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How to achieve faster growth of apparel industries in Pakistan.

Apparel industry is the most important industry in Pakistan because of its potential to use 100 per cent indigenous raw material and converting raw cotton to cotton yarn, cotton yarn to cotton fabrics, cotton fabrics to apparel and earn valuable foreign exchange for the country together with the creation of substantial employment opportunities. But its growth has not been as fast as it should be. Now we will analyse the reasons and factors responsible for the slow growth of apparel industry in Pakistan.

To identify the factors hindering apparel industry's growth in Pakistan we have to study the situation in Sri Lanka, Bangladesh, Indonesia, Thailand, India, Taiwan, Korea, Hong Kong, Malaysia and lastly UAE apparel industry and the reasons for its fast growth in these countries, because these countries are the main competitors of Pakistani products in International markets. Bangladesh garments exports is now over US$ One billion and India's garment export is over US$ two billion as against Pakistan's garments export of only US$ 500 million, in spite of all the natural advantages like its own raw cotton and cotton yarn. In our opinion the following are some of the reasons for slower growth of apparel industry in Pakistan. These reasons can broadly be divided in the following categories, according to the priority:-

1. Non-availability of finance

2. Marketing problems

3. Lack of technologies and technical know-how

4. Lack of trained manpower

5. Non-availability of proper raw materials and trims

6. Non-availability of information on apparel industry and trade

7. Inadequate informations about quota availability

8. Restricted machinery imports

9. Inappropriate Government policies, etc.

Finance Availability

The main reason of slow growth of apparel industry is almost non availability of finance, for fixed and working purposes in Pakistan for the apparel industry, specially for new comers. Whereas, presently whatever amount government allocates the textile sector, most of the amount as taken up by the spinning units and the balance by the weaving knitting units. Therefore, in actual terms no amount is left for the apparel units. As compared to Pakistan, Bangladesh's garment industry was growing very fast during the last four years and now surpassed Pakistan's industry only because of easy availability of industrial finance for new apparel units. Therefore, it is recommended that the government should allocate substantial funds exclusively for the apparel industry and proper system may be evolved for its disbursement.

For this purpose consultants may be hired who would recommend the amount of capital required (with six monthly revisions) together with a suggested list of machinery and its estimated price which should be the basis of government's capital financing requirements. Similarity, funding for working capital requirements may also be recommended, based on production capacity of the units. If the government does not have sufficient funds the alternate solution may be as follows:

The Suggested Solution: The total requirement of apparel industry's financing, both fixed and working capital, whether directly or through leasing companies may be kept outside the credit ceiling. This financing should not be subject to any governmental regulations i.e. prudential regulations or otherwise, then the market forces themselves will take care of the financial requirements of the apparel industry. (But some officials may make the usual objections to this as not being possible due to IMF restrictions).

Marketing: Some of the Pakistani entrepreneurs do not have experience of export marketing, specially new comers. They need assistance and guidance. Proper and up to date marketing informations should be made freely available to them so that the number of new exporters with new ideas can be increased which in turn increase export of apparels. The following steps can also be taken more effective and better marketing:

Leading international apparel manufacturing and marketing companies like Wrangler, Levi's, Arrow, Jordace, La Costa. "C&A", Sear's, St. Micheal, etc., may be invited by Pakistani Government and a series of seminars may be organised to inform them about the advantages of manufacturing and buying in Pakistan. Services of successful USA or European consultants like Kurt Salmon or others may be availed for this purpose and all expenses should be borne by the EPB or Ministry of Commerce. Further, they may be encouraged to establish their own manufacturing facilities or joint-ventures or licensing arrangements similar to the Wrangler, who are already working in Pakistan.

Manufacturing and marketing expertise and technical know-how of these internationally well known and famous manufacturers can be very helpful for Pakistani manufacturers and exporters. This will also encourage them to make Pakistan their sourcing point. A list of such leading names with full particulars may be prepared from all over the world specially USA, Europe, Japan and Hong Kong and circulated to the existing and potential manufactures of apparel in Pakistan. Foreign buying houses maybe encouraged to open their offices in Pakistan for buying Pakistani apparel.

Foreign Buying houses who are already operating in Asia may be identified like those in Hong Kong, Bangladesh etc., and invited and encouraged to come to Pakistan to open their offices here. A list of leading apparel importing countries of the world may be prepared mentioning the quota and non-quota countries separately. A genuine list of leading apparel importers in each of these countries may be prepared and made available to everyone on nominal cost. This list should be updated after every six months. An updated list of non-quota countries may also be prepared and made available on nominal cost.

Pakistan should participate in every apparel fair all over the world. A list of such apparel fairs may be prepared and publicised in Pakistan through EPB and the trade associations. Pakistani entrepreneurs may also be encouraged to open their own marketing and distribution offices abroad.

Exhibition Centers: Permanent exhibition centers in Karachi, Lahore, Islamabad and Faisalabad for apparel should be set-up immediately.

