Economic survey: Textile exporters need govt’s financial aid

* Country’s textile products are of poor quality

* Labourers are less productive

Staff Report

KARACHI: Pakistan’s textile exports suffer from serious structural problems, which need to be addressed
by textile manufacturers with the government’s help through facilitation and temporary financial support,
revealed the Economic Survey of Pakistan released on Friday.

It pointed out that country’s textile products are of poor quality, and therefore fetch low international
prices. The machines installed in recent years are old relative to Pakistan’s competitors. Therefore, these
machines use more power, are less productive and carry higher maintenance cost.

The survey said Pakistan’s labourers are less productive because little or no efforts have been made to
impart training or improving their skills. Citing reasons for struggling textile exports in the international
market, it stated: “Pakistan’s exporters spend little money on research and development and export
houses lack the capacity to meet bulk orders. They are also unable to meet the requirements of
consumers in terms of fashion and design.”

It is generally argued that Pakistan’s exporters are uncompetitive in terms of adherence to contracted
quality and delivery schedule, whereas their competitors are investing heavily and creating better
economies of scale. According to the economic survey, Pakistan’s exports this year have experienced a
decline of a $563 million because of a slump in their unit values.

“Although Pakistan’s exports in terms of quantity present a mixed picture, the general decline in their
prices in the international market has deprived Pakistan of $563 million,” it said.

Listing various other issues regarding the declining exports, the survey stated that the less than
satisfactory export performance of textile manufacturers could be attributed to a variety of factors. Firstly,
it appears that Pakistan’s textile exporters were unable to compete with China, India and Bangladesh in
the international market. Secondly, the discriminating dumping duty of 5.8 percent on the bed linen
export has also affected Pakistan’s competitiveness.

Thirdly, the poor quality of cotton on account of contaminated cotton issue has also adversely affected the
exports of the spinning industry. Fourthly, the rise in prima cotton price - a genetically modified version
which is imported from the USA and a critical input for producing higher quality bed wear and fabrics - has
made it difficult for Pakistani exporters to use it in their products.

Pakistan’s exports are based on a few items namely: cotton, leather, rice, synthetic textiles and sports
goods. These five categories of exports account for 77.2 percent of the total exports.

During the first nine months of 2006-07, the cotton manufacturers alone contributed 61.5 percent,
followed by leather (4.5 percent), rice (6.6 percent), synthetic textiles (3 percent) and sports goods (1.6
percent). The degree of concentration has changed little from the last fiscal year. Further breakup reveals
that almost all export earnings have originated from textile manufacturers.

Though Pakistan trades with a large number of countries, its exports are however highly concentrated in a
few countries including the USA, Germany, Japan, the UK, Hong Kong, Dubai and Saudi Arabia, which
account for one-half of its exports. The United States is the single largest export market for Pakistan,
accounting for 28.4 percent of its exports followed by the UK and Germany. Japan is fast diminishing as
an export market for Pakistan as its share in total exports has been on the decline, reaching less than one
percent from 5.7 percent a decade back.

Pakistan needs to diversify its exports not only in terms of commodities but also in terms of markets.
“Heavy concentration of exports in few commodities and few markets can lead to export instability,” the
survey added.