Pakistan'sTextile Industry is facing a threat from Bangladesh, vietnam

MULTAN, March 22nd:Once buoyant and prospering, Pakistani textile industry is facing regional threat from new comers like Bangladesh and Vietnam, and giants including China and India. Time to face up to this regional threat! How did it happen - lack of fresh investment and neglect to upgrade and modernise. The key reasons - high cost of finance, increasing raw cotton prices, and the industry barons’ relocating abroad, including in Bangladesh.The country’s biggest industry, the largest employer and the principal forex earner - textiles - looks downcast. Pakistan is the world’s fourth largest producer and the third largest consumer of cotton.
The industry has lost the technology edge in basic textiles, which it enjoyed over India, Bangladesh, and China, at the start of this century, due to lack of investment in the sector, in the last five years, while its competitors rapidly upgraded technology.All Pakistan Textile Mills Association (APTMA) Chairman Gohar Ejaz Khan identifies some of the key causes of this worrisome picture. “The industry invested heavily in basic textiles after 9/11, on the strength of a low interest rate regime that continued until 2004. The industry has been caught off guard as all its financial plans are ruined by an abrupt increase of 300 percent in the interest rates,” he said. “The reserves of all the textile mills have dried up now in servicing the bank credits at 16-18 percent that were actually obtained at 6-7 percent when balancing and modernisation was carried out.” That was when the industry was going ahead on the technology track, and was upgrading itself with a range of modern equipment. The industry insists a return to those boom years is possible with the help of fresh investment if, it is available at ‘a viable interest rates’.Textile exports in FY 2010 were $10.182 billion, up from $9.776 billion in FY 2009. Exports in the fist seven months of FY 2011 (July-January) were $6.914 billion, up from $5.187 billion in the like period of FY 2010. Overall exports in FY 2010 were $19.673 billion as compared to $19.120 billion in FY 2009.As Pakistani textile industry was investing in injecting modern technology, competitors including India, appeared threatened, and forced their own governments to subsidise import of high-tech equipment. Textile entrepreneurs support this view. S M Muneer, one of Pakistan’s biggest spinners, says Pakistan, in 2003, was operating a total of 11.8 million spindles. Half of these spindles were state-of-art, the most modern and the fastest spinning machines. None of these were in use in Pakistan’s competitors - India or China. “We have hardly added 2.0 million spindles over the last seven years,” Muneer says.
Machinery import data, compiled by International Textile Manufacturers Federation (ITMF) indicates, “Pakistan did not import a single spindle in 2007 and 2009, while imports in 2009 were limited to 238,000 spindles.” In sharp contrast to Pakistan, China imported 268 million high-speed spindles during 2004-2009.
India added 1,186 million spindles, equalling Pakistan’s in 2003, and Bangladesh imported 2.3 million high-speed spindles.A similar story relates to installation of imported modern shuttle-less and air jet looms.In 2003, Pakistan had 23,000 plus shuttle-less and air-jet looms. Between 2003 and 2009, Pakistan added just 5,425 of these looms. China had around 30,000 of these weaving machines in 2003, while India had only 13,000, and none was in use in Bangladesh.
From 2004-2009 China added 175,233 shuttle-less looms, India 22,221, and Bangladesh 23,484. Pakistan imported none of these looms in 2008 and 2009. In view of this technology input by competitors, “bulk of the global output of yarn and fabric consumption will be done in India and China which have now larger capacity,” Ejaz says.It is time to listen to the textile industry. The industry should be helped - once again.But one thing must be made clear in view of the dire financial straits of the public finances.
A major part of the price tag should come from the private sector owners - not from the public exchequer. The sector had too many tax breaks in the past. Now it should come out with its own money, too, as Ejaz cautions the industry and the government. “Pakistan’s salvation lies in increasing textile productivity, both vertically and horizontally, by adding high-tech spindles, looms and sewing machines through a meaningful facilitation.” In a situation like this, the ball is now in the court of the government, the bankers and the textile barons. Inattention will be perilous.

Spell Bounder

I'm journalist in Pakistan,And working in this field about 20 years.