Apparel Marts: Apparel marts in Karachi, Lahore, Islamabad and Faisalabad needed to be established on the pattern of apparel marts in USA to house apparel showrooms and offices under one roof in centrally located building. The apparel associations may also have their offices in these building. The exhibition halls may also be provided in this building. A library on apparel industry may also be housed in this building.

Technology and Technical know-how: Pakistan is ahead of India or Bangladesh as far as use of modern machinery is concerned. For instance Pakistan is already using computerised marking and grading systems and under-trimmer lockstitch machines. But Pakistani entrepreneurs lack in technical know-how, therefore, their production efficiency is low. Thus, substantially scope for improvement in quality exists. The answer to this problem is again the introduction of latest production techniques through major reputed international manufacturing companies who may be encouraged to come to Pakistan either on their own or in joint venture or as a lencensor.

Free import of trained technical manpower from other countries may also be allowed. Apparel manufacturing and designing courses may be introduced in schools, colleges and universities in Pakistan, specially Business Administrations institutions.

Trained Manpower

The is a acute shortage of trained manpower in Pakistan, specially at production manager's level. Thus Pakistan must have comprehensive training institutes in major cities on the pattern of Hong Kong Training Institute or Sri Lanka Training Institute. There has been numerous discussions on this topic but no positive action has been taken as yet.

Availability of Raw Materials and Trims

Certain finer varieties of cotton fabrics made of over thirty counts are not readily available. Similarly, denim cloth for denim jeans are not available in appropriate quality and sufficient quantity resulting in substantial loss of exports to Europe. These must be looked into and rectified. Import of raw materials for re-export as apparel may be freely allowed without any governmental (Federal or Provincial) levies. The trims such as buttons, zips, inter linings etc., are not freely available. This must be also be looked into and necessary steps taken to resolve this problem. Special incentives may be given on imports of inter linings, buttons, zippers, printed poly bags and packing materials with no governmental levies on its imports.

Information on Apparel Industry

A proper library may be established for apparel industry. This library should have all the books published on apparel industry worldwide. All technical journals and magazines being issued from all the countries may be available in this library for use by the apparel manufacturers. Video films as apparel industry may also be made available here. This library may be housed in the apparel mart, if the same is proposed.

Information on Quota Availability

A comprehensive booklet giving details of total quota availability in Pakistan items and destination wise together with details of parties allocated with these quota's may be printed annually like those already being published in Hong Kong. (copies of those may be obtained through our commercial offices in Hong Kong). With present day computerisation, this should not pose any problem. This is very essential for our foreign buyers and the buying houses in Pakistan to know as to what quotas are available, how much and with whom. This will assist in reconciliation of quota availability and utilisation. This will also substantially reduce quota misuse and manipulation and therefore may result in strong resistance to its implementation.

Machinery Imports

All apparel machinery, spare parts, needles and attachments may be imported free of all governmental levies and without any financial ceiling. Presently a commercial importer cannot import over Rs. 30 million worth of apparel machinery and spare parts per year and has to pay 12-1/2 per cent sales tax in its imports.


a) The difficulties of getting telephones, faxes and telexes should be removed on a urgent basis.

b) The problems of electricity load-shedding must also be resolved.


Pakistan with its bounty of raw cotton is poised to leap into an economic boom provided proper and timely steps as suggested above are taken immediately. There is no reason why we cannot surpass Hong Kong's apparel export of US $ 15 billion as against Pakistan's current garment exports of US $ 500 million only.

Pakistan import of industrial sewing machines in the last six years are as follows:-
1986-87 21,935
1987-88 18,180
1988-89 11,432
1989-90 21,944
1990-91 46,264
1991-92 62,408

In the six months of 1992-93 i.e. July, 1992 to December, 1992 it was 28,587 units.

The export of readymade garments and hosiery in the last four years are as follows:
(US $ (Million))
 Garment Hosiery
1988-89 336.6 167.8
1989-90 394.6 274.1
1990-91 497.6 334.9
1991-92 613.9 425.5
Source: State Bank Annual Report 1991-92

God has given Pakistan a bounty in the shape of raw cotton but we have not yet been able to fully harness the same to our economic advantage. With the current expected cotton output of about ten million bales and the cotton yarn production of over one billion kgs., our textile based economy needs to be guided towards more value-added products. (But this should not in any way give an idea that further production of cotton yarn should be discouraged. It is only with substantial increase in cotton yarn production that value added products and its export can be increased).

Production of better and finer quality of cotton yarn specially above thirty counts should be increased. Production of better quality cotton fabrics, both woven and knitted, should increase specially woven fabrics for trousers and denim jeans for which there is a shortage. After having written all this, we must come down to the reality of further value-added production and exports. Though finer quality of cotton yarn and better quality of wider width cotton fabrics also increase the value of exports. It is only the substantial growth of apparel industry which will propel the Pakistan economy to a respectable level.
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Author:Rashid, Asif Ali
Publication:Economic Review
Article Type:Industry Overview
Date:May 1, 1993
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