April 5, 2006	Wednesday	Rabi-ul-Awwal 6, 1427

KARACHI, April 4: The value-added textile sector, including knitwear and garments, is under pressure and is struggling for its survival in a highly competitive environment. Exports from Bangladesh, India and China, enjoying incentives and cushion provided by their governments, have rendered Pakistani products totally uncompetitive in the world market.

Pakistan, being a cotton growing country, was expected to perform better by capturing greater share of the world’s textile trade in post-quota era. However, in the absence of timely preparation and lack of appropriate measures both on part of the industry and the government have led to a difficult situation.

These are the findings of a study carried out by Pakistan Hosiery Manufacturers Association (PHMA) for all the segments of textile industry, including spinning, knitting, processing and value-added garment industry.

“In the EU alone Pakistan has witnessed a negative growth of 12.5 per cent in value and 0.5 per cent in volume during the nine months period against India’s growth of 16 per cent in value and 5.5 per cent in volumes,” report said. This fact has been also verified by the World Bank in its report showing post-quota growth of textiles and clothing of different countries.

A major factor as pointed out in PHMA report, which has put country’s entire textile industry in general and the value-added textile sector, in particular under pressure, is the high cost of production compared to other textile producing countries of the region such as Bangladesh, India and China.

This disadvantage is stretched to almost all input ingredients of production starting from power (electricity), water, dyes, chemicals, spare parts as well as human resource (labour).

The PHMA has already submitted its findings to different government departments, including ministry of commerce and the Prime Minister’s secretariat so that it may attract some attention from the people, who matter in the power of corridors and the decision-makers because already a lot of water has passed under the bridge.

It is not only the high cost of basic inputs, which put Pakistani exporters of textile at a disadvantageous position, but numerous other factors which could be easily adjusted and tackled by the government. They are also discouraging new investment in the country.

The report compiled on the basis of facts and figures pointed out that the cost of land in Bangladesh is zero in EPZs and cost towards owning land is $2 per square meter per year with a lease agreement of 30 years, renewable at expiry. It means that for one acre of land one has to pay $8,000 per year which is Rs480,000 in Pak rupees, whereas in Pakistan the cost of land in EPZ Karachi is almost Rs10 million.

Making a startling disclosure the report says: “As far as other industrial areas are concerned, in SITE cost of land is approximately Rs50 million per acre; Korangi Rs60 million per acre and Landhi, Rs40 million. Consequently, for a sizeable plant minimum five acres of land would be required and it can be well imagined how huge an initial cost would have to be incurred by an entrepreneur for setting an industry.

Furthermore, in Bangladesh all sorts of capital goods and raw materials are zero rated whereas in Pakistan they fetch 5 per cent duty at customs stage which further enhances capital cost for the industry.

The PHMA report also listed additional incentives being given by Bangladesh government to their exporters, such as cash incentives of 7 to 15 per cent, status of GSP plus given by the EU to Bangladesh, which allows all imports at zero duty. Other importing countries like Canada, Australia, New Zealand have granted immense concessions to Bangladesh whereas no such subsidies are given to Pakistan despite the fact that it has suffered immensely for being a front-line state in war against terrorism and a victim of severe earthquake of October 8. The USA is also considering granting further concessions to Bangladesh on the pretext of being the least developed (LDC) country.

The report further said that imports from Bangladesh attracted zero per cent duty whereas Pakistani goods attracted about 10 per cent duty in European Union making Pakistani products uncompetitive.

Similarly, it has pointed out that the image of an exporting country plays a vital role in capturing world markets. Bangladesh is considered a liberal democracy and despite all the political and labour turmoil it is labelled by the foreign media as a democratic, free and safe country.

As a result of this there are offices of more than one thousand international buyers and marketing agents in Dhaka. Resultantly, the report says, marketing is not a problem at all for Bangladeshi exporters. Against this there are very few offices of international buyers in Pakistan. Above all, most of the buying countries advise their citizens not to travel to Pakistan, while there is no such travel advice for Bangladesh.

Consequently, Pakistani exporters have to travel to Dubai, Hong Kong, Singapore to meet their buyers along with a huge burden of samples but it still doest not meet the satisfaction of the customer. Buyers could only be satisfied if they actually pay a visit to the manufacturing place. Such frequent travelling entails higher cost and low prospect of orders, the report added.

The report observes that it is a proven fact that the international buyers greatly appreciate the high quality with maintenance of latest designs and trends of Pakistani textile products. Quite a few buyers, who come to Pakistan and visit the manufacturing units, are taken aback at seeing the well-organized plants with the latest and modern machines, labs, quality control and equipments and openly acknowledge that they have never imagined that the Pakistani textile industry is so advanced.

In order to overcome such shortcomings the PHMA has suggested a number of long term measures, including hiring of lobbyists and consultants, revamping of Pakistan’s foreign missions by hiring competent and well versed commercial counsellors. Steps should be taken for capacity building, enhancing cotton crop size to meet the growing demand of the industry. Above all, a level- playing field be ensured by reducing and bringing all sorts of input costs at par with those of the regional countries.