In Addition To Vietnam, There Is Also Pakistan Iron. Pakistan Textile Industry Will Attract Investment Of US $7 Billion In The Next 5 Years.

According to the news of the economic and Commercial Counsellor's office of the Chinese Embassy in Pakistan, Pakistan's "dawn" reported that Bashir, chairman of the Punjab Textile Industry Association, President Bashir, said at a relevant meeting on Tuesday that the Palestinian government has taken special measures to encourage industrialization and exports, and the environment of the Palestinian business is improving. In order to improve the sustainability of textile industry development and clear the direction of growth, the Ba textile industry association is formulating the long-term development strategy of the textile industry, and plans to invest 7 billion US dollars in the next 5 years to promote textile and clothing exports to increase by 100% to US $26 billion.

Pakistan is the third largest cotton consumer in the world, the fourth largest cotton producer, the fourth largest textile producer and the twelfth largest exporter of textiles. The textile industry is the most important pillar industry and the largest export industry of Pakistan. In recent years, Pakistan's textile industry has been beset by bottlenecks, such as unsafe, high operating costs, declining competitiveness of products and weak demand in the international market. However, with the steady development of the "one belt and one way" construction and the construction of China Brazil economic corridor, China and Pakistan have broad prospects for cooperation in textile industry.

1. The basic situation of Pakistan's textile industry

　　 1. Pakistan's most important pillar industry

Pakistan is an important textile country in the world, and the export volume of cotton yarn and cotton cloth ranks the highest in the world. The number of employees is about 15 million, which accounts for 40% of the manufacturing labor force, and the credit scale accounts for 40% of the total credit scale of the manufacturing sector. The industrial added value accounts for 8% of GDP. The textile industry is the most export oriented industry in Pakistan. In the 2015-16 fiscal year (July 1, 2015 to June 30, 2016), the export volume of Palestinian textiles amounted to US $12 billion 450 million, accounting for 60% of its total exports.

2, the industrial chain is relatively complete.

Pakistan is one of the few textile giants in the world that owns the capacity of the whole industrial chain. According to statistics from the Ministry of textile industry of Pakistan, there are 1221 cotton ginning factories, 442 home textile mills, 124 large textile textile and garment factories and 425 small textile and garment factories. The annual production capacity of cotton yarn is about 11 million 300 thousand spindles, including 300 thousand textile machines, 350 thousand force looms and 18 thousand knitting machines. The annual production capacity of cotton cloth is 5 billion 200 million square meters, and there are 700 thousand industrial sewing machines. Pakistan is a large cotton producing country. The annual output of cotton is about 13 million bales (480 pounds / bag), the annual output of man-made fiber is about 600 thousand tons, and the annual output of terephthalic acid is 500 thousand tons, all of which provide a solid foundation for the development of textile industry.

3, the distribution of production and research is relatively concentrated.

More than 60% of Pakistan's textile enterprises are concentrated in Punjab and 30% are in Sindh. The Punjab province's famed textile industry city, which is composed of large, medium and small textile mills and workshops, accounts for 58% of the total export volume of Pakistan textiles. Pakistan's main textile technology institutions and facilities are also concentrated in the city, including Pakistan Kasetsart University, Pakistan National Textile University, Pakistan Cotton Research Institute and Pakistan Agricultural Research Institute.

4, the influence of industry organizations is large.

The main industry organizations of Pakistan textile industry include the whole Pakistan textile mill Association, the whole Pakistan textile processing factory Association and the Pakistan knitwear Producers Association. Because of the pillar position of textile industry in Pakistan's national economy, the all Pakistan textile mill Association and its local branches play a leading role in the development of the textile industry. First, it affects the formulation and implementation of the government's industrial policies; the two is to strengthen the industry's self-regulation, such as providing trade disputes arbitration, etc.; three, trade promotion and investment promotion, such as cooperation with the government and participation in various trade and investment exhibitions, etc.; four, industrial protection and self-help, for example, on behalf of the member enterprises, they request the government to carry out anti-dumping and anti patch investigations on imported products.

Two, the main problems and challenges faced by Pakistan's textile industry

1, the scale of enterprises is small and the degree of industrialization is not high.

Most of the enterprises engaged in cotton ginning, spinning, weaving, clothing production and chemical fiber production in Pakistan are small or workshop type enterprises. Manual labor still accounts for a large proportion. Only a small proportion of enterprises with a certain scale and higher industrialization degree are relatively backward in technology and equipment such as chemical fiber, clothing, printing and dyeing, etc. 10%. Due to the difficulties in financing and financing of small and medium-sized enterprises, as well as the problem of insufficient investment in Pakistan for a long time, the investment in technological upgrading of textile enterprises is seriously insufficient, and the expansion of production scale is difficult, which restricts the upgrading of product technology and the realization of scale efficiency.

