textile industry would have boomed. Instead, the industry suffers from ‘severe technological obsolescence,’ insufficient R&D, falling cotton crop, and an unclear path forward.
The lack of R&D in the cotton sector of Pakistan has resulted in low quality of cotton in comparison to rest of Asia. Because of the subsequent low profitability in cotton crops, farmers are shifting to other cash crops, such as sugar cane. In Punjab alone, the cotton area sown this season was less by 1.14 percent as compared to the last year. Textile owners argue that although the Cotton Vision 2015 targets 20 million bales till 2015, it is an ambitious target as in reality cotton production is decreasing each year. It is the lack of proper R&D that has led to such a state. They further accuse cartels, especially the pesticide sector, for hindering proper R&D. The pesticide sector stands to benefit from stunting local R&D as higher yield cotton is more pesticide resistant.
Moreover, critics argue that the textile industry has obsolete equipment and machinery. The inability to timely modernize the equipment and machinery has led to the decline of Pakistani textile competitiveness. APTMA has highlighted that the Pakistan textile industry faces tough competition from the Indian, Bangladeshi and Chinese textile industries and local policies have resulted in Pakistani textiles facing a critical condition.
For instance, Bangladesh, India and China enjoy comparatively low interest rates than Pakistan. The prevailing rates are as following, 8.5 to 9.0 per cent in Bangladesh, 5.25 per cent in India (market rate is 10.25 per cent, however exemption of 5 percent is provided to the textile industry) and 5.58 per cent in China. Meanwhile, in Pakistan, the last three to four years has seen the interest rates to have risen more than 150 percent, to 13.25 percent. The increase has essentially crippled the small time textiles owner, while seriously hindering growth of the textile tycoons. This has led to textile owners accusing the government and banks for maintaining detrimental policies. I believe that it is imperative that the new government takes actions that have a positive impact on the industry as textile provides employment to approx 38 per cent of our working class. A coherent plan should be devised by the Pakistani government that allows some sort of exemption/concession such as in India; the Export-Import Bank was set up for the purpose of financing and facilitating the industries, especially textile.
Industrialists also argue that the non-guaranteed supply of power by WAPDA (Water and Power Development Authority) is another problem that negatively affects the textile industry. Although, some textile units have built their own energy generating plants to cut cost (these units run on gas), small units production depends entirely on the electricity supply of WAPDA. The textile industry suffered heavy financial losses in Dec, Jan and Feb quarter, because of the inconsistent electricity supplies. The lack of production subsequently resulted in the industry not meeting its target for the quarter, massive financial losses were borne by textile owners and sadly, it hit the most vulnerable: workers on daily wages. Their frustration was observed recently, when the WAPDA and MEPCO (Multan Electricity Power Company)offices in Multan, were torched by daily wage workers, [see related post]. Textile owners as well as workers passionately assert that the inconsistent supplies have and are destroying business across Pakistan. They also highlight that the high cost of the utilities has making Pakistani textile uneconomical in the international market.
All things considered, it is apparent that the Pakistani Textile Industry is facing an uncertain environment. The increase in input cost of minimum wage by 50 percent, increasing interest rates, non-guaranteed energy supplies, lack of R&D and reduction in cotton production has had a negative impact on the industry’s competitiveness internationally. In order to sustain the Textile Industry, the new Pakistani government has a tough task ahead and needs to urgently implement a suitable long-term strategy that provides a level-playing field against their regional competitors.
asak
Ok, I just got to your site and need to look around, but so far, just by the topics you have listed, I love it. I have lived in the US all my life, but try to keep a little knowledgeable of what is happening in Pakistan. This sounds like a good place to keep up with that…oh and CHUP, I love the name!
want to know the sources of facing these problems.
Thank you and thanks for visiting, hope you continue to stop by!
Great article! It not only pointed out the problems but also offered some solutions and illustrated the need of a long term strategy. It would’ve been interesting to read about the impact of the removal of quotas and the threat of Chinese manufacturers gaining a greater portion of market share.
Well done, Abida!
We would love to see more articles like this one, which would keep us Pakistanis abroad more informed on such issues.
I would imagine that having the quota system in place in past years probably led to a lull in investment as well (at least in terms of machinery and textile related infrastructure). After all, there was little reason to be competitive with other nations when a certain amount of demand for your goods was guaranteed.
[…] in many places at once.” Our contributor, Abida Mukhtar, a consultant based in Lahore, [and also the author of last week’s post on the issues facing the Pakistani textile industry], discusses the global crisis as well as rising food prices in […]
[…] textile industry contributes more than 60 percent to the country’s […] Read more at: CHUP! – Changing Up Pakistan Tagged as: all pakistan textile mills association, aptma, cash crops, cotton crop, cotton […]
@ editor
hi, read some articles here, i am into wirtting n research but to myself, can i contribute to my self,i’ve got that economics background
i want to have some details of textile industry of pakist5an in the year 2009.
i appricate kalsoom’s knowledge and comprihenceve detail about the issue.
