Spinning a ‘winning yarn’ with synthetic fibers

LAHORE: An interesting scenario is emerging in the all sub-sectors of textiles that are expecting substantial surge in exports after numerous facilitations announced by this government including bringing power and gas rates to regional level; however the question is: will this buoyancy last without technology upgrade?

Syed Ali Ahsan, a top textile industry leader, being fully aware of lag in technology, has said the sector would invest $7 billion in new technology in next five years. If this materialises then it would be the highest investment ever in textiles in five years period. The surviving spinning mills are comparatively better equipped than 125 odd mills that have packed up in the last few years.

The chances of revival of these mills are very slim. In fact, many of them have disposed of their machines at throwaway prices. Some have converted their facilities them into cold storage, some have opened recreation facilities for families, while others are managing marriage halls on the premises of erstwhile textile mills.

Ahsan says most of the problems impeding exports have been resolved, but laments the concession on gas and power would end after June. He thinks a five year commitment on stable energy rates would attract huge investment including joint ventures with foreign entrepreneurs. Pakistani businessmen are however happy that the present government is not only interacting with them, but also accepting their prudent suggestions.

Textile exports have much higher potential that could only be fully tapped if we restructure our industry on the lines of the existing global trends. There, for instance, exists a structural flaw in that the Pakistani industry makes products predominantly made from cotton. Our fiber mix is 70 percent cotton and only 30 percent manmade fibers. The global trend is exactly opposite, which prevents us from exploiting the huge global market of synthetic fibers.

This skewed situation was not created by the private sector but it is due to flawed government policies. We have the potential to take our textile exports much above Bangladesh’s level but to achieve that we would have to address the structural problems in textiles.

The use of manmade fiber in Pakistan remained subdued because successive governments have provided protection to the domestic producers of polyester fiber as well as purified terephthalic acid or PTA which is the main polyester feedstock. The protection provided in 1997 for first 10 years was 15 percent. The industry could not compete globally with products made from manmade fiber that cost them 15 percent higher than global rates.

The most unwise decision in this regard was subject even those synthetic fibers that were not produced in Pakistan. It was only three years back the government allowed zero rated import of all synthetic fibers except polyester.

Some exporters are now blending these fibers with cotton to produce products needed in most of the global markets. It will take some time to take share from other countries that are already entrenched in those markets.

Still the case of polyester fiber has not fully resolved. Pakistan produces a few varieties of this fiber and many of its types used globally by textile millers are not produced in Pakistan, but due to protective duty under polyester fiber head, their imports are hampered.

The Harmonized Commodity Description and Coding System or generally known as Harmonized System (HS) code for all polyester fibers is the same. Every commodity that enters or crosses most international borders has to be declared to customs by means of this code.

The government would have to find a way out so that protective duty is charged on polyester fibers that are produced in Pakistan. Another structural imbalance is that we produce more yarn and fabric than we can consume in our exports. Yarn and fabric are low value-added products. We can add $3-5 billion in exports if these yarns and fabrics are converted into value-added garments and knitwear.

The problem however is that we do not have enough garment factories that could consume these low value-added intermediate raw materials. Ahsan, who chairs all Pakistan textile mills association, says there are 4,000 stitching units in Bangladesh, while we have only 200. He said we need at least 3,000 units of the same size as in Bangladesh. He said local investors could at the most add another 500 stitching factories; for the rest the government would have to attract foreign investment.

Foreign investment would come on the strength of long-term textile policy. Abdul Razzak Dawood, the advisor to the PM on textiles, is formulating that policy. Moreover the government would have to speed up its efforts for improving the yield and quality of cotton crop. On average, the country produces 10.5 million bales, consumes around 14 million bales, and imports the difference from foreign sources.