Pakistan Eyes Growth

Country Profile

Textile World Asia Special ReportPakistan Eyes GrowthPakistan readies itself to be a prime
contender in the global textile market.

With China and India dominating the post-textilequota spotlight, Pakistan has not been
recognized immediately as an up-and-coming textile manufacturing powerhouse. But, the numbers tell
quite a different story – one of growing strength and determination to share a piece of the global

According to a 2002-03 chairman’s review issued by the All Pakistan Textile Mills Association
(APTMA), the textile industry in Pakistan has been the largest single contributor to the country’s
economy. There has been a substantial increase in textile production capacity and in raw material
consumption. The exports of textiles, especially those of value-added goods, have increased
substantially. The industry is the largest contributor to Pakistan’s gross domestic product – more
than 11 percent – and generator of employment – hiring about 40 percent of the manufacturing
workforce. APTMA reported numerous new investments have been made to upgrade existing facilities,
as well as to build greenfield projects. The major areas of investments, which amounted to nearly
$3.2 billion in the past several years, are capacity expansion, product diversification and
development of higher-value added products.

In fact, textiles is such an important industry that the Pakistan Ministry of Commerce
declared the end of textile quotas earlier this year as having “a profound impact on our
predominant sector.” It also said the growth in exports in the past several years provided the
country “a degree of confidence in facing the upcoming world competition in this sector.”

The transformation of Pakistan’s textile industry began in 1999, when, according to APTMA,
there was a change in the mindset and an improvement in the relationship between the government and
the business community. An understanding was reached that the government and the business sector
should work together in public-private partnership to better Pakistan’s economy. APTMA credits such
a partnership as a key factor in building investor confidence, which has resulted in the phenomenal
growth of the textile industry.Export GrowthAccording to the Pakistan Ministry of Commerce, textile
exports generated $7.17 billion – 67 percent of the country’s total exports – in fiscal year 2003
to 2004 (the latest year for which data is available), representing an increase of 24 percent from
the previous year. More importantly, three categories – bedwear, woven garments and knitwear – each
crossed the $1 billion mark for the first time. The ministry said the growth can be attributed to
greater access allowed by the European Union, investments made by the textile sector for expansion,
and the prudent handling by the government of its cotton policy and quota management policy.

To sustain overall export growth, the Pakistan Export Promotion Bureau (EPB) has outlined a
strategy that promotes the country’s core product categories, which include raw cotton yarn,
fabrics, garments, made-up articles, towels and manmade textiles. EPB reported it will increase the
penetration of these core products to Pakistan’s top-10 export countries. Meanwhile, it has also
identified less-explored regions, including Africa, Eastern Europe, South America, Central Asia and
Oceania, which provide significant export opportunities.Production GrowthThe textile sector in
Pakistan is made up of both large-scale companies and small – and medium-sized workshops engaged in
every aspect of manufacturing, from cotton ginning to spinning and weaving to processing. Main
products include greige and printed fabrics, home textiles, towels, hosiery, knitwear and
ready-made garments. According to APTMA, there are 453 textile mills in the country with 7.6
million spindles and 70,000 rotors in operation. The capacity utilization rate for spindles is 83
percent, while the rate for rotors is 47 percent.For fiscal year 2002 to 2003, cotton yarn
production increased to 1,924,900 tons from 1,818,300 tons in the previous year, representing a
growth of 5.8 percent.Cotton fabric production in the mill sector increased marginally by 2.4
percent in fiscal year 2002 to 2003, according to APTMA numbers. For the non-mill sector, a much
more significant growth rate of 14.6 percent was registered.The Pakistan textile industry uses
nearly 11 million bales of cotton every year, and it relies heavily on its homegrown production. In
addition, it also is the second-largest importer of U.S. pima cotton, which it uses in the
manufacturing of high-count yarns for value-added products. Cotton consumption has increased from
an average of one bale per spindle per year to nearly two bales per spindle per year. APTMA
projects that by 2007, Pakistan’s spinning industry will need at least 15 million bales of cotton
annually.Currently, the country ranks fourth among 70 listed cotton-growing countries in terms of
output; however, the government is motivated to move up the ranks in the near future by increasing
both the peracre yield and the area under cultivation. More importantly, the government is working
with cotton growers to produce higher-grade contamination- free cotton for use in the production of
higher-end products that generate a higher price. Currently, the country loses about $1.4 billion
in annual income because of the poor quality of its cotton, according to APTMA.Textile Vision
2005In the years leading up to the elimination of textile quotas in 2005, Pakistan prepared itself
for the new marketplace with a long-term strategy plan called Textile Vision 2005. In addition to
initiatives in monetary policies, marketing and governance, among others, the program, spearheaded
by the government’s Board of Investment, has proposed an investment of 333 billion rupees for the
“balancing, modernization and renovation” of the textile sector.Adhering to this strategy, the
industry imported $405 million worth of machinery in fiscal year 2001 to 2002 and $370 million in
fiscal year 2000 to 2001. So far, investments of 23.03 billion rupees in spinning, 5.27 billion
rupees in weaving, 4.41 billion rupees in polyester fiber manufacturing, and 3.37 billion rupees in
knitting have been made.With well-laid-out plans and a determination to succeed, Pakistan no doubt
will soon join the stage as a significant textile supplier.

IGATEX 2005: New Format To Serve Different Textile Sectors
This year’s IGATEX
Pakistan is trying something new. Responding to growing market demands, organizers of the annual
event have split the show into two: the textile machinery exhibition will take place April 13-16,
while the garment and leather machinery, accessories and fabrics exhibition will be staged April
25-28. Both will take place at the Karachi Expo Centre. According to Judy Lee, director of the
show, IGATEX has grown substantially in the past several years that a decision was made to separate
the shows according to the segments of the textile industry. Both exhibitions are organized by
Singaporebased Conference & Exhibition Management Services Pte. Ltd. and Pakistan-based Pegasus
Consultancy (Pvt.) Ltd. Moreover, both shows have the support of many industry and government
bodies, including the Pakistan Ministry of Commerce, the Pakistan Export Promotion Bureau, the
Pakistan Readymade Garments Manufacturers & Exporters Association, and the All Pakistan Textile
Mills Association, among others.

Show organizers are projecting IGATEX 2005 will attract 300 exhibitors from 25 countries and
30,000 visitors. This forecast represents a slight drop in size compared to last year’s event,
which hosted 423 exhibitors and more than 50,000 visitors. As with IGATEX 2004,Turkey will again be
the partner country of the show this year, whose country pavilion is expected to occupy more than
800 square meters. Other country pavilions include China and Taiwan. In addition to the
exhibitions, show organizers said exhibiting companies will be hosting technical seminars for show

Karachi-based All Pakistan Textile Mills Association (APTMA) is the
national trade association of the textile industry in Pakistan. APTMA represents 347 textile mills,
of which 275 are spinning plants, 43 are weaving plants and 29 are vertically integrated companies
that handle all textile manufacturing processes from spinning to finishing. The total installed
capacity of APTMA members include 8,012,400 spindles, 63,216 rotors and about 10,000 looms.

March/April 2005