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Date : 7/5/2008 
 
 

 
  AIMS & OBJECTIVE

 



"Facilitate Pakistan textile industry to obtain and sustain global standing”.

   
 
APTMA endeavours to promote efficient
business systems at Micro and Macro
levels for supporting
integrated commerce.

   
     
       
 
CHAIRMAN'S REVIEW 2004-2005

General Pervez Musharraf, President of the Islamic Republic of Pakistan, Federal Ministers, Your Excellencies, Ladies and Gentlemen.

I welcome you all to the Annual Dinner of the All Pakistan Textile Mills Association. It is particularly encouraging to have in our midst the President of Pakistan as testament to the importance of this sector and this Association.

As you are aware, the textile industry contributes 11% of the GDP and employs 40% of the workforce in the manufacturing sector. It is responsible for 62% of total exports. Some of you may not know that APTMA was founded in 1952 and since then has been the foremost association concerning the textile business in Pakistan.

As the premier industry association of the country, APTMA is keenly aware of its commitment to act as a partner in national development. We have helped set up and support two institutions of technical excellence in textile engineering and design namely National Textile University & Textile Institute of Pakistan and also contribute towards agricultural research vis-à-vis cotton.

I will be sharing with you the reasons for the increased levels of business confidence as a result of the Government's orientation towards business in general.

We will also give some statistics regarding how far we have come in the last 5 to 6 years. We also want to share with the President and our other guests our vision for where we want to go in the next 5 to 10 years, and how we foresee huge challenges under the new rules of international trade.

We will particularly focus on regional developments and the struggle for market share in the post-quota era of textiles, and how a world scale industry such as the Pakistan textile industry could set world-leading targets for growth.

There can be no denying that we have come a long way. There is a paradigm shift in the business environment of Pakistan. There is also a willingness to think out of the box to find real time and innovative solutions to the problems. The Government has zero-rated five export oriented sectors in the Sales Tax law, principal among them being textiles.

We have found an innovative way to rationalize the duty on the import of polyester, which is the second most important raw material after cotton.

Mr. President, the industry has also changed its course over the years. We have accepted and learnt to live under a free import and export regime for cotton. This has seen us grow our consumption significantly more than the cotton production itself in Pakistan. While farmer yields and profitability are improving, so is cotton consumption in Pakistan.

We have systematically worked towards providing the organized sector of industry with a level playing field within Pakistan.

As a result, the industry has emerged more efficient and more responsible over the years. However, as we shall illustrate, regional competition is becoming fierce and in a number of cases unfair.

My colleague Anjum Saleem said in his speech 2 years ago how excited he was to see exports rising from $5 billion to $7 billion. Well, we are now at $10 billion with the potential to beat this rate of growth in future.

The question is what we need to do to maintain or improve the growth of this industry.

The way international trade is evolving is neither free nor fair. There is continued downward pressure of unit prices of textile goods, while the raw material prices and energy costs are going up.

Textile trade in the world is estimated to be around US$ 300 billion currently. Industry experts predict that by 2014 the facilities in the West will close down and they will source their textiles from more efficient areas of the world resulting in the trade volume of around US$ 800 billion. Pakistan's share of the current trade volume is around 3%. If we are to maintain our current share of this larger pie, our textile exports alone are potentially targeted to reach US$ 24 billion.

Foremost among these are incentives for further investment. These include a $6 billion Technology Upgradation Fund Scheme that gives textile investors a 5% discount on their long-term borrowing in India - for processing mills there is another 10% capital subsidy over and above this.

Bangladesh encourages local production of yarn and fabric by giving garment mills a 5% subsidy on local procurement of yarn. They have now attained a capacity of over 5 million spindles despite the fact that there is no indigenous cotton and no man-made fibre production.

The emergence of China as a burgeoning force in world textiles is also a cause for concern in a number of textile sub sectors.

Once in a lifetime history provides a window of opportunity, which if availed, can change the destiny of nations. The window, available today, is to capture the outposts which are being abandoned by the Western textiles and which our regional competitors have already marshaled their forces to capture. Once lodged, it will be almost impossible to overthrow them. We are positioned to capture them ourselves provided the required strategies and technical support is in place.

Our concerns relate to the future, towards our effort to retain our position as a leading textile producer and to get greater market share in the coming years. We have concerns over our ability to continue with the present rate of growth as long as the region does not provide an even playing field.

Mr. President, there is no surer way to grow exports than by encouraging capital formation and capacity expansion in textiles.

We have invested over $5 billion since 2000. We now want to invest further $6.3 billion in the next 5 years. We want to increase value addition, without giving up on the markets we have created for basic textiles.

