Impact of Textile Industry

on Pakistan Economy
Syed Abdul Sattar Shah
Assistant Professor-IBA-University of Sindh Jamshoro
Dr.Anwar Ali Shah G.Syed
Pro-Vice Chancellor-MBBS-Dadu-University of Sindh-Jamshoro
Faiz M.Shaikh (faizanmy2000@hotmail.com)
Assistant Professor SZABAC-Dokri-Larkana –Sindh

Abstract
This research investigates the Impact of Textile Industry in Pakistan’s
economy. Data were collected 100 textile mills, in the form of unstructured
questionnaire from the textile industry of Pakistan. The main respondents of
the questionnaire were senior to middle level management located in Karachi,
Hyderabad, Kotri, Nooriabad, Faisalabad and Lahore the for the purpose
of this study yellow pages were used for identification and address of the
respondents and web site of APTMA. From the 100 e-mail addresses, 10 were
bounced and returned as either address unknown or not active anymore. Out
of the remaining 90 respondents 48 agreed for the qualitative interviews in
which respondents were met face to face in textile mills located in different
cities of Pakistan. Response rate was 90% during this survey. It was revealed
that textile industry has contributed.
Key words: Pakistan, textile industry

Introduction

Pakistan’s economy depends upon it’s various sectors out of which

textile is the most important sector because it contributes about 65 percent of our
national exports, 46 percent of Industrial production, 38 percent of employed
Industrial work force and 9 percent of Gross National Product (GNP), (Liaquat &
Hassan, 2005). This sector has now gone through transition, moved from Multi-
Fiber Agreement (MFA) to the quota free regime governed by WTO, effective
from 2005. There are tremendous opportunities for countries that have prepared
themselves for this eventuality. The move to free trade means that only those
countries that have comparative advantage in textile will be significant players
in international textile market. In Pakistan, substantial investment has been
made in this sector over the last few years to capture these opportunities. Textile

Revista Română de Statistică - Supliment nr. 3 / 2014 43

manufacturers and exporters of Pakistan should be geared up to face challenges
of quota free environment, (MTDF Medium term development Framework
2005–10). Therefore it was found necessary to eliminate the weaknesses and
highlight the ways to improve the performance of our textile industry to compete
in the international market. In this connection this research is aimed at finding
the effects of trade liberalization on textile industry of Pakistan.

The Textile Industry of Pakistan

The Textile Industry of Pakistan is the major player in the development

of Pakistan’s economy. It is considered to be one of the world’s leading cotton
producers. Till 1997, Pakistan was the world’s largest exporter of yarn followed
by India. Pakistan was the second largest exporter of textile made-ups, with
Pakistan’s bed wear exports having acquired a 6 per cent share in the global
trade of textile made-ups in 1999 (Kazmi, 2003). Globally, the bed wear and
linens sub sectors were the second largest in terms of production and exports,
with 28 per cent share of the total textile made-ups market in 1999 (SMEDA,
2002). Pakistan was the second largest exporter, after China, of bed wear and
linen with a 20.89 per cent share of this sub sector in 1999, up from 13.65 per
cent in 1995 (Fatima M., Ahmed E., 2006).
In 1999-00 there were about 443 textile units, 8,477,000 spindles,
149,780 rotors and 9944 looms. In 2003-04 the number of units increased to
about 456, Spindles to 9,590,000 rotors to 146,640 and looms to 10,646. In
2005-06 again an increase in textile units 461, spindles 10,437,000, rotors
155,104 and looms 8747. Furthermore, in 2006-07 there were 567 units,
1198000 spindles, 11,809,000 rotors and 9000 looms (Mirza R. B., 2009).
Furthermore, the table 2.1 below describes the contribution of textile industry
in Pakistan’s economy.

Contribution of Textile Industry in Pakistan Economy1

Figure 1
60% 54%
50% 46%
38%
40%
SHA R E IN M A N U FA C T U R IN
EX POR T EA R N IN GS
30%
GD P
EM PLOY M EN T
20%
8.50%
10%

0% 1

1. www.aptma.com.pk

44 Romanian Statistical Review - Supplement nr. 3 / 2014

 Textile industry of Pakistan is comprised of Ginning, Spinning,
Weaving, Knitting, Printing, Processing, Dyeing, Hosiery, Made-ups and
Garments. There are also some fully integrated composite units which are
the combination of all the process and production under one roof. In Pakistan
these sectors are mainly situated in Karachi, Lahore, Faisalabad, Hyderabad,
Kotri and Nooriabad. For conducting research the above sectors were lumped
together into four major sectors for compiling the qualitative data sectors
shown in the textile value chain diagram. The selected sectors were; spinning,
weaving (including knitting), dying and printing (including Processing and
Bleaching) and Garments.

