BY:
Ijlal Mansoor
Relevant Questions to Case Studies
• Define the concept of Revealed Comparative Advantage (RCA). How is it
measured, and why is it important in analyzing a country’s export
performance?
• Compare the revealed comparative advantage of Pakistan, India, and
Bangladesh in the textile sector. What factors contribute to Pakistan’s
comparative advantage in textiles, and how has it changed over time?
• Explain the potential reasons for the decline in Pakistan's textile export
share, despite maintaining a strong RCA in textiles. How have energy crises
and governance issues affected this?
• What is the significance of dynamic RCA analysis in understanding the
competitiveness of Pakistan’s textile and clothing industries over time?
What trends can be observed from 1980 to 2010?
• Discuss the challenges that SMEs in Pakistan face in implementing TQM.
How do these challenges differ from those faced by large enterprises?
• Analyze the role of continuous improvement and employee involvement in
the success of TQM in the textile sector. Why is team development
emphasized in TQM practices?
Export Contribution
60% of country’s total export i.e 12.81 Bln US$
GDP Contribution
8.5%
Employment Contribution
38% of Workforce i.e 15 Mln
Rank in World Textile Exporters
8th largest exporter
Rank In Cotton Consumption
4th Largest Consumer
Rank in Cotton Production
3rd largest Producer
Production Capacity
670Mln units of Garments, 400Mln units of
Knitwear and 53 Mln kgs of Towels
Cotton Production
(2013-2014)
9.2 Mln Bales*
Cotton Consumption
(2013-2014)
11.88 Mln Bales*
Source: http://www.agrochart.com/en/news/news/030414/pakistancotton-and-products-annual-mar-2014/
INDUSTRY OVERVIEW
• Supply
• Due to increase in raw material prices,
economic conditions and energy shortages the
industry is currently working below its
capacity.
• Instability in raw material prices leads to
fluctuation in selling prices which in turn
affects the industry.
• Key Players
•
•
•
•
Nishat mills limited,
Younus textile mills limited,
Gul Ahmed textiles mills limited
Kohinoor mills limited.
• Trade Body
All Pakistan Textile Mills Association (APTMA)
• Regulatory Body
Ministry of Textile, Ministry Of Commerce and Trade
Global Overview
• The expiry of the ATC on January 1, 2005,
eliminated all textile and apparel quotas for
members of the World Trade Organization (WTO).
• Global cotton consumption for 2012/13 is
projected at 110 million bales
• World consumption led by China, India, and
Pakistan, accounting for a combined two-thirds of
global cotton consumption in 2012/13.
6
Textile World Trade
WORLD TEXTILE AND CLOTHING
EXPORTS
SR.NO
COUNTRY
VALUE(US$BL
N)
SHARE IN
WORLD
1
CHINA
256.125
36.125
2
EU-27
176.632
24.913
3
INDIA
29.117
4.107
4
TURKEY
25.536
3.602
5
BANGLADESH
19.881
2.804
6
US
18.941
2.672
7
VIETNAM
17.963
2.534
8
PAKISTAN
12.81
1.807
9
INDONESIA
12.19
1.719
10
KOREA
12.012
1.694
11
OTHERS
127.793
18.024
709
100%
SHARE IN WORLD
KOREA
2%
INDONESIA
2%
PAKISTAN
2%
OTHERS
18%
CHINA
36%
VIETNAM
US 2%
3%
BANGLADES
H
3%
TURKEY
3%
INDIA
4%
EU-27
25%
7
WORLD TEXTILE AND CLOTHING
IMPORTS
SR.NO
1
2
3
4
5
6
7
8
9
10
11
VALUE(US$B SHARE IN
COUNTRY
LN)
WORLD
EU-27
232.925
32.853
USA
108.769
15.341
JAPAN
41.151
5.804
CHINA
23.106
3.259
RUSSIA
13.173
1.858
CANADA
13.173
1.858
KOREA
10.498
1.481
MEXICO
8.681
1.224
VIETNAM
TURKEY
OTHERS
8.58
8.544
240.4
709
1.210
1.205
33.907
100%
SHARE IN WORLD
EU-27
33%
OTHERS
34%
TURKEY
1% MEXICO
VIETNAM1%
1% CANADA
KOREA
2%
2%
JAPAN
6%
USA
15%
CHINA
3%
RUSSIA
2%
8
9
10
History
1940’s
• Two textile mills(Okara Textile Mills and Lyallpur Cotton
Mills) with 80,000 spindles and 3,000 looms only which were
capable of producing 8% of the domestic demand at that time
1950’s
• Pakistan Industrial Development Corporation was formed in
1952 which started its operations in 1953 with the inauguration
of the Valika Textile Mill at Karachi
1960’s
• 180 units of textile bleaching, printing and processing units
• A number of spinning units comprising of only 12,500 spindles
were set up.
