Textile Ind Of Pakistan

TEXTILE INDUSTRY

A LEADING INDUSTRY

GROUP MEMBERS     

RABI AFTAB AFSHAN NASEEM SYEDA TOOBA SANA TARIQ SHAHEER MALIK

AGENDA  

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ABOUT TEXTILE DEVELOPMENT OF INDUSTRIES IMPORTANCE TEXTILE IN BRIEF MARKET SHARE ECONOMIC PROFILE TEXTILE SECTOR PROFILE

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PRODUCTION TREND MAIN MARKETS IMPORT EXPORTS SWOT ANALYSIS EFFECTS OF WTO PROBLEMS ISSUES CONCERNING UNITS

ABOUT TEXTILE A textile is a cloth, which is either woven by hand or machine.  "Textile" has traditionally meant, "a woven fabric".  The term comes from the Latin word ‘texere’, meaning ‘to weave’. 

HISORICAL BACKGROUND 

At the time of independence Only 6 Textile Units with:  

80,000 spindles 3000 looms,

Supply 8% of the domestic demand  The Government set the objective of promoting Textile Industry first as an import substitution industry and later as an export oriented industry.  Rapid growth during 50’s & 60’s.  With the sudden upsurge textile spinning and composite units started picking up roots 

During the nineties a combination of factors adversely effected the industry, mainly:    



Removal of export duty on raw cotton, increasing domestic prices to international levels and beyond. Infestation of the cotton crop by leaf curl virus, reducing supply sharply and increasing prices. Frequent changes in governments creating inconsistency in policies of the Government and Financial Institutions. Rapid expansion of the installed industry in the hands of new entrants who did not have the managerial skills or the liquidity base to succeed. Rapidly changing global markets, especially the shift towards man made fibers.

IMPORTANCE The textile and clothing industry is the backbone of Pakistan's economy  Single largest determinant of the growth in manufacturing sector  Pakistan is a monocrop economy as cotton contribute 10% in the agriculture GDP  4th largest Producer of Cotton  3rd largest Exporter of raw cotton  A leading Exporter of yarn in the World 

IMPORTANCE (CONT)   

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Cotton is the cash crop of Pakistan. Availability of cheap labor and basic raw cotton The exports of textile and textile products of Pakistan have shown a significant increase in the recent years. Global textile and clothing trade is set at $ 356 Billions in 2000 with textiles trade at $ 157 billions and clothing trade at $ 199 billions (W.T.O report). Pakistan has a strong presence in International Textile Market with share of $.4.53 billions export in textiles and $.2.144 billions exports in clothing (2000).

Textile Vision 2005 

An open, market driven, innovation & dynamic textile sector, which is: Internationally Integrated.  Globally competitive.  Fully equipped to exploit the opportunities created by the Multi Fiber.

ECONOMIC PROFILE Cotton textile is the largest industry of Pakistan.  It is a broad industry and involves spinning yarn production weaving and cloth production.  Completely regulated to allow expansion by the private sector.  Important sector of economy as its product form almost 60% of Pakistan total exports and 18% weight in the country’s large scale industrial production. 

Contribution to total exports

68% (US $ 5.2 billion)

Contribution to manufacturing

46% of total manufacturing

Contribution to value addition

27% of industrial value addition

Contribution to GDP

10.5% of total GDP

Sector Employment

38% of total employment (15 million)

Skilled & Un skilled Ratio

70 : 30

Market Capitalization

12% of total market capitalization

Salaries and Wages

44 billion per annum

Total sector Investment 

 31% of total investment ( Rs.140 billion)

Technology

Medium

Sources of Machinery

Japan, Germany, Switzerland, Belgium, China

Numbers of Units & Capacities ::.

Total Capacities: Spinning 1550 million Kgs Yarn Weaving

4368 million Sq. Mtr. Fabric

Finishing

4000 million Sq. Mtr.

Garments 670 million Pcs. Knitwear

400 million Pcs.

Towels

53 million Kgs.

