Interview with Mr Rana Farooq Saeed Khan

Textile sector is the mainstay of Pakistan’s economy. It contributes around 8% of the GDP, employs nearly 40% of the industrial labor force and claims a share of about 60% of country’s exports. In the context of extended value chain, textiles sector also affects rural population as cotton is one of the leading crops and cultivated by a significant part of farming community.

Textile is the backbone of the economy of Pakistan. We are producing the 4th largest crop in the world at around 12-13 million bales, but consume more than 16 million bales, which makes us the third largest consumer of cotton in the world. We have the complete value-chain in this sector, from ginning to spinning, weaving, processing, and home textiles, woven and knitted garments. However, the sector is facing some critical imbalances in this value-chain. Although, our spinning sector is most advanced, commensurate development has not taken place in the downstream sector. Our weaving is mostly done by inefficient and outmoded local power looms and the share of shuttles looms is very low. Similarly, there are technical bottlenecks in our processing industry that needs not only more capacity but significant additions in technical expertise. For these reasons, we are wasting nearly half of our consumed-cotton in export of low value added products, a trend that must be reversed for Pakistan to take full advantage of its strength in the field of textiles.

There are also a number of factors that are affecting Pakistan’s exports performance in textiles. These include, restricted market access, preferential access to competitors, brand recognition, and lack of exports guarantee. Fashion design and fashion technology are two important areas that we need to develop to broaden the scope of value-added activities.

The first ever textiles policy, given by the government of Pakistan People’s Party in August, 2009, aims to address all the ills presently afflicting the textiles sector. The policy has been widely acclaimed for its comprehensive coverage, setting of clear direction for the future and commitment of the government to provide necessary support to remove the current imbalances in the value-chain. The policy has been actively implemented in close coordination with all the stakeholders.

Clearly, the most obvious strength is our strong agrarian base, which produces the 4th largest crop in the world. By the way, our crop has the potential to increase manifold because we have yet to introduce BT cotton in Pakistan.

We are at an advanced stage of finalizing agreements with Monsanto and Chinese firms and hopefully, next crop will have the certified BT cotton seeds available for farming. We have the necessary spinning capacity; significantly above the size of our own crop, and mostly our technology in spinning is modern.

The bottlenecks, as I earlier alluded, start downstream of spinning industry, where technology is outmoded, capacity is insufficient and there are infrastructure bottlenecks also. Equally important, there are gaps in trained manpower, which is critically needed at the value-added segment of the chain.

The new policy will focus on modernization of machinery throughout the value-chain, remove bottlenecks in infrastructure and undertake major programs to eliminate shortages in skilled manpower.

Above all, the policy has envisaged promulgation of a law that would lay standards and benchmarks for the working of the entire textiles chain. Presently, there are no standards for inputs, outputs, conveyance, marking, labeling etc., which is a leading cause for loss of value for precious resources of the country. These standards will be set by a Board that will comprise both the leaders of the industry as well as experts in the field. Necessary administrative authorities will be provided to the ministry to ensure strict enforcement of standards so notified.

Undoubtedly, these are very important sub-sectors, and Pakistan has had a good track record of exports of carpets. Both these sectors have been included in the textiles policy and work is in progress to design specific interventions in these sub-sectors so that these are rejuvenated. Traditional textiles, including handlooms, need to be protected and their products provided support for exports. We are committed to support this sector.

As I stated earlier, the policy comprehensively covers the textiles sector and recognizes the ills presently afflicting its performance. We have nearly issued all the SROs required to be issued under the policy. Several major initiatives such as training of some 500,000 workers over a five year period, setting of clusters for small weavers, cotton yards for trading of cotton and effluent treatment plant for a cluster of processing industries are in an advanced stage of approval after which they will be launched.

I may also point out that the implementation of the policy is carried out through close coordination with the industry. There is a Textiles Policy Implementation Liaison Committee that I head and comprises leading representatives from the entire textile chain and it meets every month to ensure that the policy implementation does not face any snags.

Ministry of Textiles Industry is working to provide state of the art infrastructure to the textile industry. In this regard, three garments cities are under construction, in addition to a modern textiles city in Karachi. The idea is to provide best possible infrastructure to the sector. As the textile sector of country is totally in the private sector, therefore, technological advancement is primarily the responsibility of the entrepreneurs.

Similarly, we plan to bring more such projects in other cities of the country, which will be implemented through public-private partnership. The policy also envisages contribution to existing industries that are suffering from lack of adequate infrastructure. One such initiative, which is imperative for meeting compliance standards, is to establish effluent treatment plants for the processing industries.

A nation-wide survey is currently underway to map the entire textiles industries so that a national project to provide this support can be designed and implemented. In the meanwhile, whenever a group or cluster of industries, contiguously located in an industrial estate, approaches the ministry, a specific project will be launched, as is currently done in Faisalabad.

As you know value-added textiles sector is highly labor intensive. In places like India and Pakistan, textiles sector is the mainstay of industrial employment. Undoubtedly, new challenges on job opportunities in the sector will be posed by automation of garments manufacturing, and we should prepare today for effectively meeting these challenges. At the outset, we should be ready to adapt the new technologies, to maintain our competitive advantage. We will have to invest substantially more in re-training our work force so that either they may remain in the sector with increased efficiency or adopt new areas of specialization.

However, while acknowledging the challenges emerging on this front, let’s also be clear that our real advantage emanates from nothing other than production of cotton. We should formulate policies to ensure that all cotton is consumed at home and in increasingly higher value added products.

Our exporters are keen to have greater access to key international markets, removal of discriminatory policies of importing countries and elimination of various distortions that militate against their competitive advantage. They are also looking for support in introducing Pakistan brand in world markets, export guarantee scheme and support in exploration of new markets. The new policy envisages initiatives in all these areas and we will have specific schemes introduced for this purpose. As for market access, Pakistan is currently in talking to both EU as well as USA for seeking appropriate changes in their existing trade regimes with Pakistan.

Pleasure.