According to the economic and Commercial Counselor's office of the Chinese Embassy in Pakistan, Pakistan's dawn Daily reported that Bashir Bashir, President of Punjab province of Pakistan's Textile Industry Association, said at a related meeting on Tuesday that the current government of Pakistan has taken special measures to encourage industrialization and export, and the business environment in Pakistan is gradually improving. In order to improve the sustainability of the development of the textile industry and clarify the growth direction, Pakistan textile industry association is working with the government to formulate a long-term development strategy for the textile industry. It plans to attract 7 billion US dollars of investment in the next five years, and promote the export volume of textiles and clothing to increase 100% to 26 billion US dollars.
Pakistan is the world's third largest cotton consumer, fourth largest cotton producer, fourth largest textile producer and twelfth largest textile exporter. Textile industry is Pakistan's most important pillar industry and largest export industry. In recent years, Pakistan's textile industry has been plagued by problems such as unstable security, high operating costs, declining product competitiveness and weak international market demand. However, with the steady progress of the "belt and road" construction and the construction of China Pakistan Economic Corridor, China Pakistan textile trade cooperation has broad prospects.
1、 Basic situation of Pakistan textile industry
1. Pakistan's most important pillar industry
Pakistan is an important textile country in the world, and its export volume of cotton yarn and cotton cloth ranks first in the world. The number of employees is about 15 million, accounting for 40% of the labor force in the manufacturing industry. The credit scale accounts for 40% of the credit scale of the manufacturing industry in Pakistan, and the industrial added value accounts for 8% of the GDP. Textile industry is the most export-oriented industry in Pakistan. In 2015-16 fiscal year (from July 1, 2015 to June 30, 2016), Pakistan's textile export volume was 12.45 billion US dollars, accounting for 60% of its total export.
2. The industrial chain is relatively complete
Pakistan is one of the few textile countries in the world with the production capacity of the whole industrial chain. According to the statistics of Pakistan's Ministry of textile industry, there are 1221 cotton ginners, 442 spinning mills, 124 large-scale textile and garment factories and 425 small-scale textile and garment factories; the annual production capacity of cotton yarn is about 11.3 million spindles, with a total of 300000 textile machines, 350000 force looms and 18000 knitting machines; the annual cotton production capacity is 5.2 billion square meters, with a total of 700000 industrial sewing machines. Pakistan is a major cotton producing country with an annual cotton output of about 13 million bales (480 lb / bag), 600000 tons of man-made fiber and 500000 tons of terephthalic acid, all of which provide a solid foundation for the development of the textile industry.
3. Production and research are relatively concentrated
More than 60% of Pakistan's textile enterprises are concentrated in Punjab and 30% in Sindh. Faisalabad in Punjab province is a famous textile industrial city in Pakistan. It has a textile enterprise group composed of large, medium and small textile mills and workshops. Its textile export accounts for 58% of Pakistan's total textile export. Pakistan's main textile technology institutions and facilities are also concentrated in the city, including Pakistan Agricultural University, Pakistan National Textile University, Pakistan cotton research institute and Pakistan Agricultural Research Institute.
4. Industry organizations have great influence
The main trade organizations of Pakistan textile industry include all Pakistan Textile Mills Association, all Pakistan textile processing factories Association and Pakistan knitwear manufacturers association. Due to the pillar position of the textile industry in Pakistan's national economy, the all Pakistan textile mill Association and its local branches play an important role in the development of Pakistan's textile industry: first, to influence the formulation and implementation of government industrial policies; second, to strengthen the industry's self-regulation, such as providing services such as trade dispute arbitration, etc; The third is trade promotion and investment promotion, such as cooperating with the government and participating in various trade and investment exhibitions at home and abroad; the fourth is industrial protection and self-help, such as asking the government to conduct anti-dumping and anti subsidy investigations on imported products on behalf of member enterprises.
2、 Major problems and challenges facing Pakistan's textile industry
1. The scale of enterprises is small and the degree of industrialization is not high
In Pakistan, the vast majority of enterprises engaged in cotton ginning, spinning, weaving, garment production and chemical fiber production are small or workshop type enterprises. Manual labor still accounts for a large proportion. Only about 10% of enterprises with a certain scale and high degree of industrialization account for about 10%. The technology and equipment of chemical fiber, clothing, printing and dyeing are relatively backward. Due to the difficulties and high financing of small and medium-sized enterprises, as well as the problem of insufficient investment that has plagued Pakistan for a long time, the investment in technology upgrading and transformation of textile enterprises is seriously insufficient, and the expansion of production scale is difficult, which restricts the improvement of product process and the realization of scale efficiency.