Ginning
Textile chain begins from Ginning. It adds value to textile by separating
cotton from seed and impurities. There are 1221 Ginning factories in Pakistan
of which 1075 are in the Punjab and the remaining 146 are in Sindh. The
total capacity is approximately 20 million bales per year (assuming a 100
day ginning season). Against capacity, the total production of ginned cotton
is 10.0 million bales suggesting an excess capacity of ginning in the country.
Ginning is the sector which is first in the process of value addition leading
to readymade garments or other textile products. Unfortunately, the ginning
sector is out-dated and needs modernization.

Spinning
Spinning is the foundation process and all the subsequent value
additions i.e. Weaving, Knitting, Processing, Garments and Made ups, depend
upon it. Any variation in quality of spinning product directly affects the entire
textile value chain. This sector of Pakistan is old and many of the units are as
old as the time of partition. It is considered to be the most important segment
in the hierarchy of textile production. The major concentration of industry is
in Karachi, Hyderabad, Multan, Lahore and Faisalabad.

Weaving
Weaving is the textile art in which two distinct sets of yarns or threads,
called the wrap and the filling or weft (older woof), are interlaced with each
other to form a fabric or cloth. The warp threads run lengthways of the piece
of cloth, and the weft runs across from side to side. Weaving can be easier
and harder. Easier weaving means to make cloth and other objects. Threads
or strands of material are passed under and over each other. Harder weaving
is the process of making cloth, rugs, blankets, and other products by crossing
two sets of threads over and under each other.

Revista Română de Statistică - Supliment nr. 3 / 2014 45

 Today weaving ranks as a major industry in many countries. Weaving
is often completed on high speed looms. But weaving is not limited to cloth
and textile products. Weaving plays an important part in the manufacture of
screens, metal fences, and rubber tire cord. Craft workers also use varied fibers
to weave baskets and hats.
The patterns in the weaving sector is comprised of hosiery, garments,
towels, canvas, and bed wear which are different from those of the spinning
sector. The weaving sector has two different sub sectors; Independent weaving
units and Power loom units. Pakistan weaving sector produces five categories
of woven cloth that are; Greigh, Dyed, Printed, Blended, Bleached. Major
markets for Pakistani fabric are USA, EU, Hong Kong, China, Dubai and
Turkey.

Processing
The processing sector in the textile value chain holds an important
position as far as value addition is concerned. It has won world-wide recognition
for producing cool and colorful lawns, which cater for the fashion needs of the
people, both at home and abroad. Other fashion fabrics are silk, linen and
man-made materials, which are generally blended with cotton. Garments and
made-ups comprising the downstream industry rely heavily on the processing
sector for the provision of value added fabrics and materials. More than 650
units are in operations majority of which operate at a small and medium sized
scale. These units carry out processes including:
Bleaching of Fabric
Dyeing and finishing of fabric
Printing and finishing of fabric1

Garments
The garment industry of Pakistan was started in 70’s. With the passage
of time and industrialization, this industry expanded very rapidly. Majority of
units making cotton fashion garments are medium and small-size in terms of
machines, workers and output, with a few notable exceptions and scattered
throughout Pakistan2.
Garment industry has emerged as one of the important small scale
industries in Pakistan. Its products have large demand both at home and
abroad. The local requirements of readymade garments are almost wholly
1. Malik A. S., “Impact of Environmental Regulations on the Textile Sector of Pakistan”, Coun-
try Paper Prepared for Expert Meeting on Environmental Requirements and International Trade
October 2-4, 2002, Geneva.
2. “Garments and Made-Ups (Textile)”, A Report by Small and Medium Enterprise Develop-
ment Authority SMEDA, Government of Pakistan.

