Pakistan Suppliers Strive for Expansion
Grapple with Global Economic Issues
By Staff -- Home Textiles Today, 5/21/2007 12:00:00 AM
Karachi, Pakistan —
After investing US$6 billion during the previous six-year period (2000-2005), further investment in the textile sector slowed considerably during 2006. Increases in bank interest rates, higher energy costs, the overall cost of doing business, and competition from China and India are the major factors affecting major investment in the textiles sector.
Due to what some here call a "global recession in home textiles," the home textile sector has been facing problems of downturn in demand and prices for the last year, even as raw material prices are maintaining their rising trend. Some small mills have shut down, but the bigger players are resisting the situation.
As a measure of some support, the government of Pakistan recently announced a Rs. 25 billion package to the textile industry in the shape of 3% to 6% R&D support on the FOB value, and via SWAP of loans under the LTF-EOP scheme at 7%.
The textile industry in Pakistan is striving very hard to have another incentive package from the government in the shape of a zero rating of all taxes and duties as well as duty-free imports of processed fabric, accessories such as printing screens, dyes and chemicals for the home textile sector, and a reduction in energy prices.
Tariq Seagol, a leading textile industrialist, sees enormous potential still ahead for Pakistan textiles even after the elimination of quotas on Chinese textile exports to the United States. He believes that Pakistan has a large spinning and weaving base in low, medium, and high quality raw material. Wider width looms and rotaries are also a factor. But Seagol expressed his concerns on the growing competition from China and India in the home textiles market.
Kashif Shakoor of Gulistan Group believes that Pakistan has as much as a 20% to 25% share in the U.S. home textile market. In his view, economy of scale is the major problem for the home textile industry in Pakistan. He said Pakistani exporters need a large production base to respond on a just-in-time basis to fulfill follow-up orders.
Shabbir Ahmed, chairman of the Pakistan Bed Wear Exporters Association, has stated publicly that government policies like tight monetary policy and increasing utility charges are the major factors affecting the growth of the bed wear sector here. He said that Pakistan is not fully exploiting the available potential in the world market.
Sheikh Mukhtar Ahmed of Sadaqat Textiles, says that his company pays a 15.3% duty in the EU, including the antidumping duty of 5.6% on Pakistan bed wear. On the other hand, he said, the special market access enjoyed by Bangladesh and Sri Lanka creates unfair competition across the EU market.
Mukhtar notes that Sadaqat is active in most home textile product areas, selling the full range of bed wear products including sheet sets, bed in a bag, bed spreads, quilt cover sets, comforters; and curtains, decorative pillows, and tablecloths as well.
Sadaqat Textiles utilizes all channels of distribution, including direct-to-store and converters.
On the issue of prices, Mukhtar said that with the market in a depressed condition, prices are down as compared with the input prices, which are increasing in Pakistan due to the increase in inflation.
Nevertheless, Mukhtar pointed out that his company registered an 80% increase in sales volume during 2006 and the company has a target to increase sales by another 30% during 2007 as a result of expansions in all segments: weaving, dyeing, printing, and stitching. The company will add 36 new sulzer machines during 2007 in addition to 80 already installed machines. In the printing segment, the company has ordered a European machine which will be installed in few months.
Mukhtar suggested that the United States should provide Pakistan special market access, because the country is a key coalition partner with the U.S. anti-terror war. He also insisted that the government of Pakistan should provide relief in utility prices to the textile industry.
Mukhtar is very positive for the prospects of home textiles in Pakistan. Sadaqat's plans for expansion in weaving and the other areas reflects confidence in the industry.
Nishat Mills, one of the largest producers in Pakistan, during 2006 installed 108 high speed Tsodakoma weaving machines in its plant at Bhikki. The company said it also added 72 new wider width Toyoda looms at its plant at Lahore.
In a diversification move, Nishat Mills entered into a joint venture with Gulf Baraka Apparel of Bahrain to manufacture and sell apparel products under the business name of Gulf Nishat Apparel Limited.
Chenab Ltd. reported Rs. 6.958 billion in sales revenue for the financial year 2006 as against Rs. 5.863 billion for the previous year, an increase of 18.68%. Building upon this expansion, the company foresees a rapid increase to about Rs. 8.5 billion in the next year, on completion of ongoing capacity expansion.
Exports from Pakistan ($ thousands)
Bed wear and other made-ups
|Source: Trade Development Authority of Pakistan
|Targets for 2006-07 (Jul-Jun)||500,000||2,275,000|
Total Private Sector Investment: $6.0 billion from 2000 – 2005
|Source: Textile Commissioner Organization
|Spinning & Fibre||47%|
|Knitwear & Garments||5|
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