Where should I invest 100,000 in Pakistan
PAKISTAN'S CLOTHING AND TEXTILE INDUSTRY HAS TO INVEST
- International competition increases
- Companies need to modernize production and increase processing depth
Dubai / Islamabad (GTAI) - Pakistan's textile and clothing industry urgently needs to invest. International competition has intensified. Companies have to modernize their technology and increase their processing depth. The country wants to move away from the production of simple fabrics and yarns. The GSP Plus agreement with the EU and an improvement in the security situation have brightened the investment climate. For high-end machines, Pakistan is dependent on imports.
Pakistan's textile and clothing industry expects better sales opportunities abroad in the next few years, especially in the European Union. At the beginning of 2014, Pakistan received GSP (Generalized System of Preferences) Plus status from the EU, which allows the country to deliver goods to the EU at a lower duty rate or even completely duty-free. The textile and clothing industry will particularly benefit from the agreement as the sector supplies almost 80% of Pakistan's exports to the EU. The government expects additional exports for the sector worth US $ 1 billion per year.
According to the latest available foreign trade figures, Pakistan was able to increase its total exports of clothing by almost 10% to around US $ 5 billion in 2014, the year in which the GSP Plus Agreement came into force. Official figures on exports to the EU are not available. According to the foreign trade statistics, exports to Germany have increased in any case, with clothing by 13% to almost $ 500 million, with textiles by 18% to $ 434 million and with shoes by 27% to $ 34 million
|SITC||Product group||2013||2014||Changes 2014/2013|
Source: UN Comtrade
Demand for textile machines is increasing
Market observers expect increasing investments in machines. Demand for textile printing machines, dyeing machines, stenter frames and other finishing technology is expected to develop particularly dynamically. The expected increase in textile exports to the EU and an improvement in the security situation are having a positive effect on the investment climate. In recent years, electricity bottlenecks and a precarious security situation have hampered production and investment.
The market for textile machines (SITC 724) already picked up significantly in 2014. Only relatively simple machines are made in the country itself. High-end technology is mostly imported. The import of textile machinery rose to US $ 585 million in 2014, an increase of 17% compared to 2013.
|year||Value (in US $ million)|
*) SITC 724, including parts
Source: UN Comtrade
|country||2014||Change 2014/2013||proportion of|
|People's Republic of China||145||40,7||24,8|
*) SITC 724, including parts
Investments urgently needed
The competition with the competition from the PR China, Bangladesh, India and Sri Lanka has intensified. Pakistan's textile industry needs to modernize and upgrade its machinery in order to increase its productivity and added value. Pakistan covers the entire value chain from fiber preparation to the end product. Despite this good starting position, mainly simple products are produced. Only an estimated 40 companies are vertically integrated and cover all textile processing. With an annual harvest of around 13 million bales, Pakistan is the fourth largest cotton producer in the world. In addition, around 600,000 tons of synthetic fibers are produced in the country. According to reports, there are 21 factories of filament yarn with a capacity of 100,000 tons; production is supported by a PTA plant with a capacity of 500,000 t.
|product||Value (in US $ million)||Change||proportion of|
|Tent, canvas, tarpaulin||105||82,0||1|
|Made-ups (Other Textiles)||486||-0,5||5|
|Art-Silk & Synthetic Textile||274||-17,0||3|
|Other textile products||350||0,0||4|
Sources: Pakistan Bureau of Statistics; TMA - Towel Manufacturers Association
Yarn production has lost competitiveness
According to industry experts, yarn manufacturers have not made major investments to upgrade their production in the last decade, although there should be money for investments. Among other things, this was due to the strong competition in the textile sector from the PR China, India and Bangladesh. Ten years ago, Pakistan was one of the most efficient yarn manufacturers in the world. Because modernization investments were not made, the technology in Pakistan is now considered obsolete.
The companies complain about high production costs and are demanding lower electricity tariffs and protectionist measures against import competition. Electricity bottlenecks and the tense security situation also have a negative impact on production and the investment climate in the country.
The textile sector in Pakistan is characterized by numerous large textile companies, compared to a large number of small companies, most of which belong to the so-called informal sector. The informal sector includes, for example, small family businesses or small factories that are not subject to tax. The informal sector mainly manufactures simple products for the domestic market. He works with discarded machines from larger companies, imported used machines or cheap technology from China. The official statistics do not take into account the informal sector.
|724.3||Sewing machines, assume||18.508||31.034||67,7|
|People's Republic of China||9.795||19.925||103,4|
|Germany (5th place)||856||750||-12,4|
|724.4||Spinning machines and other machines for processing textiles, of which||255.311||258.348||1,2|
|Germany (3rd place)||64.086||46.545||-27,4|
|People's Republic of China||31.305||53.706||71,6|
|Germany (Rank 6)||5.290||6.097||15,2|
|724.6||Auxiliary machines, assume||30.953||36.801||18,9|
|People's Republic of China||8.797||11.935||35,7|
|Germany (rank 2)||6.429||4.880||-24,1|
|724.7||Machines for dyeing, washing, drying etc., from it||61.620||64.825||5,2|
|People's Republic of China||9.855||12.455||26,4|
|Germany (3rd place)||16.652||11.494||-31,0|
|724.8||Leatherworking and shoe making machines, including parts thereof||5.854||8.722||49,0|
|People's Republic of China||1.542||2.338||51,6|
|Finland||n / a||192||n / a|
|Germany (5th place)||29||140||381,6|
|724.9||Parts for textile machines therefrom||3.996||5.760||44,2|
|People's Republic of China||2.107||2.854||35,5|
|Germany (rank 2)||617||669||8,4|
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