Will Pak apparel sector benefit from LDC status?

18 Feb '13

3 min read

“The Pakistan Government will apply for Least Developed Country (LDC) status, which it would get by 2014”, the Textiles Minister - Makhdoom Shahabuddin recently told the Pakistan National Assembly.

This would mean that Pakistan would be able to export its textiles and apparels duty-free to countries across the world and would also be able to compete in global markets for orders on strength of the status.

However, Mr Javed Bilwani – Chairman of the Pakistan Hosiery Manufacturers and Exporters Association (PHMEA) is not gung-ho about the benefits that would accrue from receiving the status.

Speaking exclusively to fibre2fashion, Mr Bilwani said, “I do not see any real benefits accruing from the LDC status to the apparel sector as I do not see exports from the sector rising in the near term, due to poor infrastructure, shortage of energy and a host of other issues, as we will not be able to scale up production to meet the increase in orders”.

“The only beneficiaries will be the importers who will be able to import apparels and related textiles at lower rates due to the duty-free status. Of course, jobs may be created, but not on the scale that a country can really take advantage of the LDC status”, he added.

On the other hand, Mr Faisal Naseem Kari – Director of Nishat Apparels, which produces around 600,000 pieces of garments per month, is very thrilled and excited over Pakistan bagging the LDC status.

He says, “Currently we can export only a few items under the current trade concession package of the European Union. Once we receive the LDC status, we will be able to export all clothing items duty free, which will provide a big boost to our garment exports”.

When asked if Pakistan will be in a position to compete with Bangladesh or Cambodia on an equal footing, he explained, “Our biggest advantage is our access to raw cotton, yarns and good quality fabrics, which is not the same with the other two countries.

“Considering wages and other operational expenses, we are at par with Bangladesh. Retailers, who bring out 12 collections in a year and look for shorter lead times, would be looking at a country with all advantages, which is where Pakistan can hope to score over the other two countries with similar status”.

Mr Bilwani replied by saying, “The garment export sector has an exalted status in Bangladesh, which means it gets many benefits, which is not available to the industry in Pakistan. So I am pessimistic about us competing with Bangladesh”.

When reminded about the energy crisis in Pakistan, Mr Kari said, “The apparel industry consumes negligible electricity and little or no gas, when compared to the spinning, weaving or fabric process industry. So, I do not foresee these being impediments to the growth of the garment sector if Pakistan gets the LDC status”.

Fibre2fashion News Desk - India

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