Pakistan has fixed an ambitious target of reaching 100 billion exports in the next five years, out of which $50 billion would come from textiles. This is easier said than done, as we still lack the necessary infrastructure and technology in textiles.
However, an Export Advisory Council for the top 12 Textile Exporters from all sectors has been formed to achieve this target. The Textile Export Advisory Council consists of some of Pakistan’s biggest exporters. These include Musadaq Zulqarnain, Fawad Anwar, Shahid Soorty, Mian Ahsan, Yaqoob Ahmed, Amir Fayyaz Sheikh, Shahid Abdullah, Ahmed Kamal, and Ashraf Salim Mukaty.
The second Export Advisory Council for Non-Textile sectors, with 12 Sector Chairmen, concluded that the Road to Export Growth passes through China. This cannot be expected in the textile sector, where China is the primary and strongest competitor of all leading textile economies. In fact, China has been subdued in some textile sectors not because of quality or price but due to sanctions imposed on its textiles from the United States and the European Union.
A 20-member delegation representing all sectors of the export industry is currently in China, marking the beginning of our journey toward export-led growth.
In addition to the members of the two Export Advisory Councils, a third group has also accompanied the delegation, including the CEOs of the top industrial groups in Pakistan. These include Fawad Ahmed Mukhtar, Muhammad All Tabba, Waqar Ahmed Malik, Abdul Samad Dawood, Raza Mansha, Shahzad Asghar Ali, Samir Chinoy, Amir Fayyaz Sheikh, Shahbaz Yaseen Malik, Ahsan Bashir, Syed Hyder Ali and Farooq Naseem.
One does not doubt the sincerity of the Commerce Minister Gohar Ejaz. But ground realities belie his ambition. He is a dreamer but not a visionary, as to achieve an ambitious target, one must remove all hurdles before making tall claims.
After two meetings, the advisory body on textile exports has placed recommendations that have not been made public. Sources say the textile stakeholders were concerned about high power rates, and the members from Sindh protested the enhancement of gas tariff for Sindh and reduction in Punjab after the principle of tariff rationalization was applied to gas on the same pattern as in electricity. Ever since the induction of the caretaker government, the gas and power tariffs have been raised to record levels. The government bound under the IMF program is not able to provide any relief in this regard. The IMF has already banned any subsidies to exporters. So, this impediment would continue to haunt the primary textile sector for at least two years. The textile advisory council includes more significant representation in the advisory council to press their concern.
The other concern that textile exports voice is that of high-interest rates. This, in fact, is the concern of all exporters. But the ground reality is that the interest rates are still much lower than the runaway inflation in the country that today hovers over 42 percent against the central bank’s policy rate of 22 percent. In fact, the central bank is resisting further increases in interest rates in the interest of growth.
The massive rupee devaluation has not particularly helped the textile sector. However, the advisory council members realize that this was due mainly to the crash of our cotton crop last year, which forced the industry to rush for imports when cotton prices globally were very high. By the time cotton stocks reached Pakistan, the prices crashed. Our exporters had to produce textile products from high-cost raw materials. This year, the cotton crop is much better, and the global cotton rates are also lower. This will give the spinners some relief. The rupee decline will always benefit exports if we do not have to import the primary raw material of textiles.
Regarding the $50 billion export target for textiles, the ground realities do not align with the target. Whatever textile we produce in the country, 70 percent is exported as value-added products, and 30 percent is exported as low-valued yarn, fabric, or bed sheets. Even if we convert the remaining 30 percent to apparel, we will add another $4 billion to our textile exports, which might shoot up to $20 billion. (It has now been established that the $19 billion textile exports we achieved a few years back were due to abnormally high global cotton rates, and we mostly consumed our domestic cotton that year).
Once we reach $20 billion in textile exports we would be left with no cotton. We are far behind in blended textiles (cotton blended with man-made fiber or polyester). We will have to develop a market for blended textiles that accounts for 70 percent of the global textile market. This transformation would not come overnight. We have to start planning immediately. Marketing new textile products would need as much hard work as in their production. Our current primary textile machines are far behind in technology, energy consumption, and speed compared with current technology in vogue in competitive economies. In the last ten years, we have hardly invested $5 billion in textile machinery, while countries like Bangladesh and Vietnam invest at least $3 billion annually.
Pakistan is not in technical textiles that have enchanted textile players in India, Bangladesh, and Vietnam. We export low-value-added apparel, while Bangladesh and Vietnam have graduated to high-value garment exports. Bangladesh has hardly touched $50 billion in textile exports, and Vietnam could not exceed $44 billion. India, the largest textile economy after China, hovers at $40 billion. All these countries are investing heavily in textiles against nominal investment in Pakistan. It would be a dream to expect Pakistan’s government to provide investment finances. But at least it could set up industrial parks like those established by the Indian government and its states.
