Exports of readymade garments.
In the recent years, Pakistan has emerged as an important exporter of readymade garments and of textile clothing accessories. Foreign exchange earnings through these items have increased rapidly during the 80s. The total exports of readymade garments have risen more than eightfold to over Rs. 9,691 million in 1988-89 from Rs. 1294 million in 1981-82. The following table provides annual exports of readymade garments including textile clothing accessories for the last eight years.
Pakistan mainly exports cotton made articles which include shirts. T-shirts, bush shirts, coats, pants, maxies, half pants, skirts, blouses, children suits, outer and underwear garments. Besides, some ladies oriental garments with embroidery work are also exported.
The quantity and value of some major export items of readymade garments for the last five years are shown in Table I reveals that exports of garments as percentage of total exports increased from 4.92 per cent in 1981-82 to 10.74 per cent in 1988-89. Average annual growth rate of garment exports of the last seven years worked out to 37.81 per cent. Garment is one of the industries which has taken full advantage of the export incentives. It has the potential to develop into the major foreign exchange earner of Pakistan.
Table : TABLE - I
Exports of Readymade Garments (1981-82 to 1988-89) (Rs. in million) Garment % Total % Year Exports Increase Exports Share 1981-82 1294.45 -- 26269.86 4.92 1982-83 2024.64 + 62.75 34441.70 5.87 1983-84 2950.39 + 45.75 37037.07 7.96 1984-85 2661.99 - 9.77 37979.41 6.45 1985-86 4214.28 + 58.31 49592.15 5.90 1986-87 7758.17 + 84.09 61267.94 12.26 1987-88 8520.49 + 9.82 78444.56 10.86 1988-89 9691.88 + 13.74 90182.53 10.74
Cumulative growth 264.69 per cent
Average annual growth rate 37.81 per cent.
Source: Federal Bureau of Statistics.
Pakistan exports garments to a number of countries. The major among them are Canada, France, Germany, Netherlands, Sweden, USA, USSR, Belgium and Saudi Arabia. It will be seen that exports of garments to USA, Germany and UK accounted for 57 per cent of the total exports in 1987-88. This share was only 27 per cent in 1983-84. Share of Saudi Arabia has sharply declined from 16 per cent in 1983-84 to 5 per cent in 1987-88. The share of West Germany has increased commendably from 7 per cent in 1983-84 to 15 per cent in 1987-88. The shares of France and UK have also increased from 2 per cent to 6 per cent and 4 per cent to 8 per cent respectively during the same period.
Pakistan also exports textile clothing accessories to a number of countries. The exports of these have been increasing fast up from Rs. 122.88 million in 1984-85 to Rs. 728.42 million 1988-89 showing a sixfold increase in four years. The major exports of textile clothing accessories include Arab Romals, Scarves, Shawls and gloves (not knitted).
India, which is Pakistan's close competitor was alive to the fierce competition and lost no time in involving policies to meet the challenges of international competition. India's last year exports went up to one billion dollars and its current year's target has been fixed at 2.5 billion dollars. This is mainly due to the fact that Indian Government allows compensatory rebate on exports of garments to non-quota countries.
It goes without saying that garment manufacturing, be it cotton based or leather are based on 100 per cent local raw materials and are highly labour intensive. The value addition in this industry is also the highest. With the rise in wage level in countries like Taiwan, Korea and Hong Kong, they are gradually switching over to hightech and electronics thus providing additional opportunity for Pakistan to push in to fill the gaps.
It is advised that bottlenecks be removed and the other incentives be increased. Since most of the production is at small and cottage industry level, it should be exempt from the labour laws, accessories be made duty free for a specific period to ensure better quality, duty-drawback ratios be rectified and paid at actuals. The Government and the private sector should join hands to establish an institute to design garments and other allied products to ensure overall improvement in quality.
Readymade Garment Industry is one of the important segment of cotton textile industry. During the period from 1985-86 to 1988-89, while the earning by export of textiles in all forms has increased at an annual compound rate of about 27.9 per cent, it is 35.8 per cent in the case of readymade garments. Because of the higher growing demand of readymade garments in the international markets, there are better prospects for further expansion in their exports provided concerted efforts are made in this direction. The share of garments in the total textile export earning is presented in Table - II.
