Textile Industry in Transition: Pakistan's Path Amid Bangladesh's Struggles
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- Published: Friday, 05 January 2024 07:44
As Bangladesh grapples with unrest in its textile sector, Pakistan stands at a pivotal moment, aiming to revitalize its own textile industry and potentially fill the gap left by its counterpart's challenges.
In the not-so-distant past, Pakistan's textile manufacturing sector was a global force. With a robust domestic supply of high-grade cotton and a diverse clientele in the Gulf, Europe, and the United States, the industry was booming. Textiles remained the largest export-oriented sector in the country, with the introduction of GMO cotton seeds in 2005 marking a milestone year. The subsequent years saw record outputs in both cotton crops and textile manufacturing.
However, over the last two decades, Pakistan's textile industry has faced a decline. While once in global demand, the country has been surpassed by competitors like Bangladesh, Vietnam, and Cambodia. In 2003, when Pakistan's textile exports were $8.3 billion, Vietnam's and Bangladesh's were at $3.87 billion and $5.5 billion, respectively. Fast forward to 2022, and Pakistan struggles to reach $25.3 billion, while Vietnam and Bangladesh boast figures of $36.68 billion and $40.96 billion.
Multiple factors contribute to this decline, with the energy crisis of 2008 playing a significant role. The global recession in 2007-8 hit Pakistan hard, leading to challenges such as high energy costs, currency depreciation, and an overall high cost of doing business. The number of operating textile mills reduced from around 450 units in 2009 to 400 units in 2019.
Conversely, Bangladesh's textile sector, valued at $27 billion, has been a major global player, particularly in the garment industry. With roots dating back to 1976, the sector accounts for 80% of the nation's exports, featuring over 4,800 factories employing over three million people, predominantly women. Bangladesh's success is attributed to low minimum wages, a vast skilled workforce, and efficient handling of large orders with competitive pricing.
Despite its success, Bangladesh faces challenges in 2023, particularly in the Ready-Made Garment (RMG) sector. The sector achieved a remarkable milestone with a 10.67% increase in RMG exports to $42.63 billion in the first 11 months, exceeding the target of $42.308 billion. However, ongoing textile workers' conflicts, driven by demands for higher wages, have resulted in significant unrest, factory closures, violence, and clashes with the police.
The unrest in Bangladesh has drawn international attention, with concerns raised by global buyers, rights groups, institutions, and governments, including the United States, the European Union, and the United Kingdom. The workers' demands for higher wages and improved living conditions have led to protests, factory closures, and disruptions in the industry.
The Bangladeshi government's response to the protests included announcing a new salary structure, increasing the monthly minimum wage by 56% to $113. However, this increase was deemed inadequate by workers, leading to continued unrest. The situation has prompted global buyers to include clauses in their orders to avoid responsibility for goods or payments if trade restrictions are imposed on Bangladesh.
The unrest's potential impact extends beyond Bangladesh, with the global apparel market facing repercussions. U.S. sanctions and trade penalties could lead to empty shelves in stores, prompting consumers to shift preferences, a change that might take years to reverse.
As Bangladesh grapples with internal issues, Pakistan's textile industry has witnessed a resurgence in the last two years. Favorable cotton crops and a falling exchange rate have made exports attractive, resulting in substantial profits for textile mills. The industry's current upward trajectory presents an opportunity for Pakistan to regain its lost ground and potentially fill the void left by Bangladesh's challenges.
However, Pakistan's textile industry faces its own set of challenges. Issues such as demotivated employees, inadequate pay structures, reliance on outdated production methods, lack of innovation, insufficient training, and the need for modern manufacturing techniques hinder growth and competitiveness on the global stage.
As Pakistan considers stepping up to fill the gap left by Bangladesh's textile troubles, a strategic and comprehensive approach is essential. Addressing internal challenges, enhancing productivity, and aligning with global sustainability standards are crucial for Pakistan to position itself as a competitive player in the evolving global textile market.
The unfolding events in Bangladesh create an opportunity for Pakistan's textile industry to regain prominence. However, realizing this opportunity requires a concerted effort to tackle internal challenges, enhance productivity, and meet the evolving demands of the global market. The coming years will determine whether Pakistan can seize this moment, revitalize its textile sector, and emerge as a leading player in the global textile landscape.