Pakistan Keeps Going Despite Restrictions

Development of 'Textile Cities' Expected to Spur Trade

By Staff -- Home Textiles Today, 3/21/2005 12:00:00 AM

Although the post-quota situation for Pakistan's home textiles manufacturers brings opportunity, free trade alone cannot clear some of the obstacles executives in Pakistan see as potentially limiting their growth.

The U.S. State Department's travel advisory against non-essential travel to Pakistan continues to keep away many potential buyers from the United States, mill executives said. So have certain U.S. corporate insurance policies that require a higher premium when their holders travel to countries on the official Travel Warning list.

Although Pakistan's mill executives travel to meet clients in their U.S. offices or at mid-points such as Dubai, some believe their dealings would be strengthened if customers were able to tour the factories first-hand.

“Exposure is very important,” said Iqbal Ebrahim, director of Al-Karam Textile Mills Ltd. and Orient Textile Mills Ltd. “Customers need to come see for themselves.”

Some executives anticipate that because of the U.S. government's ties with Pakistan's President Pervez Musharraf in anti-terrorism efforts, travel advisories may be pulled off certain portions of Pakistan later this year — particularly cities such as Karachi and Lahore that are vital to business and trade.

Another issue looming large for manufacturers is Europe's imposition of anti-dumping duties on bed linen from Pakistan. Gul Ahmed flagged the potential impact on business in its annual report for 2004 by noting that textiles face an additional 12 percent duty under Europe's GSP standard on top of 13.1 percent in existing anti-dumping duties.

The tightening access to the European market — which absorbs 19 percent of Pakistan's textiles exports — raises the stakes for market access elsewhere. The U.S. market already takes in 24 percent of Pakistan's textiles exports, making it the country's largest off-shore market.

With competition rising in the East from China, Pakistan has laid plans to incubate trade in specialized zones.

The country is in the process of developing a 1,250-acre Textile City in the Port Qasim area roughly 25 miles outside Karachi, the first of three such textiles cities on the boards. The other two are scheduled to be developed in Lahore and Faisalabad.

Developed as a public/private partnerships, the cities will serve as exclusive textiles export zones with multiple dyeing and processing units as well as testing laboratories. The idea is to help smaller spinning and/or weaving mills flourish into more vertically aligned operations. Production of finished product is the ultimate goal, as is lifting a large sector of Pakistan's smaller textiles mills out of the low-end commodity business.

The plan for the Karachi Textile City in Port Qasim includes the development of two more container berths with 12.5 meter draft along the berth and the capacity to dock 4,500 TEU's (20-ft. equivalent containers).

For Pakistan's largest mills — many of which have been exporting to the United States for several years — there is some pressure from U.S. customers to establish distribution centers either in Pakistan or in the States, according to Maqsood Sabir, manager of marketing, Yunus Group.

“Before, the customer depended on the importer because the importer had the warehousing. Now, they would like us to handle the warehousing if possible,” he said.

Yunus, in the meantime, plans to expand its capacities this year by up to 35 percent in both its processing and cut-and-sew divisions, he said.

For Nishat (Chunian) Ltd., which has opened a U.S. office in South Carolina, the key to propelling growth will be leveraging technologies it has developed for previous products, including anti-bacterial and anti-fungal sheeting. Other innovations include the use of milk, soybean and silver fiber in sheeting fabric.

TOP MANUFACTURERS: PAKISTAN

Company Name	2004 Sales* (millions)
*Sales are home textiles only. Source: HTT research
1. Yunus Group	$350
Vertically integrated group with three mills; plans to expand cut-and-sew and processing.
2. Sapphire	326
Made investment two years ago in finishing business to move into more finished goods.
3. Crescent Group	258
An amalgamation of eight mills, including large greige production and denim jeanswear. Recently upgraded IT to enhance planning and CRM (Customer Relation Management).
4. Nishat Mills	256
Pursuing a key-customer strategy to pursue growth; also investing in new machinery.
5. Kohinoor Group	173
Expanding off its weaving base into finished goods, the group last year focused on improving production efficiencies.
6. Fatima Group	114
Consists of Reliance Weaving Mills and Fazal Cloth Mills.
7. Gul Ahmed Textiles Mills	115
Producer of bedding and a range of other textiles, company positions itself as a provider of solutions rather than simply product.
8. Nishat (Chunian) Limited	112
Opened a marketing office in South Carolina to boost U.S. business, which amounted to $61 million in 2004. Adding capacity.
9. Afroze Textile Mills	110
Export business of bedding and bath has grown nearly 40 percent since 1998 to more than $85 million.
10. Chenab	105
Vertically integrated bedding producer (also owns a garment division), the mill is also pursuing the high-tech textiles business.
11. Bismallah	80
Has been exporting bedding, window and kitchen to the U.S. for nearly 14 years.
12. Al-Karam	78
Began building out capacity and upgrading machinery more than three years ago to expand business in bedding, fabric and finished product.
13. Arzoo Textile Mills	60
U.S. has been largest export market for the maker of fabric, bedding and kitchen textiles, accounting for an average of 53 percent of exports since 1997.
14. Al-Abid Silk Mills	49
Produces broad line of bedding, window, kitchen and table linens, and has been exporting to the U.S. since the late 1990s.