T
he textile and apparel industry is often considered the backbone of the Islamic Republic
of Pakistan’s economy. In that south Asian republic — which shares borders with China to the north,
India to the east, and Iran and Afghanistan to the west, as well as the Arabian Sea to the
southwest — cotton textiles and apparel historically were the focus of the industry, mainly because
of the large amount of cotton grown in the country. In fact, Pakistan currently ranks fourth among
world cotton producers and third among world cotton consumers — having produced 9.9 million
480-pound bales and consumed 11.8 million 480-pound bales in the 2005/2006 marketing season —
according to the December 2006 US Cotton Market Monthly Economic Letter of the US Department of
Agriculture and Cary, N.C.-based Cotton Incorporated.
However, the US International Trade Commission notes in its 2003 report, “Textiles and
Apparel: Assessment of the Competitiveness of Certain Foreign Suppliers to the U.S. Market,” that
Pakistani textile manufacturers recently have diversified their product offerings to include
man-made yarns, fabrics and apparel as the result of shifts in global demand for cotton-blend
apparel. Other recent economic factors, such as the end of textile quotas in 2005, have caused
Pakistan’s textile industry to continue to adapt in an effort to remain globally competitive.
Textile Industry Structure
According to the post-show report of IGATEX Pakistan 2006 — which took place in Karachi,
Pakistan’s largest city, and is slated to return in 2008 — the republic’s textile and apparel
industry in 2006 consisted of ginning, spinning, man-made fiber, weaving, finishing, apparel, terry
towel, tarpaulin and canvas, and knitwear machinery sectors. The textile and apparel industry as a
whole employed approximately 40 percent of total industrial workers and accounted for 46 percent of
total manufacturing. There were 1,221 ginning units, featuring an installed capacity of 20 million
bales of cotton. The spinning sector comprised 408 spinning units, with an installed capacity of
157,143 rotors; and 50 composite units, with an installed capacity of 10.1 million spindles. The
country’s 10 man-made fiber units had an installed capacity of 660,000 tons.
While the show’s organizers did not detail the number of weaving units in their report, the
Pakistani government’s Board of Investment reported 124 large and 425 small weaving units, with a
total production capacity of 4.4 billion square meters of fabric. The show report also did not
include the installed capacity for the 106 finishing units in the organized sector and 625
finishing units in the small-scale sector. However, the investment board noted a total finishing
capacity of 4 billion square meters.
With regard to finished textile goods, the country’s 5,000 apparel units featured an
installed capacity of 450,000 sewing machines, show organizers reported. The installed capacity for
Pakistani knitwear manufacturers numbered 12,000 machines. Tarpaulin and canvas production capacity
totaled 100 million square meters, while installed capacity of terry towels totaled 7,500 looms.
In contrast to IGATEX Pakistan’s post-show report, the International Textile Manufacturers
Federation (ITMF), Switzerland, in its 2005 International Textile Machinery Shipment Statistics
report, noted the country’s installed spinning capacities — reported in 2004 — 9.7 million
short-staple spindles, 35,000 long-staple spindles and 150,700 open-end rotors. In comparison to
other industries in Asia and Oceania, Pakistan’s short-staple capacity that year ranked third —
behind mainland China and India, in that order — while open-end capacity was fourth — following
mainland China, India and Uzbekistan. Long-staple capacity in the republic came in 11th, tying with
Malaysia.
Installed weaving capacities in 2004 reported to ITMF totaled 24,000 shuttleless looms,
225,000 shuttle looms and 50,000 filament weaving looms. The shuttleless capacity that year ranked
sixth among other industries in Asia and Oceania; shuttle capacity was second, behind mainland
China. Likewise, Pakistan’s filament-weaving capacity came in second, following mainland China and
tying with Thailand.
On the other hand, the Karachi-based All Pakistan Textile Mills Association (APTMA), a
national trade association promoting 360 textile spinning, weaving and composite mills in the
organized sector, reported the total installed capacity for its member mills numbered 8.8 million
spindles, 65,580 rotors and approximately 10,000 looms. There were 292 APTMA spinning mills, 40
weaving mills and 28 composite mills, which featured facilities that can handle a variety of
processes under one roof. Among the products produced in APTMA mills were open-end and spun yarn;
greige, printed and dyed fabrics; and bed linens.