• Newly established mills were based upon imported technology
but there was lack of technical staff and shortage of capitals.
11
History
1970’s
• By 1970-1971 there was 113 textile units & the industry
had 2,605 thousand spindles and 30 thousand looms.
• East Pakistan Cotton Export Corporation of Pakistan was
established
• all of the private sector was taken over by the state. and
the import of machinery was made difficult due to
shortages of foreign exchange.
1980’s
• Till 1980-81 spinning continued to expand to 4033
thousand spindles. Machinery for producing garments and
made-ups was also freed from import duty
12
History
1990’s
• A huge expansion in the spinning sector took place in the first five years of
the 1990s.
• 8392 Thousand spindles and 9876 looms were there.
• Textile exports in 1999were $5.2 billion
2000’s- up till now
• Since 2002 there was an increase in 2004 showing 5%- 20% growth due to
high exports to US making it seventh largest market for US cotton.
• In 2004 Ministry of textile industry has established the five year textile
policy 2009-2014.
13
• In 2006, Exports rose to 10.5 billion US$ with the growth
rate of 16%.
• During 2007- 08, Pakistan economy went through worst
political, economic instability and electricity disruption.
2010
• In 2010, APTMA prepared a report projecting that the
textile imports would cross 16 billion US$ as compare to
the present.
• Exports for 2010 were 12.5 billion dollars.
2011
• In 2011 – Exports stood at $12.5 Billion from July 2010May 2011.
• Energy crises leaves Pakistan into tatters.
2012
• 10% spinning units and fabric printing units were shutdown.
• Remaining plants were struggling to survive after the
instability and disruption.
2013
• Textile millers on a gas protest
Trend of Textile Industry during last 10 years
YEARS
GROWTH
2001-02
4.10%
2002-03
5.20%
2003-04
20%
2004-05
2005-06
24.50%
11.23%
2006-07
2007-08
2008-09
2009-10
8.40%
4.05%
-0.70%
-1.78%
2010-2011
2012-2013
1%
1.4%
Source: Economic Survey of Pakistan
16
Trend of Textile Industry during last 10 years GROWTH
30,00%
25,00%
20,00%
15,00%
10,00%
Trend of Textile Industry
during last 10 years
GROWTH
5,00%
0,00%
-5,00%
17
Location Of Textile Units
KARACHI
Area
No. of establishments
Korangi Industrial Area
400
Landhi Industrial Area
300
S.I.T.E Karachi
300
Nazimabad
250
New Karachi
150
Domestic Overview
• In addition our exports confined to raw materials
to the global textile buyers and the same raw
material comes back to the domestic market in
form of finished value-added textile product.
• The capacity utilization in textile sector is only 60
percent.
• 13 billion cotton bales production. 6bln is
processed and the rest goes out of the country
unprocessed
19
• Bangladesh, Indonesia, Thailand & China are main
buyers of Pakistani cotton.
• Pakistan has emerged as one of the major cotton
textile product suppliers in the world with a market
share of about 28% in world yarn trade and 8% in
cotton cloth.
• Total textile Export 2012-2013 is $10127.6 M
(6.1% growth)
20
COTTON TRADE
000 Bales
2007-08
2008-09
2009-10
2010-11
2011-12*
Imports
5003
2456
2010
1847
704
Exports
344
458
920
871
1469
6000
5000
4000
Imports
3000
Exports
2000
1000
0
2007-08
2008-09
2009-10
2010-11
2011-12*
21
Estimates on Production for the Cotton Crop Year
(2013-14)