Thanks Tahir- but the credit for this article all goes to Abida 🙂
great article/ well i m a bussiness student n its a great article got the chance to enhance our knowledge about our textile industry
hi i just read ur article. can i use it in my dessertation. i am student of MBA in UK
Jamil – of course you can use it in your dissertation, but make sure to cite Abida Mukhtar as the author of the piece. 🙂
i need some more information abt textile problem can u plz help me out n so thanks of u thet u provide alot of material on textile problem m waiting 4 ur reply
Remarkable site. And comprehensive articles. Good going editor
Two day Workshop: Modern Merchandising and Order Management Techniques
Date & Timings: Saturday Feb 21, 2009 at 5:00pm – 9:00pm and Sunday Feb 22, 2009 at 2:00pm – 6:00pm
Merchandising has now become a specialized field, which requires in-depth study and managerial skills to deal with Customers and production related departments. The program has been designed by the Experts to enhance knowledge, efficiency, productivity and aligning working methodology. The Merchandisers, Managers and those involved in order planning and management can avail benefits from the program.
Course Outline
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1) Responsibilities and complexity of Merchandising in Woven Garments, Denim Garments, Knitted Garments, Home Textile Made-ups, Terry Towel and Buying Agencies.
2) Types and scope of Merchandising worldwide (i.e. Visual Merchandising & Retail Merchandising etc).
3) Dealing with Customers and business building strategies.
4) Ways of follow-up, coordination and conflict resolution with Production, Quality, Fabrication, Trims, other production divisions and Buying Agencies.
5) Methodology for Order Studying, Planning and Execution.
6) Developing a productive and realistic Time and Action Plan and Production follow-up chart.
7) Some useful Merchandising tools and tactics for day to day working
Operational Procedures (Lacking & Pitfalls) of a Merchandising department.
9) Case studies on Merchandising Models and reasons of failure in an industry.
10) Brief overview on technical concepts with pictures i.e. Oeko Tex Standards, Sanforization Certification, Spectrophotometer, Fabrication processes and Lab testing.
11) Is your Merchandising team is working as per standardized method – Activity
12) Price war after Elimination of Trade Restrictions. Competitor analysis, India, Bangladesh and China.
Additional Reference/Reading Materials
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Range of Home textile products and sizes country wise
Order Check list and Production follow-up formats
Charts on Care symbols and Conversions
Fabric and Trims testing standards
Program Details
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Days: Two Days Program
Date & Timings: Saturday Feb 21, 2009 at 5:00pm – 9:00pm and Sunday Feb 22, 2009 at 2:00pm – 6:00pm
Fee: Rs 1,500/- per participant
Certificate and Photograph ceremony at the end of the program.
High tea and refreshment during each session
For Registration, send us an email contains participant names, designation and contact numbers. Fees to be submitted at our registration desk.
SIMDA
Saliraj Industrial Management and Development Alliance
Aga Khan Community Center Salimahabad Block J, No 12, Federal B-Area, Block 14, Karachi, Pakistan.
Contact #: 0321-8209973, email: simda@cyber.net.pk
I required more information about existing crises of textile industry in pakistan,
Thanks
M.Farhan Ali Khan
viscose73@yahoo.com
farhan.ali@maxco.com
Just asking.. but is this Ms. Abida Mukhtar, the daughter of the Minister of Defence?
great article , in my view about textile sector, this government takes positive action about textile industry but our mill owner they are not give good response
mam i need more information about the problems and their solution of textile industry. thanx
i need to know what management of textile industries has played the role..in its downfall
Hello!
its basit.
it is a useful website for textile point of view. i get lot of information about this sector with help of it.
well done.I appreciate u.
but i need to know what the steps should taken by management pf textile industory.
Assalam o Alaikum.
pakistan textile industry facing so many problems
like trde policy,electricity,guas etc so need more
focus of govt.
overwhelming !
have never seen government taking positive steps for the revival of institutions and industries ..
hope someone will come to make the change.
i need to know about the problems of textile industry as well as the oppurtunities and threats for that sector
Dear CHUP!
I found this site very usefull in my thesis preparation, I want information relating to sales performance of Nishat & of overall textile sector in 2008 please can u provide me related information or any usefull link specificaly relating to Nishat, I will be very thankfull to you…!!!
This is indeed an important issue underlying since a long time in Pakistan,the new system needs to be implemented and the bureaucratic style of leadership has to be changed otherwise it would become harder and harder for the mediocre and poor to survive in this era.