TEXTILE

INDUSTRY

Comparison of Pakistan and Bangladesh

BACKGROUND
• Early Development: The textile industry in Pakistan traces its roots back to the pre-independence
era when the region was part of British India
• Economic Planning and Industrialization (1950s-1960s): In the early decades after independence,
Pakistan adopted a policy of state-led industrialization.
• Nationalization and Crisis (1970s) by Z.A.Bhutto
• Privatization and Liberalization (1980s-1990s):
• Growth and Globalization (2000s-Present):
KEY STATS
• Contribution to GDP: The textile industry contributes significantly to Pakistan's GDP, accounting
for around 8-9% of the total GDP.
• Over $25 billion in FY 2021 (source: All Pakistan Textile Mills Association (APTMA) website).
• Record high of $17.67 billion for Jul-May 2021/22 (source: Board of Investment Pakistan).
• Spindle Capacity:
• 13.41 million spindles (source: Board of Investment Pakistan).
• 3rd largest spinning capacity in Asia (source: Wikipedia).
• Looms:
• 375,000 power looms and 28,500 shuttle-less looms (source: Board of Investment Pakistan).
PAKISTAN TEXTILE SECTOR EXPORT
PEST ANALYSIS
• Political:
Favorable government policies: The government offers incentives like tax breaks and subsidies to
promote textile exports

• Economic:
Favorable labor costs: Pakistan offers competitive wages compared to regional competitors.
Fluctuations in cotton prices: Global cotton prices significantly impact production costs.
• Social:
Large, young workforce: Pakistan has a growing young population, providing a readily available
workforce for the industry

• Technological:
• Automation: Investment in automation can improve efficiency and productivity.
REASON OF PAKISTAN TEXTILE EXPORT
• Abundant Raw Material: Pakistan is naturally endowed with high-quality cotton, a crucial raw material for
textile production. This readily available resource reduces dependence on imports and keeps production costs
competitive.
• Favorable Labor Costs: Compared to several competitors, Pakistan offers relatively lower labor costs. This
makes Pakistani textile products attractive to international buyers seeking cost-effective options.
• Diversified Production Base: The industry boasts a well-established infrastructure encompassing various
stages of production, from ginning and spinning to weaving, knitting, and garment manufacturing. This allows
Pakistan to cater to a wider range of textile product demands.
• Government Support: The Pakistani government actively implements various subsidies and support
programs like duty drawbacks, subsidized financing, and tax breaks. These measures help reduce production
costs, incentivize modernization, and enhance the industry's competitiveness.
RISE OF
BANGLADESH • Favourable labour costs: Historically, Bangladesh has benefitted from

TEXTILE EXPORT
lower labour costs compared to other major garment-producing
countries. This has made Bangladeshi exports attractive to international
brands.

• Government support: The Bangladeshi government has played a

significant role in fostering the growth of the textile industry. This
includes initiatives like establishing economic zones, providing tax
breaks, and investing in infrastructure development.

• Focus on efficiency: The Bangladeshi garment industry has

continuously strived to improve its efficiency and productivity. This has
involved adopting new technologies, improving logistics, and enhancing
worker skills.

• Strategic location: Bangladesh's proximity to major markets like Europe

and Asia has given it a logistical advantage. This allows for faster
delivery times and reduced transportation costs.
BANGLADESH TEXTILE SECTOR EXPORT
COMPARISON
OF TEXTILE
EXPORTS
FEDERAL RESERVES •Pakistan:
• Reserves have significantly declined from
$17.0 billion in 2020 to $6.7 billion in 2022.
• This sharp decline is reflected in the Bar
Chart.
•Bangladesh:
• Reserves have fluctuated but remained
considerably higher than Pakistan's
throughout the period.
• 2022: $34.0 billion
• 2021: $46.1 billion
• 2020: $33.2 billion

Points to Consider:
•Lower central bank reserves might limit Pakistan's
ability to defend its currency and manage external
shocks.
•While Bangladesh's reserves are higher, maintaining a
healthy reserve level is crucial for both countries.
DOLLAR RATE
•Pakistan:

•Pakistan's import bill consistently exceeds its export earnings,

leading to a demand for foreign currency and putting downward
pressure on PKR.
•Debtobligations can strain foreign exchange reserves and
weaken the currency.
•Bangladesh:

•Bangladesh's export earnings might help counterbalance

import costs, contributing to relative exchange rate stability.
•Inflowsof income from Bangladeshi expatriates working
abroad can provide additional foreign currency reserves
RATIO’S OF UNSTITCHED TO STICTH
OVERALL GDP
CONTRIBUTIO
N (PK)

•Contribution to GDP: The

textile industry in Pakistan
contributes around 8.5% to the
country's overall Gross Domestic
Product (GDP). This signifies a
significant share in the national
economy.
OVERALL GDP
CONTRIBUTIO
N (BDG)
•Contribution to GDP: Estimates
suggest the textile industry
contributes around 18% of
Bangladesh's GDP, making it
the backbone of the country's
economy.
EMPLOYMENT IN
T E X T I L E S E C TO R ( P K )

• Estimated Employment: Around 4.672 million

individuals are employed within the textile sector,
constituting roughly 40% of the total workforce
engaged in Pakistan's manufacturing industry [1].
This translates to the textile sector being
the largest employer within the manufacturing
domain.
• Female Participation: Studies suggest that
approximately 30% of the workforce in the
textile industry comprises women
EMPLOYMENT IN TEXTILE SECTOR
(BD)

