Readymade Garment industry: Major source of Pakistan’s foreign exchange earnings
by Prof. Dr. Noor Ahmed Memon, Dean FBMS; Metropolitan University, Karachi,

The textile and clothing industry in Pakistan constitute the country's most important industrial activity by far and fulfills a crucial economic role. The industry is a major source of employment and is a major contributor to Pakistan’s gross domestic product (GDP), exports and foreign exchange earnings. The industry is diverse and broadly based but most of its focus is directed towards the production and processing of products made from cotton.

Pakistan’s garments industry is inexorably linked with its history in textiles. Long one of the world’s leading cotton producers, Pakistan has used local access to the natural fiber as well as the related yarn and fabric materials to integrate into the apparel Global Value Chain (GVC) in certain product categories.  Overall, Pakistan’s readymade garments exports stood at US$ 2.7 billion in 2018-19, an increase of nearly 27% compared to 2014-15.

The garments industry has often played a catalytic role in economic development. With low barriers to entry in terms of capital, technology and labor skills, many countries have targeted the sector as a means for providing significant employment opportunities and export revenue. The benefits associated with the industry ensure the competitive environment is fierce.

The readymade garments industry started in the 70's in Pakistan. With the passage of time and industrialization, this industry expanded very rapidly. The majority of the units making cotton garments are medium and small-size in terms of machines, workers and output, with a few notable exceptions scattered throughout Pakistan.

Readymade garments and products have large demand both at home and abroad. The local requirements of garments are almost met by this industry. The garment industry is also a good source of providing employment opportunities to a large number of people at very low capital investment. Most of the machines used by this industry are imported in the organised sector and  locally made machines are also used by the smaller players in the market.

Import of machinery

The automatic and industrial sewing machines are mainly imported from China and Germany, and are capable of working at high speed. These are especially suitable for assembly line operations and are mostly used by the organized sector. Besides automatic sewing machines, household sewing machines along with parts are being imported. The statistics regarding imports of sewing machines for the last three years are given in Table 1.

Table 1: Export of Readymade Garments from Pakistan

Year

Quantity
(Million Doz)

Value
(US $ Million)

Average
(Per Doz)

2014-15

31

2,095

67.58
2015-16 33 2,195 66.51
2016-17 35 2,319 66.26

2017-18

40 2,577 64.24

2018-19

41 2,654 64.73

 Source: Trade Development Authority of Pakistan.

Exports

At present the garment industry is able to offer a large volume of its products for export. The industry turns out various kinds of garments for men, women, boys such as plain / embroidered /printed dresses, blouses, maxis, shirts, skirts, nightdresses, tracksuits, middies, trousers, dresses, etc. Production of garments depends entirely on export orders directly or indirectly. These orders have somewhat risen in terms of value have fluctuated widely in terms of quantity.

Export of readymade garments from Pakistan increased from 31 million dozens worth US$ 2.09 billion in 2014- 15 to 41 million dozens worth US$ 2.65 billion in 2018-19, thus showing an average increase of 5% in term of value. Exports of readymade garments from Pakistan are given in      Table 2.

Table 2: Import of Sewing Machines
                                                                                                               Value : Rs. Million

Machines / Parts 2017-18 2017-18 2016-17
 Sewing Machines (Household) 150 238 153
 Automatic Sewing Machines 476 313 430
 Other Sewing Machines (Industrial) 3252 3,222 3,010
 Sewing Machines Needles 212 176 149
 Total 4,090 3,945 3,742

 Source: Pakistan Bureau of Statistics.

Pakistan exports readymade garments to a number of countries. Major buyers of garments during 2018-19 were USA, UK, Spain, Germany, The Netherlands, Belgium, France, Italy and UAE. The country wise exports of readymade garments are given in Table 3.

