Arsalan Ali

The garment industry is a high-value-added sector within the broader textile industry that possesses the potential to spur significant growth in export markets. By investing in human capital through research and development (R&D), reducing the cost of doing business, diversifying product offerings, seeking out new trading partners, and ensuring continuity of policies, this industry could embark on a journey towards sustained export-led growth, said a senior official.

Muhammad Ali Kemal, Chief of Sustainable Development Goals (SDGs) Support Unit at the Planning Commission, said while talking to WealthPK that Pakistan needs to invest in human capital and product diversification to enhance export potential. Kemal said value addition in the manufacturing sector and reducing the cost of doing business are crucial to increasing exports, earning foreign reserves, and reducing trade deficit.

According to data from the Pakistan Bureau of Statistics (PBS), Pakistan’s trade deficit for the July-March period of the current fiscal year (2022-23) was recorded at $22.9 billion, with exports at $21.046 billion and imports at $43.946 billion. He added that the textile industry, which is a major export industry in Pakistan, largely exports low-value-added products such as raw cotton, limiting potential for higher export earnings and economic growth.

The official stressed that without value addition, Pakistani manufacturers may struggle to compete with other countries offering more sophisticated and value-added products, leading to a decline in export demand and economic performance. “This, in turn, limits job opportunities in the manufacturing sector, leading to higher levels of unemployment and economic instability,” he said.

He added that the garment industry, in particular, has the potential to be a high-value-added sector within the textile industry and increase revenue. Pakistan was ranked 87 in the Global Innovation Index, with China, India, and Bangladesh ranked 11, 40, and 102, respectively, among 132 countries in 2022.

Kemal emphasised that limited support for R&D, low technological adoption, and a limited focus on developing high-tech industries have contributed to the lack of competitiveness in Pakistan’s exports. He said the high cost of doing business in Pakistan, due to factors such as energy shortages and inadequate infrastructure, has also made it difficult for exporters to compete in the global market. Furthermore, he added that the complex taxation system in Pakistan adds to the burden of exporters, making it challenging to do business.

Kemal said Pakistan’s exports have struggled to keep up with its competitors in the region, such as Bangladesh and Vietnam, who have been able to offer high-value products at competitive prices. The official pointed out that another challenge for Pakistani exporters has been the limited number of export destinations.

According to the Trade Development Authority of Pakistan (TDAP), the country’s exports are concentrated in a few countries. China, US, and UK are the top three export destinations, having a one-third share of the total exports from Pakistan. In the 2021-22 Human Development Index rankings, Bangladesh, India, and Pakistan were ranked 126, 132, and 161, respectively, out of 192 countries.

Credit: Independent News Pakistan-WealthPk