S. No.
Province
Production (million
bales)
1
Punjab
8.70
2
Sindh
3.150
3
Khaber Pakhton Khawa
4
Baluchistan
0.108
5
Pakistan
11.958
0.000433
22
Performance of Textile Industry
EXPORTS OF PAKISTAN TEXTILES (US$ MILLIONS)
2006-7 2007-8 2008-9 2009-10 2010-11 2011-12 2012-13
(Jul-Mar)
Cotton and
10390
10071
9308
9754
13147
11803
9352
Cotton textiles
Synthetic
Textiles
430
490
319
446
608
542
278
Wool &
Woolen
Textiles
233
216
145
137
132
121
88
Total Textiles
11053
10777
9772
10337
13887
12466
9718
Total Exports
17011
19224
17782
19290
24810
23641
18017
Textile as
65
%age
Source: Ministry of Textile
56
55
54
56
53
54
23
16000
14000
12000
10000
8000
Wool & Woolen Textiles
6000
Synthetic Textiles
4000
Cotton and Cotton textiles
2000
0
24
Garments
(Woven &
Knitted)
Cloth
(Woven &
Knitted)
Bed Linen
Yarn (Cotton
& Other)
Towels
Other
Textiles
2001-02
1,720,897
1,203,248
918,558
980,507
267,715
810,602
24,730
2002-03
2,239,281
1,405,116
1,329,064
976,464
374,839
1,007,369
49,016
2003-04
2,452,058
1,766,415
1,383,334
1,162,000
403,500
962,118
47,671
2004-05
2,722,987
2,050,044
1,449,533
1,087,451
520,480
832,833
109,957
2005-06
3,061,484
2,159,561
2,038,064
1,419,870
587,641
657,087
68,151
2006-07
3,345,822
2,089,956
1,995,899
1,495,234
610,712
1,003,097
50,226
2007-08
3,324,507
2,082,277
1,903,501
1,347,760
613,065
1,018,426
70,122
2008-09
2,971,147
1,992,772
1,709,566
1,131,715
627,679
1,090,615
87,966
2009-10
3,044,239
1,887,514
1,723,978
1,462,931
676,128
1,306,789
195,638
2010-11
4,079,215
2,623,195
2,088,898
2,249,037
762,308
1,587,429
364,802
2011-12
3,608,821
2,454,701
1,748,327
1,836,095
684,183
1,550,829
462,037
2012-13
3,847,157
2,690,941
1,783,528
2,243,594
775,809
1,523,648
153,873
2013-14 (JulNov)
1,679,279
1,138,727
882,061
915,291
289,464
1,278,710
111,973
25
Year
Raw Cotton
4 500 000
Garments (Woven &
Knitted)
Cloth (Woven & Knitted)
4 000 000
3 500 000
3 000 000
Bed Linen
2 500 000
Yarn (Cotton & Other)
2 000 000
1 500 000
Towels
1 000 000
Other Textiles
500 000
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
0
Raw Cotton
26
Ancillary Textile Industry
• The ancillary textile industry includes cotton spinning,
cotton cloth, cotton yarn, cotton fabric, fabric processing,
home textiles, towels, hosiery and knitwear and readymade
garments.
• These components are being produced both in the large
scale organized sector as well as in the unorganized
cottage/small and medium units.
27
Cotton Ginning Sector
• Cotton is a natural fiber used
primarily as a raw material for
textiles
• Cotton Ginning has a 2.91 percent
share in overall agriculture sector.
• Cotton Ginning has recorded a
growth of -2.9 percent as
compared to 13.8 percent growth
in last year due to less production
of cotton as compared to last
year.
28
Cotton Spinning Sector
• At present, as per record of Textile
Commissioner Organization (TCO),
it is comprised of 506 textile units
(49 composite units and 457
spinning units) with 9.892 million
spindles and 103 thousand rotors in
operation with capacity utilization
of 91 percent and 60 percent
respectively, during July-March,
2012-13.
29
Cloth Sector (Weaving)
• The power loom sector have
modernized and registered a
phenomenal growth over the
last two decades
• Knitting looms
• Weaving looms
30
PRODUCTIONN & EXPORT OF CLOTHING SECTOR
2011-12
2012-13
6746.359
6830.720
1.25
Quantity (M.Sq.
Mtr.)