Number of units: Ginning Spinning Weaving : Large Small Power Looms Finishing : Large Small Garments : Large Small Knitwear Towels

1221 442 124 425 20600 10 625 50 2500 600 400

Sub-Sector

No of Units

Size (Installed Capacity)

Production

1.  Ginning

1221

5,488 Saws

10.314 M Bales

2.  Spinning

456

a)    9.6 million spindles b)    146,640  Rotors

3.  Weaving

50

20,000 – 25,000 Shuttle-less looms

Composite Units

140

225,000 Conventional Looms

Independent Mills

 

 

Power Loom Sector

 

 

4.    Finishing 

1.818  M. Kgs Yarn

 

5,600 M. Sq MT (Approx)

-

2,700 M. Sq. MT

       Organized Sector

106

 Small Scale Sector

625

5.  Garment Units

5,000

450,000 Sewing Machines

650 M Pcs.

6.  Terry Towels

400

7,600 Looms

   55   M. Kgs.

7.  Canvas

100

2,000 Looms

35 M. Kgs.

8.  Knitwear

700

21,000 Knitting Machines

     5.50 M. PCs.

Source: TCO, APTMA, PHMA, PRGMEA

Global Scenario 

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This scenario provides an opportunity to Pakistan to excel in the sector and its share could reach to the level of 4 per cent to 5 per cent. Textile market stands today is worth more than $400 billion and it is still growing every year The share of developing countries in world textile exports improved from 15 to 50 per cent A variety of fabrics are used worldwide in different applications such as apparel, household textiles and furnishings, medical equipment, industrial and technical products

Global Scenario 

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Global textile trade in the world is estimated to be around $300 billion currently and industry experts predict that by 2014 it would reach to $800 billion. Pakistan's share in the current trade volume is 2.7 per cent. India has 4 per cent and China 26 per cent share. Asia's share in the world textile trade would increase from the current level of 54 per cent to about 75 per cent by 2014.

Pakistan’s Textile Industry Opposite Regional Players China

Pakistan • •

Textile exports at USD 10.8bn

•

Perceived as a low quality manufacturer of semi-finished goods

•

Hardly any investment in the downstream over the last 5 years No investment in product development Lack of skill – Finishing processes •

Textile exports at USD 15.2bn

•

Ability to offer full range products in the textile value chain

•

Largest purchaser of textile machinery in the world

•

Skill development for all products in the textile value chain

•

Continuous focus on product development

•

•

Textile exports at USD 144bn

India

•

Runs

Continuous product development adding to the product portfolio of the country •

•

•

Various textile institutes to focus on the entire textile value chain Continuous focus

MAIN MARKETS  USA  EU  MIDDLE

EAST  SAUDI ARABIA  HONK KONG  RUSSIAN REPUBLIC

Country wise measure market share of textile of exporting countries COUNTRIES

MARKET SHARE

CHINA

$55 BILLION

INDIA

$- BILLION

KOREA

$35 BILLION

TAIWAN

$16 BILLION

INDONESIA

$9 BILLION

Percent Share of Leading Cotton Producers

PRODUCTION TREND 

COTTON AREA UNDER CULTIVATION, PRODUCTION AND YIELD

Year Area Production Yield

Hectare

million bales

Kgs/Hec

1999-00

2983

11.24

641

2000-01

2927

10.732

623

2001-02

3116

10.613

579

2002-3(pro)

2796

10.211(9.7)

621

Textile in Brief GDP

10.5 % of total GDP

Exports

68% of total exports

Manufacturing

46 % of total manufacturing

Employment

38 % of total industrial workers

Investment

31 % of total investment

Taxes

Rs. 101 billion per annum

Value Addition (In Aggregate)

27%

Technology

Medium to High

Source of Machinery

Japan, Germany, Switzerland, Belgium, China

Textile Share in Pakistan’s Exports

VALUE IN '000' US$

S.N O

CATEGORIES

19992000

20002001

2001- 2002-03 2003-04 2004-05 2002

A

TEXTILE & GARMENTS

5,858,861

6,115,070

5,996,910

7,457,748

8,252,403

9,030,000

B

OTHER CORE CATEGORIES

1,878,643

2,134,186

2,079,826

2,252,498

2,410,729

3,086,000

C

DEVELOPMENTAL  CATEGORIES

479,642

566,218

615,917

851,597

832,147

867,000

D

ALL OTHERS

351,453

386,121

441,915

598,403

818,006

1,427,000

8,568,599

9,201,595

9,134,568

TOTAL

Source: Export Promotion Bureau

11,160,246 12,313,285 14,410,000

Textile Share in Pakistan’s Exports

VALUE IN '000' US$ S.NO

CATEGORIES

19992000

20002001

20012002

2002-03 2003-04 2004-05

A TEXTILE & GARMENTS

5,858,86 6,115,07 5,996,91 7,457,74 8,252,403 9,030,00 1 0 0 8 0

B OTHER CORE CATEGORIES

1,878,64 2,134,18 2,079,82 2,252,49 2,410,729 3,086,00 3 6 6 8 0

C DEVELOPMENTAL CATEGORIES

479,642 566,218 615,917 851,597 832,147 867,000

D ALL OTHERS

351,453 386,121 441,915 598,403 818,006 1,427,00 0

TOTAL

Source: Export Promotion Bureau

8,568,59 9,201,59 9,134,56 11,160,2 12,313,28 14,410,0 9 5 8 46 5 00

Top Imports into Pakistan 000 US $ S.No.