Mr. President, we are not aspiring for second best. We want to have the highest rate of growth in the region but for that we have to ensure ways to keep our competitive edge as compared to key regional players.

Mr. President, you have convened meetings for Foreign Direct Investments in this country. We are the largest investors of this nation. We request you now to immediately convene a local textile investors meeting under your command. Together we can formulate a strategy to implement your vision for a dynamic, vibrant and prosperous Pakistan.

Cotton is the sustaining force of the textile industry in Pakistan. We have graduated to a free import and export regime that has seen us becoming the world's largest consumers of the prime US PIMA cotton. We also consume more cotton than we are able to grow. We cannot continue to grow at this rate without the support of our farmers and with the existing cotton crop.

I would urge you, Mr. President to throw your support behind a Cotton Vision for Pakistan that will help see us achieve a crop of 20 million bales by 2010. We must adopt the latest technology including biotech cotton and we must commit all financial, technical and human resources to achieve the Vision. On our part, we assure you our consumption will be even higher come 2010.

We must not be at a disadvantage relative to our neighbouring countries when it comes to the facilities for new investment in textiles.

It may be recalled that our Textile Industry has made an investment of $5 billion for expanding its production capacity in the last five years while the interest rates were as low as 3% to 4%. However, more than 200% increase in the credit cost, which consequently increased the financial charges of the mills, has now forced the industry to stop further investment.

There has been reduction of 6.4% in investment in Textile Machinery in terms of US Dollar this year as compared to the corresponding period last year. If inflation is also factored in, the drop in fresh investment in Machinery will be in the vicinity of 11% to 12%.

This has all resulted because of the slow down in further investment in the Textile Industry due to high cost of capital borrowing and increased pressure from regional competition.

We are trying to seek advantages in the quality of our market, access to the leading consumers of textiles and apparel. In the post quota era, we must use the World Trade Organization regulations to our benefit and ensure that measures other countries are taking to boost their respective industries are WTO compliant. Pakistan operates under some of the lowest tariffs in the region but we must continue to develop bilateral trade agreements to give us preferential market access. 60% of the world trade is still conducted under bilateral arrangements.

We must appreciate the hectic efforts of our commerce Minister in getting preferential market access for Pakistani products into major markets like the U.S. & E.U. Pakistan has also assumed leadership at the W.T.O. negotiations in Hong Kong getting critical protection from the threat from countries with duty free & quota free access.

With a growing exportable surplus, our existing road and rail infrastructure will soon be inadequate to transport our exportable surplus from upcountry industry clusters. We also need to streamline passage to our ports. Again, Mr. President, we look to you for leadership in ensuring that our trade corridor is developed as soon as possible and as efficiently as possible.

Our energy needs are also varied and growing rapidly. We support your policy on developing new water reservoirs and feel this is critical to the survival of our agriculture and our industry. We would also support the moves to get energy in the form of natural gas in the shortest possible time. In the meantime, a number of members of our industry are generating power with gas and in the present scheme of things, cross subsidizing low cost consumers such as fertilizer feed and domestic users. We can find a way to continue to support consumers who deserve preferential pricing of gas without placing an additional burden on industry.

Pakistan is one of the leading textile manufacturers in the world. However, our value-added sectors, particularly apparel and knitted clothing have a very small share in the world trade. These sectors are also suffering from the intense competition from China, India and Bangladesh. We at APTMA, feel these are the real growth sectors of our export and we must continue to support them so that they can multiply our export earnings and even more importantly, provide critical jobs in Pakistan.

We would like to thank the Government for creating the Textile Ministry which was long over due. At critical junctures we have found the ministry to be responsive to our needs and has been the enabling platform from which we have successfully resolved our issues. The Textile Ministry has now constituted a commission under the federal textile board comprising of representatives from the entire spectrum of the textile business. The commission has submitted their findings and recommendations on reducing the cost of business in Pakistan and to compete on a level playing field with the regional competitors. The Ministry is expected to finalize its proposal and seek an audition with the Prime Minister prior to the budget. We have full confidence that the Prime Minister will appreciate the cost to benefit ratio of the proposal and will take a favorable decision. Mr. President, we request you to give this exercise your proactive blessings.

With these words, I would like to thank you Mr. President for sparing the time to come to our Annual Dinner. We would like to assure you that we are committed to the growth and strengthening of Pakistan. APTMA stands for employment, exports and value addition. We are proud of our contribution to the Pakistani economy and will continue to play a part in the achievement of Pakistan's goal and ideals.

In the end, I would like to fulfill our long-standing commitment to the President Earthquake Relief Fund by contributing Rs. 100 million.

Mr.Arif Saeed
Chairman APTMA 2004-2005

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