46 Romanian Statistical Review - Supplement nr. 3 / 2014

met by this industry. Its exports in 1999-2000 stood at US $ 772 million
or 8.5% of the total exports. Garment industry is also a good source of
providing employment opportunities to a large number of people at a very
low capital investment. It mainly uses locally produced raw materials. Most
of the machines used by this industry are imported or locally made and
assembled1.
All sorts of readymade garments are made from cotton fabric and
synthetic fiber. The production of garments and made-ups in Pakistan is
concentrated mainly in Lahore, Faisalabad, and Karachi. These three clusters
have their own specialties as Faisalabad caters more to Home textile, Lahore
is the home of Knitwear, Karachi lives up to its reputation of being the mini
Pakistan. The bulk of these garments are mainly exported to developed
countries, like U.S.A., Europe, Japan and Australia. However, our country’s
exported readymade garments are inferior in quality in comparison with
garments from India, Korea, Hong Kong, Taiwan, Philippines and Sri-
Lanka2.
Pakistan’s export of ready-made garment and apparel came up 5th
position during 1999-2000. Current position of this industry is not spirited
especially the trade liberalization has directed it to a point where it is extremely
hard to stay alive because of numerous national & international problems3.

World Trade Organization

The World Trade Organization (WTO) deals with the rules of trade
between nations at international level. It is termed as an organization for
liberalizing trade, a forum for governments to negotiate trade agreements and
a place for them to settle trade disputes. It operates a system of trade rules
and is a system that helps the member governments in sorting out their trade
problems4.
The major purpose of WTO is to assist free flow of trade by
removing obstacles. Furthermore, the WTO’s work is dispute settlement.
Trade relations often involve conflicting interests. Agreements,
including those painstakingly negotiated in the WTO system, often need
interpreting. The most harmonious way to settle these differences is
through some neutral procedure based on an agreed legal foundation.

1. “Garments and Made-Ups (Textile)”, A Report by Small and Medium Enterprise Develop-
ment Authority SMEDA, Government of Pakistan.
2. Ibid
3. Ibid
4. www.wto.com.org

Revista Română de Statistică - Supliment nr. 3 / 2014 47

That is the purpose behind the dispute settlement process written into the
WTO agreements1.
The most important and fundamental principle of WTO is non-
discriminatory treatment that is known as Most Favoured Nation Treatment
(MFN). Any advantage, favor, privilege or immunity granted by one WTO
member to another (such as lower customs duty to one) has to be granted
immediately and unconditionally to all other members2. WTO rules oblige
member countries to ensure transparency in their foreign trade regimes by
requiring them to publish all laws, regulations, measures and administrative
decisions affecting trade. The publication of laws has to be done in a manner
that allows importers, exporters, consumers and investors to be aware of them.
Transparency is also ensured by requiring member countries to submit periodic
notification to the WTO secretariat on different aspects of the trade regime.

GATT and the Rounds of Negotiations

The WTO was born out of negotiations, and everything the WTO does
is the result of negotiations. The bulk of the WTO’s current work comes from the
1986–94 negotiations called the Uruguay Round and earlier negotiations under
the General Agreement on Tariffs and Trade (GATT). The WTO began life on 1
January 1995, but its trading system is half a century older. Since 1948, the General
Agreement on Tariffs and Trade (GATT) had provided the rules for the system.
The last and largest GATT round, was the Uruguay Round which lasted from
1986 to 1994 and led to the WTO’s creation as shown in the table 2.2 below.

Rounds of Negotiations3
Table 2
Year Place/ name Subjects covered Countries
1947 Geneva Tariffs 23
1949 Annecy Tariffs 13
1951 Torquay Tariffs 38
1956 Geneva Tariffs 26
Geneva
1960–1961 Tariffs 26
(Dillon Round)
Geneva
1964–1967 Tariffs and anti-dumping measures 62
(Kennedy Round)
Geneva Tariffs, non-tariff measures, “framework”
1973–1979 102
(Tokyo Round) agreements
Tariffs, non-tariff measures, rules, services, in-
Geneva
1986–1994 tellectual property, dispute settlement, textiles, 123
(Uruguay Round)
agriculture, creation of WTO, etc

1 www.wto.org.com
2 Ibid
3 www.wto.org.com

48 Romanian Statistical Review - Supplement nr. 3 / 2014

 The WTO replaced GATT as an international organization, but the
General Agreement still exists as the WTO’s umbrella treaty for trade in
goods, updated as a result of the Uruguay Round negotiations. Trade lawyers
distinguish between GATT 1994, the updated parts of GATT, and GATT 1947,
the original agreement which is still the heart of GATT 1994.

