LAHORE: Pakistan urgently needs to attract foreign investment into its textile sector, following the example of Vietnam and Bangladesh, which secured billions in foreign direct investment (FDI) from China, Japan and South Korea. To remain competitive, Pakistan must focus on synthetic textiles, finishing processes and value-added garment production.
China is relocating its factories abroad due to rising labour costs and US tariffs, while Western brands seek to diversify suppliers beyond China. To capitalise on this shift, Pakistan should establish special economic zones (SEZs) dedicated to textiles, create duty-free import zones for textile raw materials, and offer tax holidays (5-10 years) to foreign investors setting up garment and synthetic fibre plants. Bangladesh’s export processing zones (EPZs) successfully attracted global brands through similar policies. Rather than relying solely on Western markets, Pakistan must actively court Chinese, Korean and Turkish investors.
To attract Chinese textile firms seeking low-cost production bases, Pakistan could offer land and infrastructure incentives. Joint ventures with South Korean firms -- leaders in synthetic fibre production -- could help establish local polyester and technical textile plants. Similarly, Turkish textile firms should be encouraged to collaborate in high-end apparel exports.
Red tape and bureaucratic hurdles in setting up factories must be addressed by implementing efficient one-window solutions for foreign investors, as seen in Vietnam. Both the government and industry stakeholders must actively market Pakistan as a competitive textile hub at global trade expos, while also working to attract major brands to invest in the country’s textile ecosystem.
Strong trade diplomacy is essential to securing better market access in the US and EU. Vietnam and Bangladesh have successfully negotiated favourable trade deals that lower tariffs on their textile exports. In contrast, Pakistan faces higher duties on textile exports to the US, making its products less competitive. Bangladesh continues to enjoy duty-free access to the EU and UK under its Least Developed Country (LDC) status, while Vietnam’s free trade agreements (FTAs) with the EU and its participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) have given its textile exports a significant price advantage.
Pakistan must negotiate a free trade agreement (FTA) with the U.S., addressing concerns over weak Intellectual Property Rights (IPR) to improve its chances. Vietnam’s FTA with the US helped its garment sector expand rapidly -- Pakistan should push for similar tariff reductions in the US market.
The Generalised Scheme of Preferences Plus (GSP+) agreement, which grants Pakistan duty-free access to the EU, is set to expire in 2027. To secure its renewal, Pakistan must demonstrate commitment to labour rights, environmental standards, and human rights. Additionally, it should lobby for expanded duty-free access to include synthetic textiles and high-value garments.
Pakistan’s strategic location offers an opportunity to negotiate better trade terms by positioning itself as a trade bridge between China, the Middle East, and Europe. Collaboration with China’s Belt and Road Initiative (BRI) could help develop export corridors for faster shipments. Simultaneously, Pakistan should explore preferential trade agreements (PTAs) with the UK, Canada and ASEAN nations to diversify export markets.
The textile industry in Pakistan remains overly reliant on low-value raw materials such as cotton yarn and fabric, rather than focusing on finished apparel. High energy costs and outdated infrastructure further drive up production expenses. To strengthen the sector, Pakistan must develop a robust synthetic fibre industry. Currently, 80 per cent of its garment exports are cotton-based, whereas global demand is shifting towards polyester and synthetic blends. Joint ventures with South Korean and Chinese firms could support the establishment of local polyester fibre production plants.
Our country must provide stable and competitively priced energy to textile manufacturers. Vietnam and Bangladesh offer subsidised electricity and gas to textile units -- Pakistan should do the same while also encouraging mills to transition to renewable energy sources such as solar and wind for long-term cost savings.
Vietnam’s well-developed shipping infrastructure gives it a major competitive advantage. To enhance export efficiency, Pakistan must develop dedicated textile export terminals at Karachi and Gwadar, streamline customs clearance, and digitise export documentation. If we implements these bold reforms, we can compete effectively with Vietnam, Bangladesh and India in the global textile market.