Pakistan - Ray of Light for Global Trade

Dec 10, 2018

The world is watching the tenuous China-US relationship, with new twists each day, leading to much speculation and uncertainty. According to a survey by HIS Markit’s Business Outlook, US business confidence is dipping, and fears are rising all thanks to tariffs and trade wars. Larger US companies predict these will shift production abroad, and with China’s troubles with the US, companies are eyeing newer shores.

To the denim production sector, Pakistan is a surprising ray of light. Part of the 'Asian apparel sourcing powerhouses', the 70-year-old country already has policies in place to jolt economic growth. In the last 9 months, US imports of jeans from Pakistan have grown 9.75 percent, to $178.98 million. World bank country director for Pakistan, Illango Patchamuthu says ‘Pakistan is sitting on huge trade potential that remains largely untapped.”

Hasan Javed, Executive Director at Artistic Fabric & Garment Industries, describes Pakistan’s rapid ascent in the last 10 years in denim production: “The level of investment in state-of-the-art machinery, R&D, and sustainability has been second to none. This has come at a time when most countries (that were traditionally powerhouses in denim manufacturing) have seen dwindling sales due to multiple factors including rising costs.”

With a brand new, bright eyed government eager for economic and social reform, the country is gearing up to make foreign manufacturers feel at home. The government’s announcement of new export policies is great news for export-oriented industries—enabling them to reduce costs and offer buyers attractive prices, ultimately making Pakistani products more competitive in international markets.

Addressing a conference in October, chairman of the All Pakistan Textile Mills Association (APTMA), Syed Ali Ahsan, said the industry envisions doubling its exports from $13.5 billion to $27 billion in the next five years, thanks to an investment of $7 billion. This will also create an additional 1.5 million jobs, contributing to overall economic growth.

Furthermore, he stated at the conference that the implementation of a flat regionally competitive electricity tariff would aid in decreasing both interprovincial and intersectoral disparity and revive about 30 percent of the idle capacity by increasing affordability.

With China and the US’s rocky trade ties— the US has hit $250bn of Chinese goods with tariffs since July, and China has retaliated by imposing duties on $110bn of US products—moving production away from high tariff fears is a more secure option. A key finding of the HIS Markit’s Business Outlook survey panel of 800 US manufacturing companies surrounded price pressures, with many pointing to tariffs as a key threat to future growth.

With apparel exports to the world rising, Pakistan, one of the emerging market economies of the world according to the IMF, is sending a clear message that they are open for business. “The recent US-China trade spat has forced many major brands and retailers to rethink their sourcing strategy and Pakistan is now finally getting the recognition it deserves, making it one of the more popular choices for full package denim production” according to Hasan Javed. “Now with a safer, and more stable political environment, favorable exchange rate for exporters, and a unique skill set allowing for complete control over the entire value chain from cotton to finished garments, Pakistan is primed for growth. We as a company are very optimistic about the future of denim manufacturing in Pakistan”

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Pakistan - Ray of Light for Global Trade