Liberalization and the Integration of International Trade

into WTO
The major principle of WTO is progressive liberalization of trade. This
principle is rooted in the belief that the removal or reduction of trade barriers results
in an expansion of international trade that is to the benefit of all countries. During
90s the Latin American Countries liberalized their economies, which resulted
in a significant increase in their imports, (Ine’s, 2003). According to Roberts &
Thoburn,” Firms have been most successful where technological capabilities
based on the domestic market provided a foundation for export competitiveness.
There are indications that with the restructuring induced by liberalization the textile
sector are in a position more effectively to exploit its competitive strengths in
international markets”. The study by Deny recommends that industries reorganize
production process to increase efficiency, which will allow them to compete
effectively in the new global trading environment, (Lewis & Griffith, 2002).
On 1 January 1995; each party integrated into the GATT products
from the specific list in the Agreement which accounted for not less than 16
per cent of its total volume of imports in 1990. Integration meant that trade in
those products were governed by the general rules of GATT. At the beginning
of Phase 2, on 1 January 1998, products which accounted for not less than 17
per cent of 1990 imports were integrated. On 1 January 2002, products which
accounted for not less than 18 per cent of 1990 imports would be integrated.
All remaining products were integrated at the end of the transition period on 1
January 2005. The integration process can be seen from table 1. At each of the
first three stages, products were chosen from each of the following categories:
tops and yarns, fabrics, made-up textile products, and clothing.

Liberalization and Integration of International Trade in T&C1

Table 3
Stages Year Liberalization (in %)
Stage 1 1st Jan 1995 to 31st Dec 1997 16
Stage 2 1st Jan 1998 to 31st Dec 2001 17
Stage 3 1st Jan 2002 to 31st Dec 2004 18
Stage 4 1st Jan 2005 Full integration in WTO 48

1. www.wto.org.com

Revista Română de Statistică - Supliment nr. 3 / 2014 49

 Trade Liberalization and Textiles
Textiles are among the first manufactured products an industrializing
economy produces. They played a critical role in the early stage of
industrialization in the United Kingdom, parts of North America and Japan,
and more recently in the export-oriented growth of the East Asian economies
(Yang and Zhong, 1998). Hong Kong (China), the Republic of Korea, and
Taiwan (Province of China) relied heavily on T&C products for their exports
from the 1950s to the mid-1980s. As these economies scaled up their industrial
development toward more capital-intensive and high-tech manufacturing
products, Southeast Asian and South Asian developing countries and LDCs
started to join the race1.

Data Collection Methodology

In the first phase of study the qualitative data was collected in the
form of unstructured questionnaire from the textile industry of Pakistan. The
main respondents of the questionnaire were senior to middle level management
located in Karachi, Hyderabad, Kotri, Nooriabad, Faisalabad and Lahore.
The major objective of the interviews was not only to collect the information
to document the different strategic factors, but also to examine the factors
influencing the success of textile industry of Pakistan in the quota free regime.
At the first stage, an e-mail invitation was sent out to the 100 textile
mills, the address was found from yellow pages and web site of APTMA.
From the 100 e-mail addresses, 37 were bounced and returned as either
address unknown or not active anymore. Out of the remaining 63 respondents
48 agreed for the qualitative interviews in which respondents were met face to
face in textile mills located in different cities of Pakistan.

Data Analysis and Discussion

Identified National Issues

High Cost of Production
In Pakistan the cost of production has climbed very high which has
also affected the textile industry. Some of the textile units have been shifted to
other countries like Bangladesh & Sri Lanka to avail the low cost benefit. The
change in the prices of different factors and utilities used in the production is
shown graphically below:

1. Adhikari R & Yamamoto Y, The textile and clothing Industry: Adjusting to the post-quota
world, online available, www.un.org/esa/sustdev/publications/industrial.

