Industry News
APTMA Rejects Claims of the Decline of Pakistan’s Textile Industry
The Foreign Policy magazine titled the year 2022 “Pakistan’s Year of Turmoil,” citing the economic conditions of the country. The year 2022 ended with the unpleasant news of the partial shutting down of the textile industry due to the prevailing economic crisis.
The All Pakistan Textile Mills Association (APTMA) has rejected news reports about the textile industry’s closure.
They stated that it would be highly irresponsible to shut down the textile industry in the current situation of Pakistan as reported by 24NewsHD TV.
Pakistan’s textile industry seems to be in decline and maybe even on the verge of closure as many units have already closed down. Several others are planning to either shut down or shift their production abroad.
In addition to problems caused by the devastating floods in the summer of 2022, textile factories are not getting the necessary raw materials and accessories. Letters of credit from as low as US$5,000 are being rejected which has also hit in-progress export orders of US$500,000 per consignment. These problems are causing production delays and disruption leading to the cancellation of export orders, they further added.
According to APTMA Patron-in-Chief Gohar Ejaz, the association has not yet made any such announcement and the speculations on social media were baseless. Ejaz wrote a letter to Pakistan’s Prime Minister in which he informed the premier about the growing problems of the textile industry, requesting prompt action to address these problems as well as drawing his special attention to this industry. Moreover, the Prime Minister was apprised that the textile industry is running at 50% of its capacity, and there is a severe capital deficit.
Under the current circumstances, any decision to shut down the entire industry would be disastrous and irresponsible. APTMA is a conscientious body that is cognizant of the challenges faced by the country and is aligned with the fabric of this nation and its sovereignty.
In the longer run, for sustainable growth, the textile industry needs a paradigm shift from providing services to international brands to designing and developing their products and establishing international standard brands, as the bulk of the profit margin is generated by brand recognition and identity in the clothing and apparel industry. The current business model of relying on cheap labor and inefficient processes is not sustainable as a long-term approach.
About seven million people in textile and textile-related industries have been laid off due to dwindling exports and the Government’s failure to end the economic crisis, representatives of the value-added textile associations in Pakistan said in a joint press conference. They said that the current Government lacks any policy measures to end the crises affecting textile producers and exporters. The press conference was addressed by Muhammad Jawed Bilwani (Coordinator of the Value-Added Textile Forum), Muhammad Babar Khan and Khizer Mehboob (Pakistan Hosiery Manufacturers and Exporters Association), Rafiq Godil (Pakistan Knitwear and Sweater Exporters Association), and Abdul Samad (Pakistan Cloth Merchants Association) among others.
Pakistan enters 2023 with multiple challenges, including rising debt, low foreign exchange reserves, an energy shortage, and having to recover from the 2022 devastating floods.
Pakistan enters 2023 with multiple challenges, including rising debt, low foreign exchange reserves, an energy shortage, and having to recover from the 2022 devastating floods.
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The Summer’s monsoon-caused flooding killed more than 1,700 people, destroyed more than 2 million homes, and covered as much as one-third of the country at one point, causing damage totaling more than US$30 billion.
According to Pakistan’s Board of Investment, Pakistan is the eighth-largest exporter of textile products in Asia. It is the fourth-largest producer and third-largest consumer of cotton. The textile industry constitutes 46 percent of the total manufacturing sector and employs 40 percent of the total labor force. Textile exports contributed around 61 percent to the total exports of $31.8 billion during the fiscal year 2021-2022.
This industry has seen ups and downs over the years due to a variety of factors and has struggled as a result of high manufacturing costs, frequent power outages, flawed strategies, and a lack of government support policies. The United States and the European Union are two of Pakistan’s biggest markets for textiles. Together, they buy 60 percent of all textiles that come out of Pakistan.
According to the Pakistan Credit Rating Agency (PACRA), Pakistan meets only 3 percent of the US needs for textile imports, as the textile sector hasn’t reached its full potential in recent years and still lags behind other South Asian competitors. Pakistan’s textile industry developed gradually and picked up the pace in the 1990s when it was contributing 9.5 percent of the entire Gross Domestic Product while the Economic Survey indicated that the textile sector, which has the highest weight in the Large-Scale Manufacturing, grew only by 3.2 percent in FY 2021-22 as compared to 8 percent in the FY 2020-21, showing a significant slowdown in growth.
The most significant factor in the decline of the textile industry over the years has been the energy crisis. Other factors include fierce competition in the international market from Bangladesh, Vietnam, India, and Thailand; a lack of modernization of the machinery and equipment; a lack of investment; rising costs; and low production of cotton and other raw materials.
Furthermore, there is a lack of adoption of technology. Many of the business operations in the textile sector are still done manually, although global procurement procedures have incorporated emerging technologies and digitalization. Due to the lack of digitization, the entire supply chain of the textile sector is being adversely affected and plagued by inefficiencies.
The need for the utilization of technology has become inevitable and seems to be the only way forward to increase productivity and revolutionize the textile manufacturing landscape. There is also a dire need to establish a link between research institutions and the textile industry to create new products and value-added services.
Given the reliance on imports, the industry faces constraints in production and fails to fulfill major international orders. In November, the industry faced a slump of 19% on a Y-o-Y basis to earn US$1.40 billion in revenue, as per the latest provisional data released by APTMA. They predict that exports could fall below US$1 billion per month in 2023.
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