2, high production costs, business difficulties

The first is the high cost of electricity. The Pakistan government implements a new energy policy that focuses on reducing government subsidies and raising electricity prices to raise funds for large-scale energy projects. According to the total Pakistan Textile Mills Association, the new energy policy actually increased the electricity price from 9.2 rupees to 14.8 rupees / degrees. Although the electricity price of the industrial sector in the Palestinian government dropped to 11 rupees / degrees in 2016, it was still higher than China's (8.5 rupee / degree), Bangladesh (7.3 rupee / degree) and Sri Lanka (9.2 rupee / degree) and other major textile competition countries. The two is the high cost of financing. The Brazilian national savings rate is low, and the funds are scarce. The textile industry with a large number of small businesses has long been facing the problem of financing difficulties and financing. Although the central bank's basic interest rate has been reduced to 5.75% in recent two years due to inflation control, the financing cost of the textile industry is still high. In addition, high gas prices, high corporate tax burden, rising wages and high logistics costs also increase the operating costs of enterprises. In the first half of 2016, nearly 2/3 of textile enterprises in Punjab were unable to carry out normal production.

3, cotton production quality is low, affecting the development prospects of the industry.

Affected by low market prices, extreme weather and poor seed quality, cotton production in Pakistan has declined for two consecutive years. Cotton production in 2015-16 years is only 9 million 800 thousand packages, down 27.8% from the same period last year, a record low in the past 14 years, resulting in over 4 million packages of domestic cotton supply and demand in two consecutive years. It is generally believed that the dependence on imported cotton has posed a great threat to the healthy development of Pakistan textile industry. In addition, Pakistan cotton growers mainly rely on the owner of the farmers, and the seeds and quality inputs are seriously inadequate. In addition, the raw cotton collection and processing process is extensive, and the quality can not reach the international standard of the process, so that the textile export is troubled by quality problems. Therefore, many high-end customers have been lost, and they have to import about 2 million packages of long staple cotton each year to meet domestic demand.

4, the added value of products is not high, and is at the low end of the global industrial chain.

The textile industry in Pakistan is at the low end of the international industrial chain, mainly in the relatively low value-added links of primary products, processed products, low-grade textile consumer goods and so on. Cotton, cotton, towels, bedding, knitted garments and other low value-added products account for nearly 80% of the textile exports. In the 2015-16 fiscal year, the 5 largest export products were: knitted apparel 2 billion 370 million dollars, cotton cloth 2 billion 210 million dollars, garments exported 2 billion 200 million US dollars, bedding 2 billion 20 million US dollars, cotton yarn 1 billion 260 million US dollars, clothing export accounted for 36.7%, far below the international level of 60%. Under the combined influence of insufficient development of new products, inefficient training of human resources, and lagging behind in the development of producer services such as brand management and marketing, the Palestinian textile industry is lagging behind the mainstream of world textile industry.

5, the competitiveness of products is declining, and international market share is facing squeeze.

In recent years, the international competition situation of Pakistan textile industry is becoming more and more serious. The two major textile exporters of China and India, which are the main competitors, are challenged by the scale advantage. The small countries such as Bangladesh and Sri Lanka use the least developed countries to obtain market access and preferential tariff treatment in Europe and America, and they are also occupying the export share of Pakistan. In contrast, Pakistan textile enterprises are troubled by high operating costs and poor business environment. At the same time, the domestic security situation in Pakistan has been unsettled for a long time. Foreign buyers have shifted their orders to other countries for fear that the Palestinian enterprises can not stabilize their supply on schedule. Affected by these negative factors, the export of Palestinian textiles decreased by US $1 billion 400 million in fiscal year 2013-2016 (Table 1), while the exports of major competitors in Bangladesh, India and Vietnam increased by US $3 billion, US $4 billion and US $8 billion respectively. Pakistan's share of the international market dropped from 2.3% to 1.5%, while India increased from 3.5% to 5%, and Bangladesh increased from 1.6% to 3.7%.

Table 1 textile export situation in Pakistan in 2011-2016 fiscal year

　　 Source: Ministry of finance of Pakistan

Three. Prospects and opportunities for the development of Pakistan's textile industry

1, the domestic market has great potential for development.

Pakistan is the sixth most populous country in the world with a large consumer market of 190 million people. As of 2016, sales of Palestinian textile products accounted for only 20% of the total output. The main reason was that the poor people who accounted for the majority of the population had low consumption ability and tended to buy cheap goods. In the past 2013-2016 years, the overall macroeconomic situation of Pakistan has shown a general trend of improvement. In the 2015-16 fiscal year, the economic growth of 4.7% has reached a new high in the past 8 years. With the continuous deepening of the construction of China Brazil economic corridor, Pakistan's economic growth is expected to further speed up, thus improving the Palestinian national consumption capacity and bringing new opportunities to the textile industry development.