50 Romanian Statistical Review - Supplement nr. 3 / 2014

 High wage rates
Labor Wages

6000
5000
4000
Pak Rs 3000
Labor Wages
2000
1000
0
2005 2009
Year

High gas charges

Rate of Gas (2005-09) Source: SSGC

400

300

Pak Rs 200
Rate
100

0
2005 2009
Year

High electricity charges

Rate of Electricity (2005-09) Source: WAPDA

15

10
Pak Rs
Rate
5

0
2005 2009
Year

High oil prices

Rate of Diesel (2005-2009) Source: OGDCL

63
70
60 48
50
40
Pak Rs
30 Rate
20
10
0
2005 2009
Year

Revista Română de Statistică - Supliment nr. 3 / 2014 51

 High interest rate
Change in Interest Rate on Bank loan (Source: SBP)

20%

15%

10% Interest Rate

5%

0%
2005 2009

Industrialists are highly risk averse

Industrialists of Pakistan are unwilling to take the risk of value addition.
As there are several stages in the textile chain and in every stage there are plenty
of problems. So the owners of spinning & weaving units are satisfied from what
ever they get by only exporting yarn and fabric. They find their earnings enough
rather than taking the risks of going through complete textile chain even the
revenues from exporting finished product are four times higher.

Lack of training programs

There must be some training programs to bring awareness in the
landlords & farmers so that they may be able to produce cotton according
to the required international standard and spinning units to produce superior
quality of yarn

R&D facility of 6% has been withdrawn

R&D is the most valuable instrument to provide awareness about the
international brands and we can also introduce new brands that should be
parallel and equivalent to the international brands.

No collective method for solving the industrial problems

There is no one capable enough to come in front and talk for the
industry rights internationally because every one is busy in trying for his
own survival. There are no any united ways of dissolving the textile industry
problems.

Changing name from EPB to TDAP is not the solution

Solutions may not depend on changing the name from EPB. (Export
Promotion Bureau) to TDA (Trade Development Authority), because the
faces are same only the designations have changed. The main story is about
the innovative policies that have been prepared since very long but still
unimplemented.

52 Romanian Statistical Review - Supplement nr. 3 / 2014

 Textile / Garments City project can be a powerful tool
Textile/Garments City project in Karachi has thought out by some
policy makers to be a great move towards the up gradation of textile industry
but when estimated practically it has been found ineffective. This project is
expected to destroy our running business and consequently, will affect the
economy. There is already a limited availability of resources that are not
enough for our existing industry. Therefore, this project is predicted to eat
up all the existing resources that are utilized by current factories. Affecting
the current running industry means decreasing the source of employment and
remaining export earnings that has already declined.

Industrialist shifting business to other countries

The major issue is the current situation of the country, as the
industrialists always have a tension and stress that anything unusual may occur
unexpectedly. Furthermore, due to the economic instability the investors are
unwilling to invest in our country. Therefore most of the investors have shifted
to other countries

Lack of funds
In the current situation of trade liberalization it is very much important
to grow in parallel with the other competing nations, this requires not only
equivalent but even more amounts of funds that are missing in the story of
our textile industry because whenever Government plans for huge amounts
of investment the banks are in short of funds and sometimes due to a change
in political scenario funds were blocked till the new policy from the newly
established Government is announced.

Labors shifting to other countries

There is a high inflation in Pakistan and the wages of labour are very
limited. Furthermore, the skilled labors are disheartened due to the frequent
closure of many textile units in Pakistan. The textile units which are trying
to survive have reduced the number of labors as well as started hiring people
on low wage rates. Therefore, most of the skilled labors have moved to other
countries i.e. Saudi & UAE.

There is a huge paper work which takes a great time

If a factory is willing to export, it has to go through a lengthy
procedure that requires a huge paperwork. It takes a great time to complete
the documentations. Due to such delays the orders are cancelled.

Revista Română de Statistică - Supliment nr. 3 / 2014 53

 Lack of interaction between Industry & Academia
One of the most important problems faced by the textile industry
of Pakistan is the lack of interaction between industry and academia.
Universities are the place where research is conducted on regular basis on the
current on going issues, which is very much helpful to solve problems and
provide innovative polices to bring drastic changes to compete with in current
situations. But unfortunately there is no any linkage between them.