1509.242
1438.938
-4.66
Value ( M. US$)
1784.482
1991.237
11.59
Production
% Change
EXPORT:
Source: Ministry of Textile
31
Textile Made-up Sector
The major product groups are towels, tents & canvas,
cotton bags, bed-wear, hosiery & knitwear &
readymade garments including fashion apparels
32
EXPORTS OF TEXTILE MADE-UPS
2011-2012
(JULY-MAR)
2012-2013
(JULY-MAR)
%
CHANGE
HOSIERY KNITWEAR
Quantity(000.Doz)
71.369
73.457
2.93
1467.064
1508.781
2.84
18.070
20.233
11.97
1195.484
1318.263
10.27
Quantity(000.Doz)
101.687
126.138
24.05
Value (M.US$)
489.135
577.690
18.10
Quantity(000.Doz)
19.273
25.248
31.00
Value (M.US$)
64.868
84.904
30.89
Quantity(000.Doz)
184.003
195.764
6.39
Value (M.US$)
1311.121
1312.315
0.09
416.653
442.948
Value (M.US$)
READYMADE GARMENTS
Quantity(000.Doz)
Value (M.US$)
TOWELS
TENTS/CANVAS
BED WEARS
OTHER MADE-UPS
Value (M.US$)
33
6.31
a) Hosiery Knitwear Industry
• There are about 12,000 knitting machines spread all
over the country.
• Exports:
 2009 – 2010
 2010 – 2011
 2013 – 2014
1.76 Bln US$
2.31 Bln US$
2.03 Bln US$
• Units Installed :
 In 1949
 And Now
Less than 5 units
973 Registered Units
• Trade Partners are USA ,UK ,UAE , Germany ,
Spain ,Canada etc.
34
b) Readymade Garment Industry:
• The garment industry has tremendous export
performance in the past.
• Exports :
 July March 2011- 2012
 July-March 2012-13
$ 1.2 billion
$ 1.3 billion
• Raw Material is locally produced while most of
the machineries are Imported or Locally Made
and Assembled.
• Major Trade partners are USA and European
Union.
35
c) Towel Industry
• There are about 7500 towel looms in the country in
both organized and unorganized sector.
• Exports:
(2012 – 2013) $489 million
(2013 – 2401) $578 million
thereby showing an increase of 18.1 percent.
• The market for fancy towels is very big is USA.
36
d) Canvas
• Highest raw cotton consuming sector.
• Its production capacity is more than 100 million Sq. meters.
• The 60 percent of its production is exported while 40
percent is consumed locally.
• Cheapest source of supply of tents and canvas.
• Exports:
 2011 – 2012 $ 64.9 million
 2012-13
$ 84.9 million
showing an increase of 30.9 percent.
37
e) Bed Wear
Exports:
• Quantity(000.Doz) 195.765 ( 6.4%)
• Value (M.US$) 1312.315 (0.09%)
• a lower increase in its export bill was rooted in
exporters’ strategy to remain competitive
38
Art Silk and Synthetic Weaving
Industry
• The art silk and synthetic weaving industry mostly
confined in Karachi, Faisalabad, Gujranwala, Jalalpur
Jattan etc
• The export performance of this sector are very
miserable during the period under review on account
of electricity disruption.
39
EXPORT OF SYNTHETIC TEXTILE FABRICS:
2011-2012
(JULY-MAR)
2012-2013
(JULY-MAR)
%
CHANGE
Quantity(M.Sq.Mtr)
283.064
198.031
-30.04
Value (M.US$)
372.008
277.796
-25.33
SOURCE: Ministry of Textile
40
Woolen Industry
• The main products manufactured by the
woolen industry are woolen yarn, acrylic yarn,
fabrics, shawls, blanket, and carpets.
41
EXPORT OF CARPETS AND RUGS(WOOLEN):
2011-2012
(JULY-MAR)
2012-2013
(JULY-MAR)
%
CHANGE
Quantity(M.Sq.Mtr)
2.557
2.154
-15.76
Value (M.US$)
92.559
87.801
-5.14
SOURCE: Ministry of Textile
42
Imports
2011-2012 ( $ M) 2012-2013 ($ M)
Textile machinery
339.1
306.6
Raw cotton
369.4
752.6
Synthetic fiber
434.6
333.9
Silk yarn
503.9
449.3
45
Prices
% Change
April13- April12
Cotton Cloth
14.3
Cotton Yarn
12.2
Blended Yarn
8.6
Woven Fabrics
21.8
Cotton Fabrics
1.5
Other Fabrics
5
Lawn
17.39
46
Bacillus thuringiensis (Bt. Cotton)
•
At the Pakistan scenario, two major types of pests are damaging our cotton crops –
sucking and chewing pests.
•
Recent disaster resulting from the cotton leaf curl virus (CLCV) spread in Punjab
and Sindh pushed our institutes like Pakistan Atomic Energy Commission (PAEC)
came up with genetically modified (GM) local cotton varieties like Bacillus
thuringiensis (Bt), a bacterium that is deadly to the bacterias.