Economic Role
While the Pakistani manufacturing sector as a whole in 2005 accounted for approximately 25
percent of the country’s estimated gross domestic product (GDP) of US$395.2 billion on a
purchasing-power-parity basis, the textile industry’s diverse product offerings accounted for 11
percent of the country’s GDP, as reported in the aforementioned IGATEX Pakistan report. In
addition, approximately 60 to 70 percent of total exports came from the production of cotton
textiles and apparel, which are considered Pakistan’s largest industries. The Business Recorder, a
Karachi-based financial newspaper, reported in July 2006 that the textile industry’s value addition
accounted for more than 9 percent of the GDP, and that the industry had a market share of
approximately 30 percent in world yarn trade and 8 percent in cotton cloth.
According to the World Bank, which cited Pakistan’s Federal Bureau of Statistics, exported
textile products were worth $2.5 billion in the first quarter (Q1) of fiscal year (FY) 2007, which
began July 2006. That figure represents a drop of 10.3 percent from Q1 FY06, but an increase of
22.2 percent over Q1 FY05. The top three exports of the textile industry in Q1 FY07 were cotton
yarn, knitwear and bedding. Cotton yarn exports, which were worth $303 million in Q1 FY06, grew by
19.5 percent in Q1 FY07 to $362 million. On the other hand, exports of knitwear — worth $526
million in Q1 FY06 — and bedding — worth $555 million in Q1 FY06 —decreased in Q1 FY07 by 10.1
percent and 19.1 percent, respectively.
The Business Recorder further noted that Pakistan counted the European Union and the United
States as the largest and second-largest export markets, respectively, for its textile and apparel
products. Pakistan captured a 3-percent market share in the EU in 2005, down 0.6 percent from 2004.
The country’s share of the US market, however, increased slightly, by 0.2 percent, in 2005.
According to the US Department of Commerce Office of Textiles and Apparel’s Dec. 7, 2006, Major
Shippers Report, Pakistan’s total textile products imported into the US market captured a 7-percent
share in square-meter equivalents (SMEs) and a 3.5-percent share in dollars. Carded cotton yarn and
sateen fabric were Pakistani products that had a significant share of imports into the US market,
both in terms of dollars and SMEs. Additionally, Pakistani specialty weave fabric, with 58.8
percent; cotton bedspreads/quilts, with 47.6 percent; cotton sheets, with 41.8 percent; and cotton
pillowcases, with 40.4 percent, all held a significant share of imports in their respective
categories in SME terms.
Rising Above Challenges
With the recent decline in textile exports and a record-setting trade deficit that reached
more than $2.1 billion in the first two months of FY07, as reported by Dawn — a Karachi-based
newspaper — Pakistan’s textile industry currently is confronting new economic challenges. Dawn
reported in November 2006 that the textile industry — including the spinning, weaving, value-added
apparel and made-up, and home textile sectors — had begun to downsize its workforce. A hike in
interest rates in early 2005 by the country’s central bank led to increases in export refinancing,
long-term commercial and industrial credit, and, ultimately, rising production costs, according to
Dawn. Furthermore, the newspaper noted Pakistani textile exporters were facing steep price
competition from manufacturers in China, India and Bangladesh.
In December 2006, the federal government announced it would provide approximately $720
million in aid to the textile sector, according to Pakistan’s Ministry of Textile Industry.
Furthermore, a recent press release from the ministry stated that a meeting was held in late
December to analyze issues affecting the textile industry, such as the international trading
regime, factor prices and productivity parameters. In a sector-by-sector analysis, top trade
officials reviewed each sector’s strengths and weaknesses, with the goal of developing a long-term
strategy, and increasing efficiency, cost effectiveness and cost competitiveness. Also discussed
was the fact that while Pakistani textile producers face increasing cost pressures, competitor
countries in the region enjoy subsidies and support. As a result, there is an offset trade balance.
Despite these challenges, there is still hope that the textile industry can rise above
current and future challenges and continue to play an important role in Pakistan’s economy. In a
September 2006 speech to traders, industrialists and ginners, Naeem Mukhtar, president of Lahore,
Pakistan-based Allied Bank Ltd. (ABL), said he believed the volume of textile exports would reach
$50 billion by 2016, and those exports could help develop Pakistan’s economy. According to the
Business Recorder, Mukhtar called for the replacement of outdated machinery and infrastructure,
especially in the ginning sector, and he said ABL would offer to advance five-, seven- and 10-year
loans with a reasonable markup in order to assist manufacturers in purchasing new machinery. New
industry and value addition are key in competing against China and India, he added.
Editor’s Note: Statistics of installed capacities of equipment in the Pakistani textile
industry vary from source to source. To present an overview of the industry in Pakistan,
Textile World Asia has included statistics from three sources in the preceding
article.
January/February 2007