2. High production costs make it difficult for enterprises to operate
One is the high cost of electricity. The government of Pakistan has implemented a new energy policy based on reducing government subsidies and increasing electricity prices to raise funds for the construction of large-scale energy projects. According to the calculation of the all Pakistan Textile Mills Association, the new energy policy actually increased the electricity price from 9.2 rupees per kilowatt hour to 14.8 rupees per kilowatt hour. Although the Pakistan government reduced the industrial sector electricity price to 11 rupees per kilowatt hour in 2016, it was still higher than the electricity prices of China (8.5 rupees / kWh), Bangladesh (7.3 rupees / kWh) and Sri Lanka (9.2 rupees / kWh). Second, the cost of financing is high. Pakistan's national savings rate is low, capital shortage, textile industry, which is dominated by small enterprises, has been facing the problem of financing difficulties and expensive financing for a long time. Although the basic interest rate of the central bank has been reduced to 5.75% due to inflation control in recent two years, the financing cost of textile industry is still on the high side. In addition, the high price of natural gas, high comprehensive tax burden, rising wages and high logistics costs also increase the operating costs of enterprises. In the first half of 2016, nearly two thirds of the textile enterprises in Punjab were unable to carry out normal production.
3. Cotton production and quality are both low, affecting the development prospects of the industry
Affected by market price downturn, extreme weather and poor seed quality, Pakistan's cotton production has declined for two consecutive years. In 2015-16, the cotton output was only 9.8 million bales, a year-on-year drop of 27.8%, a new low in the past 14 years, resulting in a shortage of domestic cotton supply and demand of more than 4 million bales for two consecutive years. It is generally believed that the dependence on imported cotton has posed a great threat to the healthy development of Pakistan's textile industry. In addition, Pakistan's cotton growers are mainly self-employed farmers, and their seed and quality inputs are seriously insufficient. In addition, due to the extensive collection and processing process of raw cotton, the quality of Pakistan's textile products can not reach the internationally accepted technical standards. As a result, Pakistan's textile exports are plagued by quality problems. As a result, many high-end customers have been lost and about 2 million bales of long staple cotton have to be imported every year to meet the domestic demand.
4. The added value of products is not high, and it is at the low end of the global industrial chain
Pakistan's textile industry is generally at the low end of the international industrial chain, mainly staying in the links with relatively low added value, such as primary products, primary processed products, medium and low-grade textile consumer goods. Low value-added products such as cotton yarn, cotton cloth, towel, bedding, knitwear and other low-value-added products account for nearly 80% of textile exports. In 2015-16 fiscal year, the top five categories of products exported were as follows: knitted apparel $2.37 billion, cotton cloth $2.21 billion, ready-made clothing $2.02 billion, bedding $2.02 billion, cotton yarn 1.26 billion, accounting for only 36.7% of the export, far below the international level of 60%. Under the comprehensive influence of insufficient new product development, ineffective human resource training, lagging behind the development of producer services such as brand management and marketing, Pakistan's textile industry is gradually lagging behind the mainstream of the world's textile industry.
5. The competitiveness of products is declining and the international market share is being squeezed
In recent years, Pakistan's textile industry is facing increasingly severe international competition. China and India, the two major textile exporting countries, pose challenges to Pakistan's overseas market by virtue of their advantages of scale. Small countries such as Bangladesh and Sri Lanka, taking advantage of the status of least developed countries, are gaining access to European and American markets and preferential tariff treatment, which are also squeezing Pakistan's export share. In contrast, Pakistan's textile enterprises are deeply troubled by high operating costs and poor business environment. At the same time, Pakistan's domestic security situation has been unstable for a long time. Foreign buyers are worried that Pakistan's enterprises will not be able to supply goods on schedule and transfer their orders to other countries. Affected by the above adverse factors, Pakistan's textile exports decreased by US $1.4 billion in the 2013-2016 fiscal year, while the exports of Bangladesh, India and Vietnam increased by US $3 billion, US $4 billion and US $8 billion respectively. Pakistan's international market share fell from 2.3% to 1.5%, while India's increased from 3.5% to 5% and Bangladesh's from 1.6% to 3.7%.
3、 Prospects and opportunities for the development of Pakistan's textile industry
1. Great development potential of domestic market
Pakistan is the sixth most populous country in the world, with a huge consumer market of 190 million people. As of 2016, the domestic sales volume of Pakistan's textile products accounted for only 20% of the total output. One of the main reasons is that the poor, who account for the majority of the population, have low consumption power and tend to buy cheap goods. From 2013 to 2016, Pakistan's macroeconomic situation showed an overall positive trend, with economic growth of 4.7% in fiscal year 2015-16, a new high in the past eight years. With the continuous deepening of the construction of China Pakistan Economic Corridor, Pakistan's economic growth is expected to further accelerate, thus improving Pakistan's national consumption capacity and bringing new opportunities to the development of textile industry.
