Supply potential of the garments sector in Pakistan

1. Pakistan’s major production centres

Karachi – denim, woven & knitted
Lahore – woven & knitted
Sialkot – sports hardware & leather
Faisalabad – denim & knitted

2. Base data country

Capital: Islamabad
Languages: Punjabi, Urdu, Saraiki, Pashtu, English
Government: People’s Republic of Pakistan
Business hours: Monday–Saturday, 8:00 a.m.–7:00 p.m.
Currency, exchange rate: Pak Rupee
Time: GMT+5
Population in millions: 183
Religion: Islam/Muslim
Climate: south hot coastal, north more temperate

3. Garment sector production data

Import duties: GSP Plus status
Working days a year: 301 days/year
Working days: 6
Working hours: 48 hours/week; realistically 52
Legal minimum wage: US$ 133                                   

Factory shifts: 1–2 day/night
Overtime: 50–150%
Interest rate: 12.8%
Production type: 100% ready-made garments                                                  

Product groups: Woven (all items), denim focus, chinos, T-shirts, fleece, sweats, tracksuits, socks, underwear, knitwear acrylics, bed wear
Main fabrics: Cotton
Sourcing countries: India, China
Local fabrics: Large variety of woven fabrics, knitted jerseys, interlocks
Lead times: 45–60 days vertically integrated; 75–90 days including fabric procurement
Shipping, vessel/air: Karachi port
Payment: LC at sight, 20–30 days, TT
Incoterms: FOB, C&F

4. Clients and exports

Main European Union importing nations: Germany, UK, France, Netherlands, Belgium, Spain, Italy
Key European Union brands/retailers: New Yorker, V&D, Jomo, Takko, Primark, H&M, Zara, Mango, Nienhaus/Lotz
Key United States brands/retailers: Walmart, JC Penney, Target, Adidas, Nike, Reebok

5. Business contacts: trade & sector associations

Megatech Lahore: fashion & machinery, March 2014
Pakistan Hosiery (Knit) Manufacturers Association, www.phma.com.pk
Pakistan Footwear Manufacturers Association, www.pakfootwear.org
National Textile University, www.ntu.edu.pk
Centre for Business Solutions, www.cbs.org.pk
Sialkot Chamber of Commerce & Industry, www.scci.com.pk
Dutch Embassy, https://www.netherlandsandyou.nl/your-country-and-the-netherlands/pakistan
PRGMEA (Pakistan Readymade Garments Manufacturers & Exporters Association), Sialkot, www.prgmea.org

6. Sector developments & trends

As Pakistan was traditionally one of the leading producers of cotton in the world, developing a textile industry that makes full use of its abundant resources in cotton has been a priority area in a move towards industrialisation. The annual volume of the total world textile trade is $18 trillion, which is growing at 2.5%. Even with so many advantages, Pakistan’s total share in global textile trade is less than 1%.

7. Strengths

• Large domestic market with dynamic population growth;
• significant remittances from abroad;
• cheap and plentiful labour;
• positive outlook for economic corridor with China.

8. Weaknesses

• Extremely tense geopolitical climate and serious domestic insecurity (terrorism);
• inadequate health-care, agricultural and educational infrastructure;
• energy dependency;
• frequent electricity and water outages;
• poor sector diversification and concentration on a few low value-added sectors.

9. Economic recovery made possible with IMF aid programme launched in 2013

With the IMF aid programme and the low oil prices, the country’s macroeconomic performance improved in 2016. Growth will remain healthy, strengthened by household consumption and substantial amounts of money being sent back to the country by workers abroad. However, the low rate of employment among women in the economy and the inadequacy of the country’s electricity production will hamper efforts to eliminate poverty, even though this is being rectified. Public investment will increase with higher public revenues, deriving in particular from improved tax collection efficiency. Benefiting from a fall in long-term interest rates and a rapid expansion in private sector credit (growing by 26% between 2016 and 2017), Pakistan should experience a strong boost to private investment over 2017 as well as 2018, although the latter at a slightly slower rate. In addition, the China–Pakistan Economic Corridor (CPEC) created between China’s Xinjiang region and the port of Gwadar (south-west Pakistan) should help to facilitate substantial Chinese inward investment, helping to improve the transport infrastructure and the country’s capacity to produce electricity. There will be a moderate rise in inflation with the rise in oil prices, mostly related to the high level of volatility of the rupee. The level of inflation will also depend on the quality of the cotton harvest and on whether or not electricity prices will rise. There will be high levels of growth in the industrial and service sectors (21% and 59.2% of GDP, respectively) thanks to improvements in electricity supplies (Source www.globaledge.msu.edu).