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‘Value-addition in textiles can earn extra $15bn’

LAHORE: Textile leaders on Tuesday sought the government policy intervention to transform surplus yarn into apparels, saying which can increase exports by $15 billion. Pakistan exported 750 million kilogram of surplus yarn, 742 million square meter of grey fabric and 1350 square meter of finished fabric last

By Mansoor Ahmad
March 11, 2015
LAHORE: Textile leaders on Tuesday sought the government policy intervention to transform surplus yarn into apparels, saying which can increase exports by $15 billion.
Pakistan exported 750 million kilogram of surplus yarn, 742 million square meter of grey fabric and 1350 square meter of finished fabric last year.
“Yarn, grey fabric and finished fabrics are in fact raw materials used at different stages in the textile value chain,” said Gohar Ejaz group leader All Pakistan Textile Mills Association (APTMA).
“These raw materials naturally fetch low price, whereas garments and knitwear are the actual value creators in textiles.”
He said if all yarn, grey fabric and the finished fabrics exported from Pakistan are converted in to garments, Pakistan could add $15billion in its exports.
“I am calculating this value based on current low cost garments and knitwear we currently export,” he said, adding that the amount could triple if high value garments are included.
However, he said graduating to high value garments would take some time as Pakistan gains expertise in stitching and designing. Achieving an increase of $15 billion should not take more than three years as Pakistan is already the most competitive country in the category of garments and knitwear exported in the international market.
Pakistan exports 37 percent of cotton cloth and cotton yarn, 4.0 percent of made up articles, 6.0 percent of towels and 14 percent of bed wear while only 30 percent of the exports are generated by garments and knitwear.
In comparison, Bangladesh exports 90 percent of its textile exports from clothing, including knitwear and garments and 10 percent from bed wear and towels.
Bangladesh consumes 0.90 million ton of cotton to export $27 billion textiles whereas Pakistan consumes 2.3 million ton of cotton to exports $13.5 billion worth of textiles. This is yet another proof of the export potential of Pakistani textiles, Gohar added.
“We can achieve high textile exports even if we replicate the policies adopted by Bangladesh.”
He said the textile exporters in Bangladesh are guaranteed availability of gas even at the cost of domestic consumers, rebates announced by their government on exports are promptly released and power supply to industries are 24/7.
“We lack this genuine facilitation,” he regretted adding that the textile sector simply demands preference in gas supplies, smooth power supply and prompt refunds as promised by the government to ensure zero rating of textile exports.
S M Tanveer the chairman APTMA said textile sector needs $5.6 billion investment in new technology to double textile exports.
He said the textile sector is ready to invest this amount in balancing, modernizing and establishment of value added garment units.
In order to increase exports by another $15billion APTMA estimates $728 million investment would be required in knitwear, and the same amount in garments.
Tanveer said investments in these two important subsectors of textiles have been nominal in last 15 years. An investment of $1.176 billion is needed in finishing sector of textile to ensure that no grey cloth is exported without finishing.
Spinning needs an investment of $1.73 billion to replace older technology and an investment of $1.23 billion is required in weaving to ensure that all yarn produced is weaved, he said, adding that bank mark up on the equity provided by financial sector is a major hurdle in this regard.
“Though the central bank policy rates have declined to 8.5 percent, they are still much higher than regional economies.”
Consumer inflation in Pakistan ranges from 4.0 percent to 3.2 percent during the last three months which is lower than the average inflation in India during the same period, still the policy rates in India are 1.0 percent lower than 8.5 percent in Pakistan.
Indian government takes 5.0 percent interest on import of new machines and some Indian states gather another 5.0 percent to lure investment, he said adding that previous textile policy promised interest subsidy, which was not provided and the new textile policy has promised the same.