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Pakistan ready to enter post-2005 era: Textile trade

September 14, 2003

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KARACHI, Sept 13: With about 10 million bales of cotton production, but with hardly 3 per cent share in annual world textile export trade of $157.5 billion and only 1.1 per cent in $199 billion world clothing export, Pakistan prepares for entering a new era of textile and clothing business after 15 months when Multi Fibre Arrangement (MFA) comes to final end in January 2005.

From January 2005 onwards, the textile business will be governed under Agreement on Textiles and Clothing (ATC) signed under the auspices of World Trade Organization. Textile Monitoring Board (TMB) is now monitoring the implementation of new rules of the trade that offers both challenges and opportunities to countries like Pakistan.

The challenges are unpredictable and volatile exchange control, vagaries of weather and unforeseen events that could knock out all projections and affect textile trade. Growing regional trade blocs may lead to de-localisation and impact textile business.

All said and done, textile consumption world over is on increase and is bound to maintain same trend in the future. “This offers vast opportunities for Pakistan where textile industry has been modernized with an investment of $4 billion in last four years,” Idrees Ahmed, Textile Commissioners said. Idrees Ahmad has prepared a comprehensive study to portray a post-2005 textile scene.

His study shows that per capita textile fibre consumption has increased from 7.5 kg in 1995 to 7.9 in 2000 and is poised to show to 8.8 kg consumption in 2005. This increase in textile fibre consumption is obviously most pronounced in developed countries where it was noted at 21.9 kg per person in 1995 and increased to 23.2 kg in 2000. It will eventually increase to 24.9 kg per person in 2005. The US, EU, Middle East and Japan are the growing markets in terms of textile consumption and offer vast opportunities to Pakistan, Bangladesh, India, China and Indonesia.

Eastern Europe is the other growing market where gradual increase in incomes is leading to improvement in textile consumption. Idrees estimated 6.7 kg consumption of textile fibre in East European countries during 1995, which increased to 9 kg per capita consumption in 2000 and is expected to increase to 10.2 kg in 2005.

The textile consumption in developing countries is too showing increasing trend but with relatively modest pace. Here the per capita consumption was estimated at 4.5 kg per person in 1995 which is much lower than average world consumption. It is expected to rise to 5.2 kg per person in 2005. So, there will be some market for low cost textiles in Africa, South Asia and parts of South America.

A more important development is that many developed countries are in process of relocating their textile industry. At present these countries meet their local textile consumption from their domestic production. But study shows self-sufficiency ratio will decline by 66 per cent in the US by 2005 when it will come down by 47 per cent in EU, 52 per cent in Japan, 118 per cent in East Europe, 82 per cent in Central Asian Republics and Russia, 150 per cent in China. It means that these countries will offer vast opportunities for textile marketing where sufficient investment is made for modernization, quality and maintaining a reasonable price range.

China is now being considered a challenge nay a threat to the developed as well as developing countries in trade during next decade. China’s main strength is cheap labour, massive scale production and a very big domestic market that support the local industry to go for export in a big way. Yuan, Chinese currency, is said to be undervalued to the extent of 40 per cent and there is whispering campaign going on in many world capitals to mount pressure for adjustment in this value. How China is going to respond to this pressure.

But China’s instrument of accession with WTO has built-in provisions and safeguards for the importing as well as developing countries. From 2005 till next three years, certain categories of Chinese textiles export will be capped to 7.5 per cent growth which gives some room to Pakistan and other countries.

Businessmen in Pakistan seek coordination and consultation with China on trade issues because of the strategic nature of relationship in the region. A Pakistan-China Business Council is expected to hold its second session either in October or November to sort out these issues. President Pervez Musharraf is expected to visit China next month when a big investment conference is scheduled to be organised in Shanghai. Businessmen are confident that Pakistan and China are well placed to sort out their issues and work out an arrangement which should help Pakistan to get a big share in world textile export market.

There is now more focus on garment and knitwear export in Pakistan. At present there are 450 plus garment units operating in Pakistan. Of these 20 per cent are said to be large scale and 80 per cent are small almost cottage industry level. There are about 250,000 industrial sewing machines and half a million domestic sewing machines in this sector. In knitting too there are about 750 big and small units. Pakistan fetched more than two billion dollars from export of garments and knitwear during last fiscal year and expect to push up earnings in the current fiscal year too. Hopes are pinned on these two sectors said to be the highest value added textile products to emerge main foreign exchange earning items in the post 2005 world export market.