KARACHI, Aug 3: Pakistan’s readymade garments have taken a hard beating in the open price war environment since January this year on phasing out of the textile export quota regime as domestic production is down by more than 11 per cent and there has been a decline in export and fall in the average unit price in the USA market during January to June 2005.
In Europe and other markets too, Pakistan’s readymade garments are not in an enviable position and are likely to be gradually pushed out signalling death for a multitude of small enterprises, fear many exporters.
India is reported to have made big inroads in the USA market and according to Azhar Elahi, a senior local garment producer and exporter, India is now the second biggest apparel supplier in the USA and European markets. Apparel market in USA is said to be of about $60 billion a year in which China’s share is highest and is said to be followed by other Asian countries including India. Pakistan comes at the bottom level.
Americans have squeezed Chinese textile exports considerably and forced it to revalue its currency, which has apparently created space for India to take its place.
“What are our choices for the input,” Azhar complained while pointing out that a very limited variety of fabrics was available and that too from the informal loom sector. “After a big investment of over $2.20 billion investment the spinning sector, look at the varieties of yarn available for the value added sector,” he moaned. “Production cost is high and labour is not disciplined,” was his other complaint.
Aziz Memon, a big name in Pakistan’s readymade garment industry, looks at the problem from other dimension. He said the quota-free environment had brought opportunities to all those who geared up and prepared themselves for the challenges and a death message for those business enterprises that refused to adjust. “Deaths in business are imminent as growth is a perquisite for survival,” he declared.
Mr Memon, who was the chairman of the Directorate of the Textile Export Quota Management in the Export Promotion Bureau till December 2004, is convinced that Pakistan’s exports in textile and that of readymade garment are well poised to show much better results.
But he wanted the government to invest in the infrastructure, electricity, gas and water and the port facilities. “Mother vessels cannot come to our ports,” he said while pointing out that it takes 15 days for shipment from Indian port to the USA and in case of Pakistan it is a minimum of 22 days.
Arif Saeed, chairman All Pakistan Textile Mills Association (Aptma), despatched a set of figures from Lahore which showed that readymade garments export in five months during January to May 2005 amounted to $553.75 million as against $581.46 million in July-December 2004. Total export of textile products during January to May 2005 were worth $3.85 billion as against $4.07 billion in first six months of 2004-05.
The Aptma chairman was of the view that textile exports were somewhat suppressed in the last six months as “buyers were expecting reduction in prices after the removal of quotas.” The spurt in Pakistan’s export after January 2005 is because of more than $5 billion investment in the textile in last four years which generated exportable surplus.
An analysis of export of certain hot categories of items in the USA market during 2004-05 shows that in category 338 (T-shirts) Pakistan showed improvement in quantity and value but the average unit price is down by 8.92 per cent. China’s price erosion is over 62 per cent, India almost 23 per cent and Bangladesh too about 23 per cent.
India has made great stride in dresses where despite a decline of seven per cent in quantity in 2005 the total value increased by over 21.5 per cent as average unit price went up by 30.61 per cent. China is down in average unit price is down by over 54 per cent but is up in overall realisation of export proceeds by about 92 per cent because the quantity of export is up by more than 320 per cent.