ITEMS

1

Crude Petroleum

2

1999-2000 2000-2001 2001-2002 2002-03 2003-04 2004-05

805

1,360

1,230

1,366

1,765

2,090

Petroleum Products

1,999

2,000

1,576

1,699

1,402

1,723

3

Road Motor Vehicles

345

320

329

501

653

972

4

Textile Machinery

210

370

406

531

598

902

-2.04%

-3.45%

-3.92%

304

277

336

5

Iron And Steel

-4.34% -3.80% -4.40%

402

512

894

Textile & Garments Machinery Imports into Pakistan Key indicators at a Glance               (000USD)

amt.

Items 2002-2003 2000-2001 2002-2003   TOTAL    12,220,000   10,339,547   10,309,425 Textile Share(%)   

525,000 4.30 %   

406,908 3.94 %  

210,952  2.05 %

GRAPH PRESENTATION

STRENGHTS & OPPORTUNITIES  Pakistan

is the 4th largest producer of Cotton in the

World.  It ranks 2nd in export of yarn & 3rd in export of cloth.  It has Large spinning and weaving capacity  Large, well equipped finishing sector  Availability of cheap labour  Large domestic market.  Good and clear investment policies.

Strengths & Opportunities Strong presence in international market.  Volumes of yarns with synthetic fibres in various blends & counts are increasing.  Production of commodity products at good quality levels  Market Franchise Technical know how Agreements  Joint Venture in Higher Value Added Segments.  Product & market diversification.  Improvement in marketing skills and country’s image. 

WEAKNESSES Outdated technology  Poor quality  Low productivity  High proportion of operations are in small and medium sized companies  Tend to be inefficient and lack the resources to effect an improvement 

Effects of WTO 

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Abolition of textile quota is likely to have a negative impact unless the domestic pricing system is reformed. Quota abolition will create opportunities, but will increase competition in the international markets. Pakistan should focus on increasing productivity The clothing sector will have greater opportunities Only 10% of the local exporters are mentally prepared to meet the WTO challenges (Chairman Export Promotion Bureau (EPB) Tariq Ikram).

Problems WTO and quotas  Sales tax on cotton  DTRE (Duty and Tax Remission for 

Exports)

Lack of Infrastructure  Lack of synergy  Inefficient industry  Trade remedy actions  Cotton 

ISSUES CONCERNING UNITS   

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OUTDATED MACHINERY LACK OF RESEARCH AND DEVELOPMENT. THE TOTAL PRODUCTION OF COTTON DECREASED AFTER 2004- 2005, 14.4 MILLION BALES THE AREA OF COTTON CULTIVATION REMAINS TO 3.25 MILLION HECTARES FOR THE LAST SOME YEARS. THE LACK OF SUPPORT OF THE GOVT OF PAKISTAN INCREASE IN PRICES OF PETROLEUM HAS ESCALATED THE COSTS OF TEXTILE EXPORTS

ISSUES CONCERNING UNITS (Cont.) 

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INDUSTRIALISTS FEAR TO EXPAND DUE TO UNCERTAIN ECONOMICAL SITUATION AND BEEN WAITING FOR A NEW AND BETTER DEVELOPMENT OF POLICIES. ALSO, THERE IS A SERIOUS SHORTAGE OF RAW MATERIAL IN THE LOCAL MARKET FOR FUTURE EXPORT ORDERS. INCREASING TARIFFS OF UTILITIES WILL ALSO GIVE RISE TO TEXTILE GARMENT PRODUCTION COST BY 10%, AS A RESULT THE INERNATIONAL BUYERS WILL TURN TOWARDS OTHER COUNTRIES.

ISSUES CONCERNING UNITS (Cont.) 

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BECAUSE OF THE SUBSEQUENT LOW PROFITABILITY IN COTTON CROPS, FARMERS ARE SHIFTING TO OTHER OTHER CASH CROPS, SUCH AS SUGAR CANE. ANOTHER MAJOR PROBLEM FACED IS THE LACK OF INFRASTRUCTURE. EXPORTERS ARE LOOSING BUYERS IN THE WORLD MARKET FO R NOT MEETING THE EXPORT SHIPMENT TARGETS DUE TO INCREASING COST OF PRODUCTION.

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