•
In May 2005 PAEC provided 40,000.00 Kg basic seed of Bt cotton (insect resistant)
varieties: which have been grown over 8,000 acres of land in season 2005-06.
47
GSP plus status to Pakistan
• Pakistan got the Generalized Scheme of Preferences (GSP)
plus status on 12-Dec’2013
• Under the scheme, textile exporters can sell most of their
products to EU states at concessionary rates of duty or
without any duty, making the goods cheaper for European
importers
• Textile exporters hoped that GSP plus status will help to
increase textile exports to EU by 30 to 40 percent and will
generate significant economic activity in the country.
48
• Major markets for Pakistan’s woven garments exports to EU are UK,
Germany, Italy, France, Spain and Belgium.
• This would create more opportunities in domestic industry, resulting not
only in competitiveness, jobs growth, exchange of technological know how
and development of skills
• implemented international conventions relating to human and labor
rights, environment and good governance. The GSP+ status can be
suspended if a country fails to show its progress over these conventions.
• EU and the USA account for 91% of Pakistan’s total garment exports.
• Pakistan's textile exporters will not be able to benefit from the preferential
scheme unless the government takes serious measures to resolve energy
shortage that holds back the textile industry.
49
Strengths And Weaknesses
Strengths
• Abundance of raw material production
• Availability of cheap labor
• Large domestic market
favorable regulatory structure
• Pakistan located Between two large markets (China and India )
Weakness
• High dependence on cotton
• Technological obsolescence
• Capital import
• Law and Order situation
• Energy Crisis
• Low value addition
• Negative country perception
• Unskilled labour
50
Backward & Forward linkage
BACKWARD LINKAGE:
• Cotton industry
• Jute industry
• Banking sector
• Machinery
• Dyes and chemicals
• Printing
• Edible oil
• livestock
FOREWARD LINKAGE:
• Shipping
• Insurance
• Cotton by-Products
• Second hand clothes
market
• Fashion Industry
• Other Allied Sectors
51
Challenges faced by Textile Industry:
• Power and Energy Crisis
• Increasing Raw Material Prices
• Law & Order Situations in the Country
• Lack of R&D Institutions
• Lack of Technical ability
• Increasing Cost of Production
• International Competition
• Export of raw material
• Environmental issues
52
Power and Energy Crisis :
• As for as Pakistani textile sector is concern it is
faced 8 to 10 hours electric load shedding per
day and 2 to 4 days Gas load shedding per
week.
• It is very difficult to continue production
process without energy.
53
Increasing Raw Material Prices:
• The main cause of increasing raw material
prices is that the grower of cotton are not
given reasonable prices and the middle man is
enjoys the benefits due to that the industry is
bearing the costly raw material that’s why
they started to grow the substitute of cotton
like sugarcane etc.
54
Law & Order Situations in the Country
• Industrial activity cannot flourish in an
atmosphere of disturbances and fear.
• Pakistan is a country where policies are rapidly
changed even in days and weeks. Without
long term and consistent policies no industry,
in the country, can develop properly.
55
Lack of Technical ability
• Technical ability to manufacture required
machinery locally is absent. Hence, it
increases our import bill.
56
Increasing Cost of Production:
• Production cost of textile industry has
increased due to rising interest rates and
rising inflation. It became a gigantic challenge
for the textile industry of Pakistan to compete
and survive in the international markets
57
International Competition
• The industry is facing competition from other
developing countries like Bangladesh, India
and China in its major export markets i.e. the
EU and the USA.
58
Export of raw material
• US$ 8 billion of yarn and fabric are exported to
three countries (i.e., Bangladesh, China and
Turkey), which use these raw materials to
produce finished goods that capture market
share in the EU to the detriment of Pakistan.
59
Environmental issues
• Water Waste in finishing processes
• Industrial processes also generate wastewater
containing heavy metal contaminants
(polluted waste) such as zinc, carbon, iron etc.
60
Recommendations:
• Adopt modern technology for harvesting of cotton crop to minimize
losses.
•
Increasing domestic production of synthetic and man-made fibres (i.e.,
cotton textiles and clothing account for less than 20% of global demand)
• Government should maintain law and order in country so that security of
life and property will be given to business and they will feel comfortable
and will be ready to invest in country.
• Focus on training and education in this sector for better human capital.
61
• Value addition should be made in acquiring greater magnitude of exports
and foreign exchange
• Diversification of export markets and products
• Awareness of Women rights
62