June 17, 2006	Saturday	Jumadi-ul-Awwal 20, 1427

ISLAMABAD, June 16: The World Bank sees a `negative impact’ on the clothing sector of Pakistan as a result of quota elimination and asks the government to improve productivity and efficiency of the sector in order to compete with China and India. Informed sources told Dawn on Friday that the World Bank believed that the implication for the apparel sector could be more `serious’ if no action was taken to improve weak performance of the clothing sector. Pakistan's per capita productivity is only 37 per cent of the benchmark established by China. Compared to this, Indian per capita productivity is 46 per cent.

For Pakistan, raising productivity by improving efficiency of the production process was said to be the key to reaping benefits from the abolition of Multi-Fibre Agreement (MFA). If, for example, Pakistan is able to increase its productivity in textile and clothing by around 60 per cent to reach China's level, the gain will likely be by over $1 billion per year.

The sources said the World Bank had indicated to provide necessary financial and technical support to help improve the efficiency of Pakistan's textile and clothing sector.

The domestic garments and apparel industry, especially the knitwear segment, is characterised by heavy presence of vertically integrated units (VIUs). Pakistan's apparel and garment industry comprised of approximately 700 VIUs in the knitwear sector, whereas very few integrated woven garment manufacturing units exit.

It additionally has 670 finishing units, both for knit and woven fabrics. There are approximately 4,000 garment units, with a diverse range of stitching capability, including leather, knit and woven garments and made-ups, with 160,000 industrial and 450,000 domestic sewing machines. Most of these garments manufactures are small units having less than 300 switching machines. There are about 400 units with 30-50 machines and 600 units with 50-300 machines.

The sources said the World Bank believed that Pakistan's garment industry was suffering from acute problems of low productivity, weak management and marketing skills and hence facing serious threat of losing its share in the international market.

Pakistan's textile sector has been described as the most important sector of the economy. It imparts 46 per cent share in the total manufacturing and contributes about 66 per cent of total exports and 38 per cent of total employment. Its share in GDP is about 30 per cent in value-added production by the manufacturing sector.

The country enjoys the advantage of a large labour force with low wage rates. Due to an increase in trends of the world market, a total of $4 billion textile investment has been made in modernisation and infrastructure development of the textile industry of Pakistan during the last four years.

But despite being the fourth biggest cotton producer in the world, having strong spinning and weaving infrastructure, comparatively the value-added sector has a small share in the export. The main reason is shortage of training facilities to enhance skill and produce competent middle managers/supervisors who have in-depth knowledge of processes and hands on experience.