Despite the growth in exports this year, Pakistan’s textile industry still has some constraints on exports that affect Pakistan’s textile exports, such as low foreign investment, rising energy shortage costs, low added value of exported textiles, and the government’s monetary tightening policy. The impact restricts Pakistan’s textile and apparel exports.
Pakistan is the fourth largest cotton producer in the world. Its spinning capacity accounts for 5% of the world’s total capacity and it is the third largest textile industrial country in Asia. Pakistan’s textile industry is the largest industry in the country, accounting for 46% of the manufacturing industry. Employees in the manufacturing industry account for 40% of the total employment rate, accounting for 30% of the entire employment rate, and its contribution to the gross national product is 8.5%. .
Pakistan’s textile industry also plays a pivotal role in foreign trade, with exports accounting for about 60% of total exports. Its cotton, semi-finished textile yarn and cotton cloth occupy a certain share in the world’s textile trade. In 2005, Pakistan’s textile exports ranked eighth in Asia. Since December last year, the EU has implemented preferential foreign trade measures for 75 items of Pakistani goods, which has facilitated the export of Pakistani textile and apparel products. Data released by the Pakistan Bureau of Statistics shows that in the first 10 months of the 2012-2013 fiscal year (July 2012-April 2013), Pakistan’s textile and apparel exports totaled US$10.749 billion, an increase of 6.1% from US$10.127 billion in the same period last year. Value-added products such as knitwear, mattress products, towels, and finished clothing products have become the main commodities driving the textile and clothing industry, while the export volume of some raw material products such as cotton yarn, spinning thread, and silk has continued to decline.
However, there are still some constraints affecting the export of Pakistani textiles in the Pakistani textile industry:
In the past 20 years, the Pakistani government has rarely invested heavily in infrastructure, resulting in backward infrastructure. Coupled with the bad reputation of a “high-risk” country in terms of security, international textile companies rarely invest in Pakistan, and most investment flows into China, India and other countries. Although Pakistan’s economy has grown in recent years, its absolute volume is very small compared to other countries, and its economic operation is not stable and implies certain variables. Over the years, macroeconomic instability, high debt ratios, inflation, high investment and operating costs, a poor investment environment, and backward infrastructure have all contributed. The labor skills of hired workers are low, labor productivity is low, and external competitiveness is reduced, which has a certain negative impact on the textile industry.
Pakistan is relatively short of energy, electricity and water resources. Pakistan’s over-reliance on imported energy has made Pakistan’s textile industry unable to make ends meet in terms of electricity expenditure. Pakistan has a serious shortage of electricity, the cost of electricity is high, and power outages are common. A considerable number of textile companies use gas or oil to generate electricity, which greatly increases the cost burden. In addition, Pakistan’s industrial base is relatively weak, and many goods rely on imports. These weak industries are precisely what the Pakistani government wants to protect. Import tariffs and explicit or implicit surcharges and fees are relatively high, and importers and wholesalers extract profits. If it is too high, the selling price of imported goods in the market will naturally be very high. These factors directly lead to the increase in the cost of Pakistani textiles.
Pakistan’s current textile exports are mainly primary textile products such as cotton, spinning yarn, cotton cloth, bedding fabrics, towels, low-end garments, etc. The added value and product price are not high, and they are easily affected by fluctuations in the international market. . In recent years, there has been an obvious trend in the world’s textile and clothing trade, which is to shift to high value-added clothing trade. Pakistan has not been able to keep up with this development in time. In the past few years, Pakistan has invested about US$5 billion in the textile industry, mostly in primary products such as spinning and weaving: spinning 47%, knitting 27%, processing 11%, accessories 8%, synthetic chemical fibers 5%, and weaving and clothing 5%. Among Pakistan’s 10.1 billion textile exports in fiscal year 2005-06, cotton yarn and cotton cloth accounted for nearly 1/3, and these products were sold to its competitors.
Due to the continued high inflation (the average for the fiscal year is more than 8%) and the government’s monetary tightening policy, Pakistan’s lending interest rates have also risen, and the average interest spread maintained by the banking sector has exceeded 7.5%. 4-5 years ago, Pakistan’s loan interest rate was 3%, but in just a few years it has risen to 9-12%, which has increased the cost of Pakistan’s textile industry by 15% compared with China, India and Bangladesh. According to Pakistan Textile The association’s latest scenario shows that the textile industry’s borrowing costs increased by 83% in the 2005-06 fiscal year, while interest rates fell by 29%. Loans to the textile industry fell by 28% in fiscal year 2005-06. In the first quarter of this fiscal year (July-September 2006), textile industry borrowing almost experienced negative growth compared with the same period last year.
