ISLAMABAD (March 27 2007): Pakistan textile sector loses its competitive edge as its regional competitors like China, India and even Bangladesh enjoy more incentives, was the crux of the presentation made by a consultant Udo Hartman Director Gherzi, Textile Organisation of Zurich here Monday.

The presentation further elaborated that improvement in the areas like: high interest rates for spinning, weaving, processing; high trash content in cotton; low labour productivity; and technological obsolescence in open end spinning and a small shuttle-less weaving base to make the industry competitive and take advantage of the real potential Pakistani textile sector.

The Federal Minister for Textile Industry, Mushtaq Ali Cheema presiding the presentation ceremony of 'BENCHMARKING STUDY' of the Textile products' Cost' in Pakistan, said the demand of incentives for the textile industry is under active consideration and after completion of global study, the decision will be made in consultation with all textile stakeholders and concerned government agencies.

Commerce Minister Humayun Akhtar Khan, Secretary Textile Ministry Syed Masood Alam Rizvi, Deputy Chairman Planning Commission, Dr Akram Sheikh, and Commissioner Textile, were also present in the meeting besides textile sector stakeholders.

M/s. Gerzi Textile Organisation was assigned this study by the Ministry of Textile Industry on the request of All Pakistan Textile Mills Association (APTMA). The presentation identified the cost factors vis-à-vis labour wages, cost of power, cost of raw water, cost of steam and cost of raw materials in the regional countries and then worked out cost of production of six different types of cotton yarn, seven different constructions of Grey Fabrics, Terry Towels, bed sheets and denim fabrics.

Explaining various factors, the Swiss consultant highlighted some facts in comparison to regional textile players mainly India, China and Bangladesh besides Turkey, Egypt, Sri Lanka, Vietnam, and Indonesia.

Analysing manufacture of various products like cost of yarn, grey fabric, processed fabric, Terry-fabric etc, Pakistan's competitiveness was comparable to other global players in the sectors. After provision of incentives, Pakistan's textile products witnessed some incremental rise but these (incentives) were on the lower side as compared to its competitors, for which the country lost competitive edge, he added.

The presentation strongly emphasised opening of more trade offices abroad and speeding up efforts in expediting more orders to create better opportunities for the textile exporters by useful feedback of foreign markets to facilitate and promote exports.

The study revealed that though labour in Pakistan is cheaper than India, China, Indonesia, Egypt, the productivity is comparatively low due to skill gap. Cost of labour in Pakistan is 43 cents, India 47cents, China 57cents, Indonesia 52cents, Egypt 60cents, and while in Bangladesh and Vietnam it is 27cents and 29cents respectively.

The study also identified the incentives being given by China, India, Bangladesh and Sri Lanka for attracting new investment as well as to facilitate the Textile Industry competition in the global market.

Talking of China's textile sector, Hartman said its approach is more holistic to create macroeconomic factors, such as under-valued exchange rate which is favourable to exports, low interest rates, and super-efficient infrastructure. The freight cost of China to USA is 50 percent cheaper than Pakistan and India, he added.

Bangladesh, he said enjoys highly competitive wages, which favour mass scale garment production. However, the government gives direct incentives to encourage backward integration in textile. Similarly, the textile sector in Sri Lanka enjoys tax holidays to enhance value-addition and to minimise lead time and two dedicated textile manufacturing zones are created, he maintained.

He talked about the incentives given to textile sector in Pakistan but stressed on the need for more. Textile sector suffers from lower yield of raw material, export performance is disappointing in terms of clothing sector and the unit value realisation is low, he remarked.

It was also stated in the presentation that the processing units of Pakistan ie, dyeing, printing and finishing, which are key units of textile are considered weak by the buyers. The Minister, however, said that the processing sector is not weak but is under utilised. There is need to develop the fabric sector, as due to its short supply the processing units are not fully utilised, he mentioned.

The minister also stressed on the balance chain of textile, which is important to increase production and exports. Therefore, investment in looms ie shuttle-less looms need to be focused, he added.

Copyright Business Recorder, 2007