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Pakistan needs to evaluate policies while vying for top slot in global textile market

"The war for the best apparel maker crown is getting hotter with Pakistan joining the race alongside Vietnam, Cambodia, India, Bangladesh. However, as the country aspires to reach the top, it first needs to check the availability of a suitable product category, materials required, labor cost and skill, workers’ rights, compliance, access to ports, manufacturing equipment, tariff structures, distance to end market and most importantly production capacity. The country also has to the face the additional obstacle of government taxation."

 

Pakistan needs to evaluate policies while vying for top slot in global textile marketThe war for the best apparel maker crown is getting hotter with Pakistan joining the race alongside Vietnam, Cambodia, India, Bangladesh. However, as the country aspires to reach the top, it first needs to check the availability of a suitable product category, materials required, labor cost and skill, workers’ rights, compliance, access to ports, manufacturing equipment, tariff structures, distance to end market and most importantly production capacity. The country also has to the face the additional obstacle of government taxation. To attract government’s attention on this issues, some apparel manufacturers are going on strike and even shutting down temporarily.

Lack of government support hinders growth

One such company, Shahkam Industries exporter of hoodies, track pants and polos to brands like AmericanPakistan needs to evaluate policies while vying for top slot in global textile Eagle, Zara, Primark, Pull and Bear, Forever 21 and Urban Outfitters. Operating since 1992, Shahid Bhatt, CEO of the company believes Pakistan is very competitive as it has excellent raw material, readily available yarn and factories which, after the lifting of quotas in 2005 and the cotton crisis of 2009 survived. He says, the main obstacle in their progress is the government’s lack support. Bhatt reveals that Vietnam gets duty free access to the US, whereas Bangladesh has the same situation as Pakistan. Additionally, their industry is preferred by their government and given protection because it forms 80 per cent of their industry. He feels the only reason the Pakistani industry is able to survive is because other places import their fabric/raw material and Pakistan makes on its own.

Butt also believes the government needs to incentivise downstream value addition. It needs to punish export of raw material (yarn and cotton) and compel value addition of them. If they don’t, exports will remain low – our yarn is sometimes being sold to Bangladesh and other Asian countries and they use it to compete against Pakistan’s apparel, companies.

Increase in sales tax to make things worse

As per Awais Ashraf, Head of Marketing, Interloop, another successful manufacturing company that focuses on hosiery and active wear, the new 17 per cent sales tax is likely to increase prices of the raw material, leading more people to import their raw materials, killing the local industry. Pakistan also needs to focus on vocational training and literacy. Untrained labourers cost margins to exporters as they make mistakes.

The prices of electricity and gas are also increasing, leading to bigger companies like Interloop trying to generate their own power. However, other countries facilitate their industries with electricity and gas. They get uninterrupted supply and industrial zones are created, with duty free benefits.

Pakistan’s infrastructure too isn’t sophisticated enough to compete with larger rivals. Bangladesh is the top contender followed closely by Vietnam and India. Though the country has abundant materials and labour it first needs to tick off other requirements with the support of the government. Overall, the country has huge potential in the apparel sector. However, to reach the top, it needs to first reevaluate its policies.

 
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