Constraints for the Industry

There are some Government departments that serve as constraints
in the success of textile industry of Pakistan. According to the industrialists
these departments do not only serve as a constraint but rather are evils for
the industry. These departments are; EOBI (Employees Old-age Benefits
Institute), Fire, CDGK (City District Government of Karachi), Civil defense,
Sales tax, Customs, Income tax, EDF (Export Development Fund).

Identified Global Issues

Removal of Quota
Removal of quota is the major issue that has affected the textile
exports. Before the quota free regime each country was assigned a quota that
they were easy to fulfill. Removal of quotas provided an open competition; the
race in which only those were able to win that prepared themselves according
to the rules and regulations of WTO.

Awareness about the trade liberalization

For most of the local industrialists trade liberalization seemed to be
a confused and disastrous era. They were able to cope up with the situation if
they were properly educated in advance.

Worse image of Pakistan internationally

Country’s international image is very important for international
trade. But Pakistan’s international image has worsened resulting in reduction
of export orders. Foreign buyers are unwilling to come to Pakistan. They have
found other potential markets such as Bangladesh, Srilanka, India and China
thus the number of orders for Pakistani textile mills have declined.

Restriction of EU to buy raw material from them

During the post quota era the textile industry used to procure raw
material from china or other countries where it was cheap, but now the EU
has restricted through some quality issues to buy the raw material from him.

54 Romanian Statistical Review - Supplement nr. 3 / 2014

Therefore, we have shifted from Chinese & other underdeveloped countries
raw materials to EU expensive raw materials other wise we are threatened that
our orders will be cancelled. This has again increased the cost of production
(these raw materials were colours & dyes).

Lack of ETP (Effluent Water Treatment Plant)

Internationally the export of processed cloth from a factory without
ETP is not acceptable internationally in the era of trade liberalization. In
Pakistan most of the factories do not have ETP. Those who are using found
it very much expensive and that still it is not equivalent to the international
standards. Only about 2 to 4 per cent of the mills may have the ETP which are
according to the international standards.

Evaluation of factory
In the pre quota era there was no any evaluation of the factory by
the international buyers. Now international organizations come to audit the
factory and charge audit fee that is very high. Initially there was only one
audit but now there are even more e.g.; First audit is “A class” then “B class”
and even then “C class” audit and so on, hence the parameters have increased.
In garment sector “Garment tests” are also conducted. They are conducted in
other countries like Singapore, Thailand etc. An example is a IKEA which is
an all rounder factory of Sweden which conducts these type of audits audits.
It is believed that these are all hurdles for the textile industry.

Delay in delivery
Foreign buyers have become more time conscious. Nowadays due to
a delay in delivery they may cancel the order. Sometimes penalties are also
paid on delay. Sometimes the shipments are sent back because of delay.

Lack of diversification in the direction of trade

Most of the exports from Pakistan are reserved for EU and US, after the
presentation of policies by WTO our exports have declined. The reason is much
better quality products from the competitors. Therefore the textile industry of
Pakistan should change the direction of trade by finding out the other potential
markets rather than depending on the two traditional markets of EU and US.

Only developing country to sign the ILO conventions completely

Pakistan is the only country in the underdeveloped world that has
signed the ILO conventions completely but we are incapable to apply them,
consequently our exports are affected.

Revista Română de Statistică - Supliment nr. 3 / 2014 55

 Millions of dollars spent to destroy Pakistan’s image internationally
The competitors have spent lots of money to destroy Pakistan’s
image in the international markets. It is expected that the reason behind the
terrorism and worse law and order situation of Pakistan is a part of planning of
competitors, so that the foreign buyers may not even think to conduct business
with Pakistan. Plus the international media has also played a negative role to
destroy Pakistan’s image.

Quality Issues
In terms of international standard major issue is faced by our Garments
industry because they are supposed to send every item used in the finished
product i.e. Zip, Button, Thread, and Labels etc. to the International Quality
& Standard verifying companies abroad to confirm that it does not carry any
substance harmful to human skin which is a very expensive process

Labor-intensive production
In the post quota regime exports from Pakistan are also subject to
restrictions due to the highly labour-intensive production.

Increase in the foreign buyers’ check

The removal of quotas has brought plenty of opportunities for the
international buyers. They can purchase from any country. Therefore they
have started checking the product with more efficiency. For example if in the
pre quota era the product having 10 defects was ignorable but now even five
defects aren’t ignorable.
E.g.: There was a full container of bonanza garments it was sent back
in claim. There was no any defect in the garments but because the cloths were
fallen from the sequence.

