The garments sector of Pakistan holds great promise when it comes to increasing export-led growth primarily because of the high value addition of exported products. Even though there has been an increasing trend in garment exports the sector is far from its true potential.
After extensive stakeholder discussions BR Research has come to the view that one of the major barriers that are constraining exports is the inability of exporters to tap into new markets. The traditional export markets of North America and Europe have become saturated with thin margins and extreme competition. Coupled with the high cost of production borne by Pakistan exporters and the lack of any new market linkages established in untapped markets, the lacklustre export trajectory is not surprising.
Therefore, the need of the hour for exporters is to move ahead of constantly complaining about the same issues such as power outages, and become proactive in finding new markets where there is huge untapped potential.
In this regard, the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) has been keenly active when it comes to creating new market linkages. In a MoU signed with the China Chamber of Commerce for Import and Export of Textile and Apparel (CCCT) delegation last year, the association aims to make China the next top destination for Pakistan garment exports.
The Chinese are eager to take advantage of the host of incentives being offered to Chinese companies to invest in the textile sector. In its recent visit the CCCT chalked out the future roadmap of facilitation with the PRGMEA.
A key step pertains to trade fairs whereby the CCCT will help PRGMEA in establishing market linkages with their counterparts in China. The Chamber has invited PRGMEA to lead the delegation for B2B meetings at the Canton Fair being held in China later this year. Unlike Europe where the Trade Development Authority of Pakistan (TDAP) facilitates delegations in international trade fairs, there is little government assistance when it comes to China.
Other matters of importance included deciding methods for dispute resolution with CCCT and PRGMEA considering mutual arbitration with the two bodies as the main focal point. PRGMEA also highlighted the need to streamline visa access to Pakistani businessmen especially in view of the preferential treatment given to the Chinese when it comes to visas.
According to Ijaz Khokhar, chief patron of PRGMEA, it was essential to ensure that the same incentives were provided to Pakistan entrepreneurs as are being given to the Chinese. For example, tax holidays can be availed by Chinese investors by investment in not just CPEC special economic zones but generally as well. Whereas, local businessmen are alarmingly unaware about the exact nature of incentive provided under the corridor.
There was also talk of establishing a facilitation desk in China to assist Pakistani textile exporters in establishing market linkages and increase their market presence.
This will go a long way in helping local businessmen tap the immense potential of the Chinese market. Ijaz is of the view that given the proper measures are taken; China can become a $1.5-2 billion incremental market for textile exports in the near future.