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The government has decided to set up Textile Export Processing
Zones on priority basis with the objective to boost exports
of the country. These Zones will be established in Karachi,
Faisalabad and Lahore to meet the challenges of the WTO
regime in the coming years, when textile quotas end from
January 1, 2005. On completion the Zones would provide
employment to about 80,000 workers and would generate
export earnings to the tune of about US $ 2.5 million
per annum.
The first textile export processing zone will be established
at Port Qasim, Karachi. This textile zone will focus on
dyeing, processing and finishing sector.
The Minister for Industries and Production Liaqat Ali
Jatoi disclosed that two or three garment cities would
also be established alongside the textile zone being set
up near Port Qasim for which ground-breaking ceremony
would be held in the month of May 2004. In this connection
the government would be spending around Rs 9 billion in
infrastructure development. The textile city would be
run in the private sector.
The textile industry is backbone of Pakistan's economy.
It contributes over 11% in GDP and largest source of foreign
exchange earnings. It accounts for 28% of value addition
and employs over 40% of the workforce in the manufacturing
sector. Their share in stock market capitalization is
about Rs 70 billion, constituting 8% of the aggregate
market capitalization.
During 2002-2003, textile goods exports were worth $7
billion, constituted about 67% of the total export earnings
of Pakistan. These sectors are projecting to achieve an
export target of $10 billion by the current fiscal year
2004-2005. This appears to be an achievable target.
When the WTO regime will come into full force after 2005,
the poor farmers in Pakistan may incur higher production
cost on their agricultural produce due to abolition of
various subsidies. Farmers from the advanced countries
on the other hand will enjoy comparative advantages over
the subsistence farmers of the poor third world countries.
Cotton farmers and the textile industry in Pakistan are
facing an uphill task to keep their competitive edge in
quality and price in the quota-free world, as they have
to buy inputs at higher cost than their counter-parts
in the rest of the cotton-producing world. Still some
countries, like India and China, provide electricity for
tube wells at subsidised rates but the irrigation of cotton
crop through tube wells in Pakistan is costly due to 3
to 4 times higher electricity cost.
China provides its cotton farmers an assistance of Rs
1290 per maund (37.5 kg) at the rate of US cents 60 per
kg. This depresses the world rate of cotton substantially,
as China is the largest producer of cotton in the world.
The next largest producer is the US that provides its
cotton farmers a subsidy of Rs 700 per maund at the rate
of US cents 31 per kg.
The highest priority should be given to increase the production
of better quality raw cotton. Abundant quantity of raw
cotton will be the main pillar of the future textile zones.
Pakistan is already facing the pinch of shortage of this
vital raw material. The total need of raw cotton of the
textile industries and household sector is more than 12
million bales, whereas the total present production is
below that level. Since early 1990s cotton production
has been fluctuating sharply.
In the fiscal year 1991-92 raw cotton production in Pakistan
peaked at 12.82 million bales. But during the subsequent
years this high growth momentum could not be maintained
mainly due to severe pest attacks. As a result production
drastically fell to 8.04 million bales in 1993-94. Since
1999-2000 production has been stable around 10 billion
bales. Textile manufacturers have imported 1.1 million
bales of cotton to meet their demand during 2002-2003,
due to massive BMR (balancing, modernisation and replacement
programme) and expansion plans undertaken by the textile
industry, mainly in the spinning sector.
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