Knitting export losses

LAHORE: The myth that Pakistan is a major global player in textiles and clothing is far from reality. It ranks 10 in basic textile exports and stands nowhere in clothing and apparel exports with China leading both textiles and clothing.

Major textile and clothing players are in Asia. This includes China, India, Vietnam, Bangladesh, Korea and Pakistan. In textiles China leads the world with exports of $118 billion, followed by India $18 billion, Korea $10 billion, Vietnam $8 billion and Pakistan $8 billion.

In textiles and clothing combined, China fetches over $250 billion, Bangladesh $38.73 billion, Vietnam $37.93 billion, India $37.11 billion, while Pakistan’s textile and clothing exports reached $12.5 billion this fiscal.

Like Pakistan, economic development of India is greatly dependent on export earning of the textile industry. Textiles provides direct employment to over 45 million persons in the mill, power-loom and handloom sectors making it the biggest employer in the country after the agricultural sector.

India is the world’s second-largest producer of textiles after China. It is also the world’s third-largest producer of cotton after China and the US. At present, a third of India’s textile production is exported.

This means that 70 percent of the textile production in India is consumed domestically. This explains the robust strength of textiles in India as global slowdown does not impact the producers as severely as in Pakistan or Bangladesh where bulk of the production is exported.

Bangladesh has emerged as a major clothing exporter. Starting with zero exports in 90s, the Bangladeshi textile exports are three times higher than Pakistan.

COVID-19 impacted the country badly. As Bangladesh's garment factories gradually reopen, manufacturers are suffering from weak global demand amid the pandemic.

Big fashion brands are still cancelling orders, adding to the plight of textile workers. In response to the call from Bangladesh Exporters Association President Rubina Haq, the European Union has organised emergency funding to help them, which was a good gesture, but could go only so far in limiting the damage done to the country's textile industry.

Textile and clothing account for more than 80 percent of Bangladesh's overall exports. Along with downsizing the previously placed order, many of the buyers have been asking for discounts up to 20 percent to 50 percent as well. Its textile and apparel, exports have increased at a CAGR of eight percent over last five years from $25 billion in 2012 to $36 billion.

It imports both yarn and fabric in large quantities. Duty free market access with China, makes it the largest supplier of T&A commodities to Bangladesh.

It has a share of about 56 percent in total imports which has grown at a CAGR of eight percent during the last five years. India and Pakistan are next top suppliers and together constitute around 25 percent of Bangladesh’s total T&A import.

T&A import from India has grown at a CAGR of six percent in the last five years. Pakistan’s textile exports to Bangladesh have remained stagnant in these five years, which means that its exporters did not benefit from the expansion in Bangladesh clothing exports.

Vietnam, in recent years has emerged as a major textile player in the world. It competes for second position with Bangladesh. The country has held its ground against the COVID-19 pandemic with its best and comprehensive strategies and implementation.

Vietnam has not reported any deaths from COVID-19. The country’s highly effective containment of the virus proved to be an advantage for its investment environment, helping economic recovery and taking the country in a new position on the global stage.

In 2019, Vietnam reaped roughly $32.60 billion from exporting textiles and garments. It is the favoured venue for relocation of Chinese textile industries. Its manpower is more skilled than India, Bangladesh and Pakistan.

Pakistan’s textile and clothing exports posted a negative growth of over six percent to $12.526 billion in the fiscal year 2019-20, as compared to $13.3 billion in the corresponding period of 2018-19. According to textile millers, Pakistan exports one way or the other 80 percent of textiles and clothing it produces. Because of heavy dependence on exports, its textile industry is severely hurt in any global recession.

The COVID-19 impact however was managed as the orders have started pouring in. Textiles account for 60 percent of our exports; still total textile and clothing exports are 1/3 of compared to Bangladesh or Vietnam.

Pakistanis have inferior textile and clothing skills than the competing economies. It is so because of the outdated technology. The industry is surviving on government subsidies.