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KARACHI: Textiles seem to have bounced back as bank advances to the sector were record high in 2016.
The textile industry is the backbone of the economy and generates the highest export earnings. Yet it appears to have failed in coping with the new challenges that emerged in the global textile and fashion industry in recent years.
Under Textile Policy 2015-19, Rs64.15 billion will be spent to increase the exports of textile and clothing items from the existing $13bn to $26bn by 2019. Pakistan is the fourth largest producer of cotton in the world and holds the largest spinning capacity in Asia after China and India.
A recent report issued by the State Bank of Pakistan (SBP) reveals that year-on-year growth in textile sector advances has been Rs90bn in 2016 in contrast to the net retirement of Rs30bn in 2015.
Recently, the government announced a package of Rs180bn that gives several incentives to the textile sector to boost exports. The current export finance rate of 3.5 per cent is the lowest in a decade, especially for the textile sector.
However, another report by the SBP indicates that the textile sector’s performance on the export front was worse than the preceding year when it retired debt instead of borrowing.
Exports in the first half of 2016-17 fell to $6.151bn compared to $6.545bn a year ago. The output of the fresh borrowing of Rs90bn by the textile sector in 2016 has yet to be seen.
Experts believe the industry could not adapt to technological changes in the global textile industry. This was in contrast with Bangladesh and Taiwan, which succeeded in making inroads into the global market in a short period of time.
For 2015, garment exports from Bangladesh to the United States grew 12pc to $5.4bn. Vietnam did even better by growing its exports 14pc to $10.6bn. India’s apparel exports to the United States in 2015 grew just 8pc to $3.4bn.
Pakistan is the fourth largest producer of cotton in the world. Yet it failed to attract investors to its textile industry. Bangladesh has emerged as an attractive destination for Indian readymade garment manufacturers. Many Indian businesses have set up units in Bangladesh simply because the country offers ease of doing business. Bangladesh does not produce cotton. But it has successfully adopted the latest technology and machines.
Pakistan is going to face a challenge from Vietnam after dealing with similar challenges from China, India and Bangladesh. According to one estimate, Vietnam’s textile exports will double to $55bn between 2015 and 2025.
Vietnam is emerging as a world production centre for textile products as major global apparel makers expand their production operations in the country.
Published in Dawn, March 10th, 2017