Table : TABLE - II
Share of Garments in Total Textile Export Earnings (Value in million Rs.) 1985-86 1988-89 1993-94 (Actual) (Projected) Export of Textile 17524.9 35738.3 62503 Annual compound growth rate % -- 27.9 15.0 Exports of readymade garments 4214.2 9691.8 20181 Annual compound growth rate % -- 35.8 25.0
Share of garments in total textile
Exports % 12.3 18.6 32.2
Source: State Bank Annual Report 1988
Export of Garments by Type
Shirts command the major share in the export of garments. The increase in the export of shirts is phenomenal in the last four years. Exports showed a rise of 109.6 per cent in 1988-89 up from Rs. 1333 million in 1985-86 to Rs. 3279 million in 1988-89. Following table illustrates the year-wise exports of shirts from 1985-86 to 1988-89.
Share of shirts in the total exports of garments worked out to 31.62% in 1985-86 which increased to 33.57% in 1988-89.
It is evident that USA was the major buyer of shirts particularly made of cotton during 1988-89 taking about 48.9 per cent of the total export of shirts. Other important buyers were UK 11.0%, Federal Republic of Germany 7.6%, USSR 7.3%, Yemen and Canada taking 3.8% each. Shirts of men/boys of cotton constituted 90.5% of total export of garments. Shirts of synthetic fibres are also exported from Pakistan.
Table : TABLE - III Exports of Shirts
Year Rs. million % 1985-86 1333 -- 1986-87 2220 + 66.5 1987-88 2724 + 22.7 1988-89 3254 + 69.4
Average Annual Growth rate 36.5%.
Table : TABLE - IV Export of Shirts to Different Countries in 1988-89
% Rs. million Share USA 1591 48.9 UK 361 11.0 F.R. Germany 248 7.6 USSR 240 7.3 Yemen 129 3.8 Canada 123 3.8 Others 661 17.6 TOTAL: 3253 100.0
Source: F.B. of Statistics - Karachi
Second important item of export in garments was outer garments. In the las four years its share in the total export of garments showed a declining trend from 30.94 per cent in 1985-86 to 20.17 per cent in 1988-89. However, exports of outer garments have shown substantial increase in 1986-87 after that it showed a declining trend as shown in the following table.
Mainbuyers of outer garments in 1988-89 were USA, West Germany, UK, France. Items which were making fast growth weretrousers dresses, blouses and suits.
Third item in the exports list is of trousers which showed a substantial rise in the last four years. Exports of trousers increased from Rs. 436.092 million in 1985-86 to Rs. 1044.342 million in 1988-89.
Blouses and Dresses
Blouses and dresses are showing rapid increase in exports. Exports of blouses increased from Rs. 251.390 million in 1985-86 to Rs. 469.590 million in 1988-89 showing a rise of 103.3 per cent in the last three years indicating an average growth of more than 34 per cent per annum. Share of blouses in the total exports of garments however, declined from 5.11 per cent in 1985-86 to 4.85 per cent in 1988-89.
Export of dresses showed a cumulative rise of 277.2 per cent up from Rs. 242.290 million in 1985-86 to Rs. 913.925 million in 1988-89. Average annual growth rate worked out to about 69.3 per cent. Share of dresses in the total exports has also shown a marked increase. It was 5.04 per cent in 1985-86, increased to 9.42 per cent in 1988-89.
It is worth mentioning that EEC has agreed to allow export of 10.282 million pieces of women dresses from Pakistan for the year 1991. This was decided in an agreement signed after the detailed negotiations of Pakistani delegation, who went to Brussels after a call given by the EEC with a view to imposing quantitative restrictions on export of women dresses considering upsurge of exports from Pakistan in the year 1989. However, as a result of negotiations EEC agreed to a limit of 7.5 million pieces for the period from 23rd March to 31st December 1990, and 10.282 million for the next year.
It may be mentioned that India which is the largest supplier of women dresses to EEC has a maximum limit of 10.29 million pieces for the year 1991. Thus, Pakistan's quota level is almost equal to that of India.
Another important achievement of negotiations was that the restraint level agreed has been distributed amongst 12 state members of ECC on the basis of actual trade flow of the first nine months of 1989 and not in accordance with the burden sharing formula visualized in the bilateral textile agreement between Pakistan and EEC. This has ensured maximum utilisation of the restraint level agreed and an estimated annual trade flow of dollars 20 million for the women dresses.
Table : TABLE - VI
Exports of Trousers
Year Rs. million % 1985-86 436 - 1986-87 755 + 73.1 1987-88 1112 + 47.4 1988-89 1044 - 6.1
Source: Average annual growth 38.1%
Table : TABLE - V
Exports of Outer Garments
Rs. in % Year million Increase 1985-86 1304 - 1986-87 2552 + 95.7 1987-88 1959 - 23.2 1988-89 1955 - -
Average annual growth 24.16%