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Coronavirus
VERY HIGH Source: covid.gov.pk
Pakistan Deaths
27,072
6824hr
Pakistan Cases
1,218,749
2,92824hr
5.08% positivity
Sindh
448,658
Punjab
419,423
Balochistan
32,707
Islamabad
103,720
KPK
170,391

Competition is on rise in the global apparel and textile markets and things are going to heat up even more. Countries like Vietnam, Cambodia and Sri Lanka have become the new disruptors and are vying to get a bigger share of the global textile pie. The stakes are even higher for Pakistan especially in light of the China Pak Economic Corridor (CPEC).

Even though most of the textile players are pressed with short-term problems there is also a need to look at the sector’s future trajectory. The Long Term Plan (LTP) under CPEC includes improving industrial co-operation in textiles by developing efficiencies in the textile and apparel value chain and expanding the size of the industry.

According to the recently released report by the Pakistan Business Council on the garments sector, the impact of CPEC is likely to include improved energy supply for the industry, better internal connectivity and logistics as well as new international market linkages as a result.

Another significant factor will be potential synergies with Xinjiang. China has invested close to $3 billion for development of a textile cluster in the province situated next to Pakistan. The proposed plan is to have raw material including cotton and yarn to be imported from Pakistan.

But there’s a big caveat here. At the moment, Pakistan’s cotton crop is dismal to say the least and is unable to go produce more than 10 million bales while even the local industry’s demand is around 17-18 million bales per year. So, there is a slim chance of catering to Xinjiang textile cluster when our own firms are relying on imported cotton. But this can change if proper attention is given by policymakers to improve cotton yields and increase the area under cultivation.

Secondly, there is a crucial need for Pakistan’s textile industry to up its game where balancing modernisation and replacement as well as skill development are concerned and the same is also part of the LTP. As the report points out, Chinese businesses have shown interest in setting up joint ventures with local partners. But again, this will benefit only a handful of local players given that the majority of the firms operating in the garment sector are small and medium enterprises (SMEs) unable to invest at the scale Chinese companies usually operate at.

However, technology and skills transfer is absolutely necessary and for that the presence of high value added textile industry in Pakistan is a prerequisite. The PBC is correct when it emphasises that detailed plans need to be made which take into account the strengths of our domestic industry and facilitate Chinese help in weaker areas especially technology. The role of SEZs and the FTA with China will be discussed in the coming weeks.

Copyright Business Recorder, 2019

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