LAHORE: Global recession provides an opportunity for our knitwear and garment producers as Pakistan is one of the lowest-cost exporters of these products.
However, they need yarn and fabric at competitive rates. This requires quick action from planners.
According to an analysis by International Trade Centre (ITC), Bangladesh, Pakistan, and Cambodia are consistently paid lower than the world average prices for the same apparel, while Vietnam, Indonesia, Turkey, and Mexico get higher than the average rates.
The ITC arrived at this conclusion after analysing the data of major apparel export items of these countries with those of their major global competitors. Our planners must realise that foreign buyers would prefer low-priced suppliers during the recession as famous brands outsource millions of pieces to suppliers around the world. In a recession, the orders are lower and buying from low-cost suppliers is handy for buyers.
Interaction with Pakistani exporters reveals that famous brands give them a fraction of the amount for the apparel they charge at the retail stage. The exporters dispatch the apparel in packing ready to retail with prices printed on the products. The exporters make these garments at almost one-tenth of the retail price. The ITC research has confirmed this. The most surprising aspect in this regard is that Bangladesh is also among the countries that are paid low for the garments they produce. Cambodia is a relative newcomer, and its lower rates are understandable.
The current textile sector situation in Pakistan does not favour the apparel sector. There is a shortage of cotton and yarn while the prices are high. It would impact the competitiveness of the apparel sector which is already operating on thin margins. We cannot blame the spinners and weavers for the current situation. Cotton prices are high, and its availability is suspect. The spinners and weavers might not be able to provide the basic raw materials to apparel exporters at competitive rates.
The current situation would not last long, but we must facilitate the apparel sector by giving them a free hand to import yarn and fabric at competitive rates for the next six months at zero duty to enable them to avail the current opportunity. The value-added sector would prefer to buy Pakistani fabric and yarn if the prices are lower than imports.
We have seen that apparel exports from Pakistan leapt when the Pakistani market was the first to open after Covid-19 than competing economies. The trade relations that Pakistani exporters made at that time stayed after Covid-19 restrictions were lifted in competing economies. The current situation provides a similar opportunity. The shortage or higher rates of yarn and fabric could deprive the country of this opportunity.
According to the ITC report, garment manufacturing has evolved from a simple manufacturing operation into a complex service industry. First-generation garment producers in Asian cities such as Hong Kong, Singapore and Seoul have transformed from simple product makers to multinationals. They are operating globally and investing in engineering, advanced information technology and cutting-edge manufacturing technology. Yet most small and medium-sized garment manufacturers in developing countries, especially least-developed countries, have paid no heed to these disruptions and continue their simple cut-and-sewing operations, providing fewer services and producing commodity-type garments.
Pakistani players will have to adapt to changing trends in the apparel industry.