Textile prognosis: World Bank

Recently, the World Bank held a conference on Pakistan’s textile industry, its prognosis, and where it stands in the international market. The future holds immense potential but compared to regional players, we lag far behind.
The World Bank expects the global apparel market to reach a size of $1.18 trillion by 2020, and $2.11 trillion by 2025. Pakistan is the fourth-largest cotton producer on the planet, yet it stands highly disadvantaged in the international textile market; Pakistan’s compound annual growth rate in textile and apparel exports from 2005 to 2013 stands at a measly 3.6 percent. Compare that with India’s 11.3 percent and Bangladesh’s 16.2 percent, and one gets a sense that something is terribly wrong.
Coming to the policy issues and domestic problems, the presentation made a very useful comparison with regional players China, India and Bangladesh. Pakistan has the highest energy tariff and is the only country of the lot where energy isn’t available to textile mills 24/7. Installed capacity utilization is less than 70 percent compared to the other three’s near-90 percent. Our corporate tax rate – along with India’s – is the highest at 34 percent, compared to Bangladesh and China’s 27.5 and 25 percent, respectively.
Moreover, from 2008 to 2013, Pakistan’s investment in machinery was pathetically low; over the six-year period, Pakistan added around 1,320 shuttle-less looms and 1,020,700 spindles. This isn’t even in the same league as the remaining regional players. The next-least investment was made by Bangladesh, which added 22,370 shuttle-less looms and 1,987,000 spindles.
From December 2013 to April 2015, the Pakistani rupee was the only currency that appreciated against the dollar – and that, too, by 5 percent – as opposed to a host of other currencies. Also, we are the only country that doesn’t provide taxation subsidies, interest rate support, zero-rating on exports, capital investment support, cluster development schemes, and long-term policy supports. Ishaq Dar did make some positive announcements in the Federal Budget 2015/16 such as lowering of export refinance rate, promise of release of pending export rebates, and implementation of Textile Policy (2014-2019). However, the majority of the textile industry’s issues went unaddressed.
As a result of all the above problems, Pakistan’s share in the world market has dropped over the past five years from 2.2 percent to 1.8 percent. The policy recommendations include the release of pending funds, revaluation of the rupee, zero-rating on exports, implementation of the Textile Policy (2014-2019), uninterrupted energy supplies, investment support schemes, and regulatory duty on yarns and fabric imports.