2, the government attaches 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 the trade associations is relatively large, the Palestinian government has always attached great importance to the development of the textile industry. The Ministry of textile industry promulgated the textile policy (2014-2019) in 2015. It aims to achieve the goal of promoting the textile industry by implementing a series of incentive measures to achieve the goal of doubling the export volume of textiles to US $26 billion in the next 5 years and creating 3 million job opportunities. According to the new deal, the Pakistan government will provide the textile industry with financial support of about 64 billion 100 million rupees (US $610 million) for tax rebates, tax exemption, loan subsidies, trade promotion, construction of textile industrial parks and development subsidies. In 2016, the Pakistani government launched a series of export stimulus plans, including the import tariff and sales tax of textile machinery and equipment and cotton, which reduced the industrial sector's electricity price from 15-16 rupees to 11 rupees / degrees, guaranteed uninterrupted power supply and increased export tax rebates. At the same time, preferential tax rates were granted to 5 major export sectors including the textile industry in the 2016-17 fiscal year budget. Although the government's development funds are short and funds are not allocated, the implementation effect is not as good as expected, but the industry generally gives positive comments.

3, obvious resource advantages

Pakistan is the fourth largest cotton producing country in the world. Although its output has declined in recent years, it still accounts for about 1/10 of the world's total. At the same time, the power resources of barau are abundant and the manpower cost advantages are large. At present, the minimum statutory wage is $114. The semi skilled workers in the textile industry and the wages of skilled workers are 150-200 dollars per month, which are at a low level in the world's major clothing exporters. According to the IMF, Pakistan will maintain a 2.2% growth rate in a certain period of time, and the growth rate of the adult labour force will maintain a 3.5% growth rate. This is a unique resource condition for the textile industry of labor-intensive industries.

Four, Sino Pakistan textile industry cooperation status and Prospects

Both China and Pakistan are major producers and exporters of textiles. There is a certain competitive relationship between them. However, the difference in the level and stage of industrial development between the two countries has created broad cooperation space for each other.

1, trade relations are close and product advantages are complementary.

Under the China Pakistan Free Trade Agreement, except for chemical fiber products, most of my textiles can enjoy 20%-50% or zero tariff treatment for Pakistan's exports. Most textile products will also enjoy tariff relief for my exports. At present, the trade structure of the two countries' textile and related products is complementary to each other. Among them, cotton yarn and cotton cloth are the largest products imported from China. Clothing is one of the most important products exported to Pakistan. It has surpassed Japan and Germany to become the largest importing country of Pakistan textile machinery.

2, investment development is lagging behind, but the potential is bigger.

In the early days, the textile companies went to Pakistan to test the water. In 1994 and 1998, China Textile machinery and technology import and export company and China Jingwei Textile machinery company jointly built factories with Palestinian enterprises to produce products such as bobbins and ring spinning machines. However, the former quit in 2006 because of labor disputes, while the latter stopped production due to a flat market reaction. Generally speaking, my investment in Pakistan textile industry is lagging behind. At present, with the continuous development of the "one belt and one way" construction and international capacity cooperation, we have created a favorable macro policy environment for China's textile industry's capital going to sea. With the weakening of the cost advantage of China's manufacturing industry, textile industry urgently needs to restructure the value chain and create new advantages of international competition through outward transfer. Pakistan has become one of the most capable countries to undertake the capacity of China's textile industry on the basis of its existing development base. Although compared with Bangladesh and Vietnam, it has failed to seize the opportunity, but it has great potential to attract investment in China's textile industry in the future. In addition, in recent years, the political and economic exchanges between China and Pakistan have been heating up, and Pakistan has warmly welcomed the investment in China. With the gradual deepening of the construction of the Sino Pakistani economic corridor, the business environment in Pakistan, including power supply and transportation infrastructure, is expected to greatly improve. These will also provide a favorable environment for Chinese enterprises, including the textile industry, to invest and develop their businesses in Pakistan.

3, the industry's deep cooperation can be expected, and the bright spot is expected to increase.

Pakistan's cooperation with its main trading partners in the textile industry often involves trade and investment as well as cooperative development. For example, in recent years, the United States has implemented the "knitted garment export support plan" in small textile enterprises in Bazhong, and has sponsored small and medium-sized textile enterprises to build production bases, train employees, upgrade and transform machine equipment and provide certification services. In contrast, the cooperation between China and Pakistan in the field of textile industry development still needs to be improved. In fact, after more than 30 years of accumulation, my textile industry has accumulated some relative advantages in terms of brand building, enterprise management, capital operation, talent cultivation and industrial support. These are precisely the short board of Pakistan's textile industry. The potential space of "combination of advantages and disadvantages" provides opportunities for deepening cooperation between the two countries' textile industry.