Imposition of antidumping duties

EU imposed a punitive import duty on Pakistani bed-linen in 2004;
it accused exporters of dumping bed-linen below cost prices at the European
market. This move was believed to be the retaliation of EU to Pakistan for
upgrading its commercial air fleet with US-American Boeings rather than
with European Airbuses. Furthermore, here was an imposition of 13.10 per
cent anti-dumping duty by EU in 2005 and again an imposition of 5.7 per cent
anti-dumping duty in 2007-08. Here the most noticeable thing is that no other
country pays the antidumping duty only Pakistan pays due to lack of political
influence because of weak political system. There is no one available to talk
internationally

56 Romanian Statistical Review - Supplement nr. 3 / 2014

 Preferential treatment to the competitors (GSP)
The European Commission provides preferential treatment of import
duty waver to the countries from which it trades. Pakistan received a benefit
initially due to a special scheme to combat drug production and trafficking that
expired in 2005. Since then Pakistan is paying the duties but the competing
countries like Bangladesh and Sri Lanka are allowed duty free access to the
EU markets. Bangladesh, for example, obtains zero per cent duty access to
the European market due to its least developed country status. Sri Lanka
equally does not pay import duties due to specific incentives for countries
having ratified certain conventions on sustainable development and good
governance.

Competitors are much stronger

There is a huge support to the other countries by their Governments.
In Netherlands textile units are 100% supported by the Government. In
china the sample room of the small factory is bigger than our whole factory.
Bangladesh has 25% price as comparable to us means we are 75% higher than
our competitor. That is why they have penetrated the world market of value-
added textiles, as China fully avails WTO quota free benefits. It has become
the world largest exporter of textiles

Summary

The chapter presents the identified issues that are summarized from
the results of qualitative interviews conducted in the textile industry of
Pakistan. The aim is to discover the troubles faced by the textile industry of
Pakistan after the implementation of WTO. The identified issues are divided
into three categories of internal, general as well as global issues. Furthermore,
the identified internal issues are presented separately for each sector of textile
industry of Pakistan.
The identified internal issues of spinning are; contaminated cotton,
low quality of yarn, international standards, lower returns from selling yarn,
Shifting from cotton to other cash crops, Improper handling methods, unable
to benefit from the competitive advantage. The identified internal issues of
weaving are; weaving is mostly based on wide width, outdated machinery,
non-availability of testing laboratories, lack of value addition, Pak textile
industry as a basis of foreign exchange earning for the Competitors. The
identified internal issues of processing are; inconsistency in color/shades,
antique methods for dying and printing, difficult to produce desired shades
from poor quality of water, foreign buyers have become more conscious,

Revista Română de Statistică - Supliment nr. 3 / 2014 57

expensive tests conducted abroad. The identified Internal Issues of Garments
are; always searched for the demand of cheaper garments, lack of computer
aided designs, lack of international market research for wakefulness about
the global brands, fabrics not suitable for the Production of high value-added
garments, low price from exporting garments, other countries taking benefits
by labeling the made-ups produced from Pakistan, unable to take benefits
of exhibitions, most of the business is established in small shops, flats and
houses, higher chance of defected production, huge investments went into
spinning & weaving only.
The identified national issues are; high cost of production, industrialists
are highly risk averse, lack of training programs, R&D facility of 6% has
been withdrawn, no collective method for solving the industrial problems,
changing name from EPB to TDAP is not the solution, textile / garments city
project can be a powerful tool, industrialist shifting business to other countries
, lack of funds, labors shifting to other countries, there is a huge paper work
which takes a great time, lack of interaction between industry & academia,
constraints for the Industry. Finally, the identified global issues are; removal
of quota, awareness about the trade liberalization, worse image of Pakistan
internationally, restriction of EU to buy raw material from them, lack of ETP,
evaluation of factory, delay in delivery, lack of diversification in the direction
of trade, Only developing country to sign the ILO conventions completely,
millions of dollars spent to destroy Pakistan’s image internationally, quality
issues, labor-intensive production, Increase in the foreign buyers’ check,
Imposition of antidumping duties, preferential treatment to the competitors,
competitors are much stronge.

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