textile sectopr performance pep final presentaion

7/28/2019 Textile Sectopr Performance PEP Final Presentaion

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Pakistan Economic Policy

Performance of Textile Sector in Pakistan

Presented By: Bilal Jawaid



Textile Industry is one of the prime and mature industries in Pakistan. It ranks

amongst the top textile industries in the world.

Cotton is the basic raw material for textile industry and Pakistan is the 4th

largest producer and 3rd largest consumer of cotton in the world.

About 10 percent of the world cotton crop is produced in Pakistan

The textile industry currently accounts for more than 60% of Pakistan's exports.

In Asia, Pakistan is the 8th largest exporter of textiles products

It employs 38% of manufacturing labour.

Textile contributes 46% of the total output produced, and

Textile contributes 8.5% to the GDP




Increase in the cotton production and expansion of textile industry has been

impressive in Pakistan since 1947.

Cotton bales increase from 1.1 million bales to 10 million bales by 2000.

Number of mills increased from 2 to 600

Spindles from about 177,000 to 805 million

In the 1950s and 1960s textile industry of Pakistan witnessed tremendous

growth, when a number of textile Spinning and Composite Units were

established.

Till 1997, Pakistan was the world’s largest exporter of yarn followed by India.

However, in 1998, India gained the NO 1 position, leaving Pakistan at NO 2.




In the case of cotton cloth production, a number of Asian countries have been

emerging in the international market to compete with Pakistan. These countries are

Bangladesh, India, Taiwan, Indonesia, Thailand, Turkey, Sri Lanka and Iran.

During 1973-1992, 71 spinning units with 1,136, 835 spindles, 6,600 rotors and 7,329looms were closed down. Pakistan’s govt then hired a foreign consultant form to look

into the matters, their finding was

Pakistan has failed to make real progress in the international market and is taken over by

the neighbouring competitor countries, so they recommended that

It is vital that companies play very positive role in the markets, which each one having its

own marketing activity, whose job is to understand the need of the customers and the ever

changing competitive dynamics of the markets.




Pakistan has a very low share of the international textile market and due

to the economic slowdown in US and Europe, Pakistan’s textiles exports

are also declining as they are mostly dependent on these two markets.

China tops the US market with a share of 36% followed by Bangladesh 21%,

Morocco 19%, India 18%, and Pakistan 13%.

In the European market, China tops again with a share of 29%, Vietnam 28%,

India 19% and Pakistan only 1.5%

Pakistan textile exports declined by 10.38% (from $13.788 billion to

$12.356 billion) during the fiscal year 2011-2012 as compared to 2010-2011.




industrial sector of the country is facing worst kind of power load shedding

(gas and electricity) from last few years, which is resulting in reduction in

exports.

Prices of Pakistan-made textile commodities had decreased in international

market, which is also one of the reasons for reduction in exports.

Farmers are shifting from cotton crops to other crops because they claim

That govt is discouraging local exporters through policy measures against selling

the crop in the foreign market.

That govt is not taking corrective actions to stabilise domestic prices

That govt is not announcing support prices for cotton crops




Farmers also claim that APTMA tries to keep crop prices as low as

possible so that the cost of production for textile companies stays low.

This low price causes a loss to farmers of cotton and hence they are willing

to shift to other crops. This will ultimately cause a decline in textile exports.

The industry is bracing for more trouble ahead with continuing crises of

electricity and gas, international market access, global economic

slowdown etc.




Strengths

Raw material base: Pakistan has high self sufficiency in raw material and

is the fourth largest producer of cotton.

Labour: Labour in Pakistan is available in abundance and that too at a

cheap price, so this means low cost of production.

Rich Heritage: Due to cultural diversity and rich heritage, designers

come up with new different and attractive designs which are appreciated

worldwide.

Domestic Market: Shift of population from rural to urban areas, increase

in income level and growth of population increases domestic demand.




Weaknesses:

Research & Developments: no efforts are being made by the APTMA

in the R&D of the textile industry to enhance the quality of products,

upgrade the technology used, and encourage effective methods of

production in order to compete internationally.

Dependence on Cotton: Textile sector heavily depends on cotton

and a low cultivation of cotton will destroy textile industry.

Labour Productivity: Though labour is available in abundance and at

a cheap price but their productivity is very low. (Work which is

completed in 33 minutes in USA, takes 75 minutes in Pakistan).




Weaknesses:

Poor Infrastructure: supply of water, electricity, gas, transportation etc

Poor Quality Standards: other than multinationals or big companies,

most of the medium and small sized units cannot ensure the reliable and

consistent quality standards.

Unstable Political Situation: Political unrest, strikes and terrorism have

critically affected the economy of Pakistan.

System Orientation and Supply Chain: We are disorganized,

disconnected and distorted. Time management is very much important

aspect in the business but we lack this aspect.




Opportunities:

Marketing: If investment is made in training sales force and in marketing

textile products, market share can be captured from other smaller

competitors.

Collaboration with Foreign Companies: By doing so, latest technologies

can be used, which will not only reduce cost of production, but also

improve product quality and will comply with international standards.

Re-engineering of Production System: Improve production system to

manufacture flawless products, it may be a costly but a very fruitful and

necessary measure to stay competitive in the long run.




Opportunities:

Add Value to Product: It is better to export yarn than cotton, to

export readymade garments than to export only fabrics and so on.

Image Building of Pakistan to attract FDI: If govt succeeds in

building a secure environment , this will increase FDI in Pakistan.

Cost of Business: Rising inflation also increase the cost of

production. Unnecessary costs must be controlled if Pakistani Textile

industry is to survive in the middle of the two giants of the textile

sector in the world. (India and China, where labour and raw material is

available at a much lower cost than Pakistan.)




Threats:

New Competitors: New competitors such as Bangladesh, Vietnam and

Turkey are a threat to our textile industry. Though competition cant be

avoided but we shall try to ahead of them by reforming our strategies

Phasing out of Quota System: WTO imposed quota system on exports of

textile products, which is now ruled out, so the Chinese and Indian

manufacturers may gain most of the market share.

Fashion Life Cycle: Fashion changes quickly nowadays, so buyer wants quick

deliveries of their product, even at higher cost. So if our exports take longer

time, people will not prefer buying from us.



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