2. The government attaches great importance to the development of textile industry
As the textile industry is related to the overall situation of employment and export in Pakistan, and the influence of trade associations is great, the Pakistani government has always attached great importance to the development of the textile industry. The Ministry of textile industry issued the textile policy (2014-2019) in 2015. It is planned to implement a series of incentive measures to promote the development of the textile industry. The goal is to double the textile export volume to 26 billion US dollars and create 3 million jobs in the next five years. About US $16.4 billion of tax-free subsidies and subsidies will be provided to the government for the textile industry development according to the new policy. In 2016, the Pakistani government launched a series of export stimulus programs, including the exemption of import tariff and sales tax on textile machinery and equipment and cotton, reducing the electricity price of the industrial sector from 15-16 rupees per kilowatt hour to 11 rupees per kilowatt hour, ensuring uninterrupted power supply and increasing export tax rebates. At the same time, preferential tax rate support was given to five major export departments including the textile industry in the 2016-17 fiscal year budget. Although the implementation effect is not as expected due to the shortage of government development funds and inadequate funds allocation, the industry generally gives positive comments.
3. Obvious resource advantages
Pakistan is the fourth largest cotton producer in the world. Although its output has declined in recent years, it still accounts for about one tenth of the world's cotton production. At the same time, Palau is rich in power resources and has a great advantage in human cost. At present, the legal minimum wage of Pakistan is 114 US dollars, and the wage level of semi skilled and skilled workers in the textile industry is 150-200 US dollars per month, which is at a low level in the world's major garment exporting countries. According to the prediction of the International Monetary Fund, Pakistan will maintain a population growth rate of 2.2% and an adult labor population growth rate of 3.5% in a certain period of time, which is a unique resource condition for the textile industry of labor-intensive industries.
4、 Current situation and Prospect of China Pakistan textile industry cooperation
China and Pakistan are both major textile producers and exporters, and there is a certain degree of competition between them. However, the differences in the level and stage of industrial development between the two countries also create a broad space for cooperation.
1. Close trade relations and obvious complementary advantages of products
Under the China Pakistan Free Trade Agreement, except for chemical fiber products, most of China's textile exports to Pakistan can enjoy tax reduction of 20% - 50% or zero tariff treatment, and the vast majority of Pakistan's textile exports to China also enjoy tariff relief. The obvious advantages of the two countries in the current textile trade structure and their related characteristics. Among them, cotton yarn and cotton cloth are the largest products imported from Pakistan, and clothing export is one of the important products exported to Pakistan, which has surpassed Japan and Germany as the largest import source country of Pakistan's textile machinery.
2. The development of investment is relatively backward, but it has great potential
In the early stage, our textile enterprises went to Pakistan to test water. In 1994 and 1998, both China National Textile machinery technology import and Export Corporation and China Jingwei Textile Machinery Co., Ltd. established joint ventures with Pakistan enterprises to produce yarn tubes and ring spinning frames. However, the former withdrew in 2006 due to labor disputes, while the latter stopped production due to mild market reaction. Overall, my investment in Pakistan's textile industry is relatively lagging behind. At present, with the continuous promotion of the "belt and road" construction and international production capacity cooperation, a good macro policy environment has been created for China's textile industry to go abroad. With the weakening of the cost advantage of China's manufacturing industry, the textile industry urgently needs to restructure the value chain and create new international competitive advantages through outward transfer. Pakistan has become one of the most capable countries to undertake the capacity of China's textile industry with its existing development foundation. Although Pakistan has failed to seize the opportunity compared with Bangladesh, Vietnam and other countries, it has great potential to attract investment in China's textile industry in the future. In addition, in recent years, political and economic exchanges between China and Pakistan have been heating up. Pakistan warmly welcomes China's investment. With the gradual deepening of the construction of the China Pakistan Economic Corridor, Pakistan's business environment, including power supply and transportation infrastructure, is expected to be greatly improved, which will also provide a favorable environment for Chinese enterprises, including textile industry, to invest in Pakistan.
3. Industry depth cooperation is expected, and bright spots are expected to increase
Pakistan's cooperation with its major trading partners in the textile industry often involves both trade and investment as well as cooperative development. For example, in recent years, the United States has implemented the "knitted clothing export support program" in small and medium-sized textile enterprises in Pakistan, subsidizing small and medium-sized textile enterprises to build production bases, train employees, upgrade and transform machinery and equipment, and provide certification services. In terms of textile industry, the level of cooperation between China and Pakistan still needs to be improved. In fact, after more than 30 years of accumulation, China's textile industry has accumulated certain comparative advantages in brand building, enterprise management, capital operation, talent cultivation and industrial supporting. These are just the weaknesses of Pakistan's textile industry, and the potential space of "long-term and short-term integration" provides opportunities for deepening cooperation between the two countries' textile industry.