Presentation on Textile City 1

IMPORTANCE OF TEXTILE INDUSTRYIN PAKISTAN’S ECONOMY 2002-03 : IMPORTANCE OF TEXTILE INDUSTRY IN PAKISTAN’S ECONOMY 2002-03


World Textile & Cloting Trade (US$.billion) : World Textile & Cloting Trade (US$.billion) Clothing to become more than 65% in 2005 Recession Asian Crisis 105 213 311 331 334 356.42 500


Slide4 : TEXTILE VISION-2005 Vision Statement An Open, Market Driven, Innovative & Dynamic Textile Sector Which is Internationally Integrated Globally Competitive Fully Equipped to Exploit the Opportunities Created by MFA Phase Out And Which Enables Pakistan to be Amongst the Top Five Textile Exporting Countries in Asia`


Textile Vision 2005 gave a road map to Textile Industry to avail the opportunities of global Textile Trade when textile quotas will phase out. Target set for 2005 under three scenarios were: : Textile Vision 2005 gave a road map to Textile Industry to avail the opportunities of global Textile Trade when textile quotas will phase out. Target set for 2005 under three scenarios were: 1998 Low Road Do – Able High Road Exports 4.9 7.440 10.12 13.82 (Bln. U.S. $) Investments 2.7 4.5 6.4 (Bln. U.S.$) Employment 1.37 - - 2.38 (Millions) Pakistan’s Textile Exports in 2002 – 03 fetched US $ 7.17 Bln. Which is almost the Low Road scenario. EXPORT TARGET FOR TEXTILE 2005


Slide6 : UNDER THREE SCENARIOS EXPORT TARGETS　2005　(Million＄)


Slide7 : China has made huge investment in modern equipment. China has merits of Scale, Productivities, Quality and Aggressive Marketing. China has expanded textile exports from $ 39.5 billions in 1998 to $ 53.5 billions in 2001. China plans to increase its textile exports further to US $75.0 billions by 2005. Buyers are watching the global supply position & if Pakistani Entrepreneurs are not willing to change, the buyers will shift to China which has developed a large supply base for Textile Products. ANALYSIS OF THE MAJOR COMPETITOR


Slide8 : Pakistan’s Textile Industry has potentials to increase volumes of textile exports and enhance earnings by shifting more & more to high value added products. A comprehensive policy package is desired to support the Textile Industry to survive & win the post MFA competition by making available the necessary facilities & infrastructure in a timely manner. It is critically necessary for Pakistan to provide infrastructure for Textile Industry to expand in size and volume to compete with China in the international market after the elimination of MFA quota by 1st January, 2005. REQUIRED ACTIONS


Slide9 : In order to give a boost to export of value added textile products at a quicker pace, Textile Vision 2005 proposed establishment of “Textile City”. REQUIRED ACTIONS (continued)


Slide10 : The concept of the Textile City is based on designing an exclusive production area specializing in large-scale production of value added textile products, and Providing necessary infrastructure facilities such as sufficient water, gas, stable voltage power, and treatment of waste water that ensures cleaner environment in the Textile City; as well as Making available all support activities to facilitate the units for concentrating on production activities with high level of productivity and quick delivery response to the export orders. CONCEPT OF TEXTILE CITY


Slide11 : Further it is easier for the foreign buyers to visit and place orders for particular products with the units of their choice, economizing their time-traveling and ease in contacts with local manufacturers. The proposal is to create the Textile City as a broad and integrated Free Trade Zone specializing in Textile Industry, particularly dyeing factories in order to gather the scattered textile companies together in the Textile City as much as possible. CONCEPT OF TEXTILE CITY (continued)


Slide12 : The proposal is to locate the Textile City somewhere physically near or having good access to a sea-port. In Karachi, vast land area for industrial use is available at Port Qasim , which seems to be an ideal place for the Textile City. (NB) The Textile City needs to be kept at 3-4 kilometers distance from the Pakistan Steel Mill at Port Qasim because its dust can harm the textile dyeing process. Additionally the water used at the Textile City can be re-utilized by the Pakistan Steel Mill. LOCATION OF TEXTILE CITY


Slide13 : The Textile City will be declared under the legislation of Export Processing Zone offering the same incentives. FACILITIES OF THE TEXTILE CITY


Slide14 : Priority will be given to large-scale factories with minimum capacity of the knitted fabric dyeing of 20 MT/day and/or 50,000 meter/day for woven fabrics possibly with knitting/stitching facilities. Guaranteed supply of sufficient water (18 million gallon/day or 80,000MT/day) (details explained later), as well as stable voltage power and gas Common facilities for waste-water treatment to be used collectively at reasonable fee will be provided to allow participating companies to meet ISO -14000 certificate as a requirement from their buyers in Europe and the US that is envisaged to be escalated after the elimination of the MFA quota at the end of 2004. FACILITIES OF THE TEXTILE CITY (continued)


Slide15 : HIGHLIGHTS OF THE TEXTILE CITY


Slide16 : The supporting industry for the textile accessories e.g. sewing thread interlining, padding, buttons, zipper, tags, embroidery & name labels need to be promoted also. Inviting relevant industries like accessories makers or packers to the adjacent area to the Textile City. A housing complex for the workers in the Textile City need to be considered beside the transportation to the Textile City by the stake- holders SUPPORT SERVICES


JUSTIFICATION/DETAILS Value Addition in TextileOne Bale of 170 Kgs of Cotton is worth* : JUSTIFICATION/DETAILS Value Addition in Textile One Bale of 170 Kgs of Cotton is worth* Products US$ Raw Cotton : 119 Cotton Yarn : 253 Towels : 434 Cotton Fabric (Grey) : 579 Finished Fabric : 603 Bed Wear : : 618 Knit Wear : 1,401 Woven Garments : 1,561 * Based on Actual Unit values of 2001-2002


Slide18 : Averagely, one kg of Pakistani dyed knitted fabric fetches US$4.00 higher price. So the supply of sufficient water can add the value of US$1.6 million/day (Average capacity:40MT/day, 10units). If each unit works 365 days a year, total increased value becomes about US$580 million. If dyed fabrics are stitched before shipment, there will be 50% further increase in value, which is equivalent to about US$870 million. Supply of 18.0 Million gallons water per day means that the export earnings increase to US$870 million per year. As water supply condition is currently extremely inadequate at Karachi, it is necessary to provide enough water for the dyeing industry in Karachi. These units heavily seek abundant water supply for their works and further expansion. JUSTIFICATION / DETAILS (continued)


Slide19 : One more Textile City is being planned for up-country and Three Garment Cities are being planned in Karachi – Lahore & Faisalabad. Ministry of Industries is working separately on proposals for the Garment Cities. FUTURE PLANS


SHIFT TOWARDS VALUE ADDITION  ( % in textile exports) : SHIFT TOWARDS VALUE ADDITION ( % in textile exports)


Slide22 : Source: WTO/Gherzi 16 16 24 34.9 46 70 21.1


Slide23 : Three Scenarios (Assumptions) Low Road Exports growth at historic patterns. Export growth rate will match the growth rate of import markets. Market shares growth in ignored markets. Do-able Unit Prices will improve. Cotton production will increase. Share of Man-Made Fiber will increase. High Road Value Added Products (Garments/Made-Ups)will be the engine of export growth. Product & Market mix will be diversified. 50% of the total fabric will be imported. Textile Vision 2005


Slide24 : Employment Generation in Textiles Textile Vision – 2005


Slide25 : Total Low Road Do-Able High Road PAK Rs. Billion 138 233 333 US$ Billion 2.7 4.5 6.4 INVESTMENTS Textile Vision 2005