ISLAMABAD, May 25: Despite an overall positive performance following the lifting of quotas on textile and clothing exports, local manufacturers’ profits were falling because of increased price competition, United Nations Development Programme (UNDP) said in a report.

According to a statement, Pakistan has expanded its textile and clothing exports to the United States even as it lost shares in the European Union market, with primary commodities such as cotton yarn, cotton fabrics, garments and bedwear all showing strong growth.

Concurrent with the increasing sales, however, sustainability in the sector remains in question; more than one- third of Pakistani firms in a recent survey said they were aware of others that have been forced out of business in the post-quota era.

The new figures were contained the latest quarterly tracking report on the impact of the lifting of quotas, prepared by UNDP.

Sewing Thoughts: How to Realise Human Development Gains in the Post-Quota World examines the effects on trade flows in 12 selected Asia-Pacific countries during the first full year of the post-quota regime.

As a total, Pakistani textile and clothing exports in the first six months of fiscal 2005-6 increased by 15 per cent compared to the same period a year earlier. Exports of bedwear were particularly strong, rising by nearly 66 per cent, from $802 million to $1.3 billion.

The textiles and clothing sector accounts for 60 per cent of Pakistan’s exports and 35 per cent of its industrial employment and employs the second-largest number of women, after agriculture.

More than 2 million people, including informal workers, were employed in the country’s textile and clothing industry. The report focused on how human development gains could be achieved by increasing and sustaining employment opportunities, particularly for the poor and vulnerable, in the textile and clothing sector.

Among other measures, it called for stronger investment in health, education and skills development; reduced trade transaction costs; adoption of innovative strategies for sourcing inputs and strategic management of export processing zones to enhance efficiency and attract foreign investment.

The report further advised that exporters be granted enhanced access to credit; public-private partnerships be pursued and developing countries extend their cooperation for development of the sector.