• Reliable sources point towards a range of 4 million to

4.5 million workers employed in the textile and garment
sector
• Historical Trend: Traditionally, the industry boasted a
much higher female presence. Sources like the World
Bank reported around 80% of the workforce is women
• More recent data reveals a potential decline in the female
percentage. Studies suggest a range of 60-65% female
workers in 2018, compared to the earlier 80%
WAGES IN THE TEXTILE INDUSTRY
Pakistan:
• Minimum Wage: The minimum wage in Pakistan varies depending on the province. As of 2023, the federal minimum wage is
approximately PKR 25,000 (around USD 120) per month [1]. However, this might not directly translate to the textile sector.
• Actual Wages: Industry reports suggest that the average wage for textile workers in Pakistan can range from PKR 15,000 to PKR
22,000 (around USD 72 - USD 105) per month, depending on factors like experience, skill level, and specific job role [2].

Bangladesh:
• Minimum Wage: The minimum wage in Bangladesh's garment industry has been undergoing revisions. As of December 2023, the
monthly minimum wage was set at BDT 9500 (around USD 110) [3].
• Actual Wages: Similar to Pakistan, the actual wages in Bangladesh can vary. Sources suggest an average range of BDT 8,000 to
BDT 12,000 (around USD 94 - USD 140) per month for garment workers [4].
 Textile and Apparel Policy 2020-2025:
Duty-free import of machinery: This reduces the cost of equipment upgrade and
modernization for textile manufacturers.
Special economic zones: These zones provide tax breaks and other concessions
to attract investment in the textile sector.
Tax breaks: Exemption or reduction in taxes on exports of textile products can
improve profitability.
GOVERNMENT Subsidized loans: Schemes offering loans with lower interest rates can ease the
INCENTIVES financial burden on businesses, allowing for expansion and technological
advancements.
Reduced energy tariffs: The government sometimes provides temporary relief on
electricity and gas prices for the textile industry, aiming to lower production
costs. This policy, however, faces criticism due to concerns about sustainability.
Focus on skill development: Initiatives like the "Skills for Prosperity" program
aim to train workers in the textile sector, enhancing their employability and
productivity.
ISSUES WITH THE CURRENT STRATEGY
Over-reliance on subsidies:
• Financial strain: Subsidies and tax breaks can lead to a significant burden on the government's budget, limiting resources
available for other crucial sectors.
• Discouragement of innovation: Easy access to subsidies might reduce the incentive for businesses to invest in long-term
solutions like modernization and technological advancements.

Focus on short-term gains:

• Limited long-term competitiveness: Emphasis on immediate cost reduction through subsidies might overshadow the need
for sustainable development strategies that focus on efficiency, skill development, and product diversification.

Structural bottlenecks:
• Energy inefficiency: Outdated infrastructure and inadequate power supply can significantly increase production costs,
hindering the industry's global competitiveness.
• Logistical challenges: Poor transportation networks and inefficient logistics can lead to delays and higher costs in the
movement of goods, impacting export timelines and profitability.
CONT.
• Skill gap: The industry might require a workforce with specialized skills in areas like design, advanced machinery operation, and quality
control. Inadequate training programs can create a gap between the industry's needs and the available workforce.

• Fierce competition: Pakistan faces stiff competition from countries like Bangladesh and Vietnam, which offer lower production costs and
potentially more efficient infrastructure.

• Additional factors:

• Political instability: Uncertain political and economic environments can deter foreign investment and hinder long-term planning within the
industry.

• Focus on traditional products: Over-reliance on conventional textile products without adequate diversification can limit the industry's
ability to cater to evolving market demands.
SHORT SHORT-T E RM ME ASURE S (WIT HIN 2 -3
YEARS)
• Focus on immediate cost reduction:
• Targeted subsidies: Provide temporary financial relief through subsidies that incentivize investments in
energy-efficient technologies and modernization.
• Streamlining customs procedures: Reduce bureaucratic hurdles and expedite the clearance of raw
materials and machinery imports.
• Enhancing competitiveness:
• Skill development programs: Launch targeted training initiatives to bridge the skill gap in the
workforce, focusing on areas like design, advanced machinery operation, and quality control.
• Market diversification: Explore new export markets with growing demand, potentially in regional trade
agreements.
LONG-TERM VISION (5+ YEARS):
• Sustainable development:
• Energy efficiency: Invest in renewable energy sources and modernize the power grid to ensure a reliable and cost-effective energy supply.
• Infrastructure improvement: Upgrade transportation networks and logistics systems to facilitate efficient movement of goods and reduce
export-related costs.
• Innovation and technological advancements:
• Research and development: Encourage investment in research institutions and foster collaboration between industry and academia to develop
new technologies and product lines.
• Focus on value-added products: Shift towards producing higher-value textile products like technical textiles and apparel with advanced features.
• Strengthening the industry ecosystem:
• Public-private partnerships: Foster collaboration between the government, private sector, and educational institutions to create a supportive
environment for innovation, skill development, and market access.
• Trade promotion: Increase participation in international trade events and exhibitions to showcase Pakistani textile products and establish new
business relationships.