P AKISTAN S T EXTILE AND G ARMENT I NDUSTRY HAS TO INVEST

Transcription

1 TEXTINATION NEWSLINE P AKISTAN S T EXTILE AND G ARMENT I NDUSTRY HAS TO INVEST INTERNATIONAL COMPETITION INCREASES / COMPANIES HAVE TO MODERNIZE PRODUCTION AND INCREASE DEPTH OF PROCESSING Dubai / Islamabad (GTAI) - Pakistan's textile and clothing industry has urgently to invest. The international competition has intensified. The companies need to modernize their technology and increase their processing depth. The country wants to get away from the production of simple fabrics and yarns. The GSP Plus agreement with the EU and an improvement in the security situation have improved the investment climate. In high-end machines Pakistan is dependent on imports. Pakistan's textile and clothing industry expects better sales opportunities abroad in the next few years, particularly with the European Union. Early 2014 Pakistan has received from the EU the GSP Plus status (Generalized System of Preferences) that allows the country to supply goods at a lower rate of duty or even with a completely duty exempt in the EU. Particularly the textile and clothing industry benefits from the agreement, as the sector provides almost 80% of Pakistan's exports to the EU. The government even hopes on additional exports for the sector worth USD 1 billion per year. Following the latest available trade figures, Pakistan increased in 2014, the year in which the GSP F.M. / pixelio.de Textination GmbH 1

2 Plus agreement came into force, its total exports of clothing by almost 10% to around USD 5 billion. Official figures of exports to the EU are not available. According to the foreign trade statistics, in any case exports to Germany have increased in clothing by 13% to almost USD 500 million, in textiles by 18% to USD 434 million and in footwear by 27% to USD 34 million. Pakistan's export of textiles, clothing and footwear (USD million) SITC Productgroup Change 2014/2013 Export 65 Textiles 9, Clothing 4, Shoes Textile Fibres Cotton Import 65 Textiles 1, Clothing Shoes Textile Fibres 1, Source: UN Comtrade Demand for textile machinery rises Market observers anticipate increased investments in machinery. A particular dynamic effort is expected in the demand for textile printing machines, dyeing machines, tenter frames and other finishing techniques. Positive for the investment climate will be the effect of the expected increase in textile exports to the EU and the improvement of the security situation. In recent years power shortages and a precarious security situation have inhibited the production and investment activity. The market for textile machinery (SITC 724) grew significantly since In the country itself only relatively simple machines are being manufactured. High-end equipment is mostly imported. The import of textile machinery rose to USD 585 million in 2014, an increase of 17% compared to Import of Textilmaschinen*) Dieter Schütz / pixelio.de Year Value (in Mio. US$) *) SITC 724, including pieces Source: UN Comtrade Textination GmbH 2

3 German machinery manufacturers are losing market share The PR China has superseded Japan as the major supplier of textile machinery in In fact Japan was able to increase its deliveries vigorously (+ 23%), but the Chinese succeeded to get even higher gains (+ 41%). The suppliers from Switzerland and India have also increased their exports to Pakistan significantly. German machinery manufacturers however were not able to benefit from the increasing demand. Import of textile machinery by main supplier countries (in USD million, change over previous year and supply share in %) *) Country 2014 Change 2014/2013 Share PR China Japan Switzerland Germany Italy India Total *) SITC 724, including pieces Investments urgently needed Competition from PR China, Bangladesh, India and Sri Lanka has intensified. Pakistan's textile industry needs to modernize and upgrade, to increase its productivity and the added value. Pakistan covers the entire value chain from fiber preparation from to the end product. Despite this well-position predominantly simple products are being produced. Only an estimated 40 companies are vertically integrated and cover the entire textile processing. With an annual harvest of about 13 million bales Pakistan is the world's fourth largest cotton producer. In addition about tons of synthetic fibers are being manufactured in the country. According to reports there are 21 manufacturers of filament yarn with a capacity of t; the production is supported by a PTA plant with a capacity of t. Export of the textile industry by product group (Changes compared to the same period of last year and in %) Product Value (in Mio. US$) Change Share Knitwear 1, Readymade Garment 1, Bed Wear 1, Towels Tent, Canvas, Tarpaulin Made-ups (Other Textiles) Cotton Cloth 1, Cotton Yarn 1, Raw Cotton Textination GmbH 3

4 Art-Silk& Synthetic Textile Other Textile Products 350 0,0 4 Summe 10, Sources: Pakistan Bureau of Statistics; TMA - Towel Manufacturers Association Yarn production has lost competitiveness According to sector experts In the past decade yarn manufacturers made no larger investments to upgrade their production, although money would have been available for such investments. The reason for that should have been the heavy competition from China, India and Bangladesch. Ten years ago Pakistan used to be one of the most efficient yarn manufacturers worldwide. Because modernization investments failed to materialize, this technique applies as outdated in Pakistan today. The companies complain about high production costs and are demanding more favorable electricity tariffs and protectionist measures against import competition. A negative effect on the production and the investment climate in the country also have the electricity shortages and the tense security situation. The textile sector in Pakistan is characterized by numerous large textile companies with quite a large number of small businesses opposite which mostly belong to the so-called informal sector. The informal sector, for example, includes small family companies or small productions, which are not taxable. The informal sector produces mainly simple products for the domestic market. It works with discarded equipment of the larger companies, imported used machinery or cheap equipment from China. The official statistics do not take the informal sector into account. Günter Hamich / pixelio.de Günter Hamich / pixelio.de Import of textile machinery by product and top supplier countries (in USD thousands, change compared to the previous year in%) SITC Productgroup Change Sewing machines, from 18,508 31, PR China 9,795 19, Japan 2,596 3, Vietnam Germany (Rank 5) Spinning and other machines for textile processing, from 255, , Japan 74,961 61, Switzerland 36,203 57, Germany (Rank 3) 64,086 46, Weaving machines, from 121, , Japan 29,997 68, Textination GmbH 4

5 .Japan 29,997 68, PR China 31,305 53, Italy 6,666 11, Germany (Rank 6) 5,290 6, Auxiliary machines, from 30,953 36, PR China 8,797 11, Germany (Rank 2) 6,429 4, Japan 2,055 3, Machines for dying, washing, drying, from 61,620 64, PR China 9,855 12, Italy 14,867 11, Germany (Rank 3) 16,652 11, Machines for leather processing and footwear manufacturing, incl. parts, from 5,854 8, Italy 3,674 4, PR China 1,542 2, Finland n.a. 192 n.a..germany (Rank 5) , Parts for textile machines, from ,2.PR China ,5.Germany (Rank 2) ,4.Italy ,3 Source: Katrin Pasvantis, Germany Trade & Invest Translation: Textination-Team Textination GmbH 5