Table 3: Country wise Export of Readymade Garments
                                                              (Value in $ 000)

Country

2018-19

2017-18

2016-17
 U.S. America 522,272 552,627 620,230
 Spain 344,528 348,204 282,514
 United Kingdom 295,815 327,256 280,348
 Germany 286,967 324,569 207,802
 Belgium 145,909 170,870 166,488
 Netherlands 200,653 14,232 109,623
 Italy 107,608 92,735 88,344
 France 82,078 80,088 79,975
 Poland 78,805 71,572 58,126
 U.A.E 68,141 70,987 66,339
 Denmark 72,815 57,805 40,000
 Canada 39,132 36,684 32,259
 China 20,203 20,440 20,829
 Australia 19,047 19,019 18,200
 Japan 15,795 18,282 17,701
 Saudi Arabia 11,448 14,594 12,781
 Mexico 16,902 14,207 11,338
 Norway 12,242 11,791 10,600
 Portugal 11,235 10,788 10,242
 Other Countries 302,125 320,468 85,060
 Total 2,653,720 2,577,218 2,318,799
 Source: Trade Development Authority of Pakistan.

World Exports

In 2018, the world value of apparel trade was approximately US$452 billion. China, the European Union (EU28), Bangladesh, and Vietnam unshakably remained the world’s top four largest apparel exporters in 2018. Altogether, these top four accounted for as much as 72.3% of world market shares in 2018, which, however, was lower than 75.8% in 2017 and 74.3% in 2016—primarily due to China’s declining market shares. Notably, even though apparel exports from Vietnam (up 13.4%) and Bangladesh (up 11.1%) enjoyed a fast growth in absolute terms in 2018, their gains in market shares were quite limited (up 0.3 percentage point from 5.9% to 6.2% for Vietnam and up 0.1 percentage point from 6.4% to 6.5% for Bangladesh). This result once again suggests that due to capacity limits, no single country has emerged to become the “Next China.” Instead, China’s lost market shares in apparel exports were fulfilled by a group of countries, a phenomenon which can be linked with fashion brands and retailers’ sourcing diversification strategy. World exports of readymade garments are given in Table 4.

Table 4: World Export of Readymade Garments
                                                              (Value in $ 000)

Country

2016 2017 2018
 World 417,927 439,498 451,852
 China 149,431 146,030 145,052
 Bangladesh 32,208 26,302 36,997
 Vietnam 24,081 20,325 30,057
 Germany 16,534 21,449 23,345
 Italy 20,023 17,434 232,202
 India 16,975 147,434 15,692
 Turkey 14,766 14,798 15,307
 Spain 12,225 13,824 14,295
 Hong Kong 14,916 13,732 13,130
 Neterlands 9,050 10,308 12,113
 Pakistan 2,319 2,577 2,654
 Source: Texprocil.

Future Prospects

The fashion manufacturing world internationally is facing the undesirable task of keeping up with modern politics. Fashion is one of the most exposed sectors in the ongoing US–China trade war because when two super powers work against each other, the global supply chain gets affected. Since such heavy tariffs have been implemented on Chinese products by the US, brands are setting their eyes on more lucrative lands. Pakistan has a developed apparel manufacturing base and can pick up the spill over from the neighboring countries aflush with orders from the US.

Domestic Market

In recent years, the garment sector has witnessed the entry of some of the biggest textile groups of the country and these textile groups availed opportunities by introducing separate brands, lawns and other fashion related products in the market.  On the other hand, talented designers with innovative ideas and internationally competitive designs are projecting the cultural heritage of Pakistan. 

There are numerous luxurious fashion brands in the country and their annual sales volume runs in billions of rupees. In an exceedingly competitive market, these brands try to come up with the most creative designs. These brands are focusing the youth and meeting their demands. Brand consciousness among the people is increasing rapidly.

A fashion product is showing drive and multifariousness in Pakistan. Most of the sales of branded clothing taking place through franchises that have bought the right to sell these products to consumers while the online sale of the clothes is also gaining grounds; as the younger demographic prefers to buy online products.

References:

  1. Pakistan Bureau of Statistics.
  2. Pakistan Economic Survey- 2018-19.
  3. Trade Development Authority of Pakistan.

 

 
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