As globalisation challenges nations to expand their marketing, it has opened new avenues for developing parts of the world. Countries like China, Brazil and Angola are faring well at the international marketplace.

Globalisation has also led to exchange of cultures and traditions and ensured easy availability of all kinds of products throughout the world. The textile and fashion industries are the biggest beneficiaries of this cultural exchange. Today, Chinese embroidery can be spotted in London, chikankri and mirror work are popping up in international fashion shows and zari work or Sindhi embroidery have managed to impress designers in Europe, US and Asia Pacific.

The global reach of the textile industry has successfully removed prejudices against Pakistan being a closed economy. The Pakistan textile and apparel industries have been going through structural change and its textile sector is carefully and systematically making its way into the international market.

Rollercoaster ride
Apart from providing employment to 30 per cent of the total workforce or nearly 49 million people, the textile sector also contributes approximately 8.5 per cent to Pakistan's total Gross Domestic Product. Globally, the textile sector is one of the fastest growing and stands at an annual volume of US $18 trillion. And it continues to grow by 2.5 per cent. But this global growth is not a reflection of Pakistan's progress, as the country's share is less than one per cent.

The last few years have proved to be extremely turbulent for Pakistan's textile industry. An unstable political scenario, lack of security and difficulty in accessing global markets has forced the industry to confront massive headwinds. The erratic economic growth coupled with energy crisis, unskilled manpower and debts by firms have also made the textile sector extremely fragile.

In order to deal with these growth barriers, the previous government of Pakistan formulated a five-year textile policy beginning 2009. Under this, the government introduced textile reforms to achieve an export target of US $25 billion. Regrettably, the then Pakistan government failed to implement many important proposed steps mentioned in the policy. That is why textile exports touched approximately US $14 billion at the end of 2014 against the target of US $ 25 billion.

In first gear
There is a shift in the scene now. The current party in power has formulated a new textile policy and targets raising textile exports to US $26 billion by the end of 2019. The European Union (EU) is also playing its part in pulling up the growth of Pakistan's textile sector with textile exports to EU rising to 30.68 per cent in the first quarter of 2014, compared to the corresponding period of last year. EU has also granted Generalised Scheme of Preferences (GSP) plus status to Pakistan, giving it greater market access. The total exports in the first two months of 2014 rose to US $ 446.91 million as against US $ 342 million in the same period of 2013, leading to an increase of US $ 104.91 million.

Home textiles also registered a growth in the first quarter of 2014. Home textile exports rose to US $ 274.47 million, an increase of 28.15 per cent. Leather exports also increased by 15-20 per cent, reaching US $ 25.49 million, while carpet exports totalled to US $ 9.88 million, indicating a rise of 12.79 per cent.


A toss-up

Though the new textile policy is promising, the government has to sort out liquidity crunch, energy crisis, high interest rate and financial pressure on a priority basis. Pakistan is also facing stiff competition from India, Bangladesh, China, Turkey and Vietnam. These nations have not only made remarkable progress in various fields, but have also gone on to become the preferred choice of international brands. Bangladesh's textile exports were recorded to be around US $ 0.5 billion in 1980s. By 2014, that stood at US $ 23 billion. Turkish exports have also kept pace with Bangladesh, soaring from US $ 0.5 billion in 1980s to US $ 24 billion in 2014.


But China and India are the biggest cause of worry for Pakistan's textile industry. China, which is a global leader in textile export has recorded a growth of US $ 186 billion. That's a neat climb from US $ 14 billion in 1980s to US $ 200 billion in 2014. India also recorded a growth of US $ 18 billion as textile exports rose from US $ 14 billion in 1980s to US $ 30 billion in the current year. Pakistans textile exports, on the other hand, have shown a slow growth rate, from US $ 1.0 billion in 1980s to US $ 13.064 billion in 2014, a rise of a little over US $ 12 billion.


As of now, Pakistan is relying on low cost labour for textile outsourcing, as labour rates in China and Turkey are higher than in Pakistan. However, even on this front, Pakistan is facing neck to neck competition from Bangladesh. International brands are drawn towards Bangladesh as labour costs are lower than in Pakistan. According to a McKinsey report, Bangladesh will double its clothing business by 2015 and triple it by 2020. Bangladesh brings to the table competitive pricing and quality that most others cannot match.


Foreign investors are keeping a safe distance from Pakistan, following its deteriorating internal security. Investments by international apparel brands in Pakistan have been severely compromised. Moreover, with brands giving high prominence to moral responsibility, rules have become stricter, which puts even slightest flaws in working conditions under the scanner. Around 22 per cent of independent audits have revealed non-compliance in fire safety in Bangladesh, followed by 17 per cent in Pakistan and 15 per cent in India. Companies and investors are increasingly looking to explore investment opportunities in countries that have stern rules regarding safe and ethical working conditions. The inability of Pakistan's textile mills to ensure high standards of workplace safety overrides long-term goals, contributing to the sector's sluggish growth.

 

Silver lining

In spite of so many pitfalls, all is not lost for Pakistans textile and apparel sectors. There has been a positive change in consumer spending behaviour. The countrys growing middle class has ensured that fashion no longer remains only for the elite. According to a report by Asian Development Bank titled Asia's Emerging Middle Class: Past, Present and Future, Pakistan's middle class expanded by 36.5 per cent since 1990 against India's 12.8 per cent expansion. In the last five years, spending on clothes and footwear rose at rate of 7.4 per cent per year, even as prices increased by 7.2 per cent per year. The per capita volume of clothes bought by Pakistanis has increased by nearly 11 per cent.


The apparel market has also witnessed change in buying behaviour of consumers in Pakistan. Demand for readymade clothing has climbed up by 81 per cent in the past decade. This has resulted in a drop in demand for tailored clothes. Brands like Mango, Puma, Nike etc are attracting more consumers and this consumer base includes higher and middle income groups.


Getting future-ready

Pakistans textile sector is inching forward, but in order to increase its textile share globally, the country needs to invest in modern technology. Obsolete and low cost technological infrastructure has watered down the advancement of this industry in comparison to the competition. The need for technical advancement remains Pakistans Achilles heel, as neither the government nor manufacturers have made serious efforts to keep abreast with technological advances. Pakistans textiles can compete at the international level if manufacturers keep pace with evolving technology. To that extent, Pakistans textile ministry is now focusing on the technical framework of the textile industry to ensure products are at par with international standards.


Today, Pakistan exports textiles to China, United States, United Kingdom, Germany and Bangladesh. Efforts towards technical advancement have opened up new opportunities for higher and more sophisticated textile products. Pakistan has recently signed a new green electricity import deal which will help import 1,000 mega watt of clean energy to the country. The project is likely to be completed in the next three years. When complete, it would help solve the energy crisis the textile sector is currently plagued with. The power crisis was one of the reasons why the textile industry failed to fulfil its export orders, reducing export ratio of textile products in the international market. Now that the sectors power problem appears to be resolved, the All Pakistan Textile Mills Association (APTMA) is looking forward to invest US $ 1 billion per annum in the textile industry.


Whether it is about boosting technology or sorting out other issues, Pakistan has taken some steps to meet the rising international standards in textiles. Yet, several serious issues like internal turmoil remain unresolved. If the country can replicate the peace model of developed countries, it can help its textile industry achieve more ambitious projects in the future.


References:

1. Ft.com

2. Dawn.com

3. Tribune.com.pk

4. Brecorder.com

5. Nation.com.pk