Policy Reform to Enhance Export Competitiveness in Leather and Textile Garments 1
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0 POLICY REFORM TO ENHANCE EXPORT COMPETITIVENESS IN LEATHER AND TEXTILE GARMENTS TRADE RELATED TECHNICAL ASSISTANCE PROGRAMME Photos: © Thinkstock.com Address: Trade Related Technical Assistance (TRTA II) Programme, Programme Management Office (PMO), 7th Floor, Serena Business Complex, Khayaban-e-Suharwardy, Sector G-5/1, Islamabad, Pakistan Telephone: +92 51 8354 810 Fax: +92 51 2600 124 E-mail: [email protected] Internet: http://trtapakistan.org For enquiries and further details about Component 1 contact: Mohammad Owais Khan, Programme Officer (Trade Policy), International Trade Centre (ITC), EU funded TRTA II programme, Islamabad, phone: +92-51-8354822, Email: [email protected] Acknowledgments This study was carried out as part of the Trade Policy Capacity Building Component, implemented by the International Trade Centre (ITC), of the European Union Trade Related Technical Assistance (TRTA II) Programme, which aims at strengthening the capacity of Pakistan to participate in international trade. Syed Kausar, Director, PITAD, wrote this study. He is entirely responsible for the views expressed in this book. Michiel Scheffer, Chief Executive Officer, Neoton Policy in Innovation BV, was the peer reviewer of this study. The study was conducted under the direct guidance of Mohammad Owais Khan, Programme Officer, Trade Policy, ITC, TRTA II, Islamabad, together with Andrew Huelin, Consultant, Trade Facilitation and Policy for Business, ITC. Jean-Sébastien Roure, Senior Officer, Trade Facilitation and Policy for Business, ITC, was the overall supervisor. Victoria Simon, Consultant, Trade Facilitation and Policy for Business, supervised and managed the production of the final version. Isabelle Jouve, Associate Programme Adviser, Trade Facilitation and Policy for Business, ITC, designed the cover page and desktop publishing. Beyond, consultancy firm, carried out the formal editing. Finally, we thank PITAD for their overall support as well as active involvement in the public private consultative process, which informed the findings of this study. Contents Executive Summary .................................................................................................................... 1 Chapter 1: Literature Review ..................................................................................................... 5 Textile Garments Sector ........................................................................................................ 5 Leather Sector ...................................................................................................................... 17 Chapter 2: Textile Garments Sector of Pakistan ...................................................................... 23 Introduction ......................................................................................................................... 23 Made-up Textiles Sector ...................................................................................................... 24 Hosiery Knitwear Industry ................................................................................................... 25 Readymade Garments Industry ........................................................................................... 25 Towel Industry ..................................................................................................................... 25 Canvas Industry .................................................................................................................... 26 Top 15 Global Exporters of Textile Garments ...................................................................... 26 Top 15 Global Importers of Textile Garments ..................................................................... 27 Challenges Faced By the Textile Garments Sector of Pakistan: ........................................... 29 Recommendations ............................................................................................................... 34 Conclusion ............................................................................................................................ 35 Chapter 3: Survey of the Textiles and Apparel Sector ............................................................. 36 Chapter 4: Pakistan-Japan Textile Trade .................................................................................. 49 Introduction ......................................................................................................................... 49 History .................................................................................................................................. 50 Overview .............................................................................................................................. 50 Current Trends ..................................................................................................................... 51 Japanese Market Perspective .............................................................................................. 53 Chapter 5: Leather Sector of Pakistan ..................................................................................... 68 Introduction ......................................................................................................................... 68 Leading Leather Trading Nations ......................................................................................... 68 Overview of the Leather Sector of Pakistan ........................................................................ 72 Production Capacity ............................................................................................................. 73 Leather Production Process ................................................................................................. 74 Location of tanneries and manufacturing units in Pakistan ................................................ 75 Categories of Leather ........................................................................................................... 75 Sources of Raw Material ...................................................................................................... 76 Technology and Capital ........................................................................................................ 77 Research & Development .................................................................................................... 77 Infrastructure ....................................................................................................................... 77 Pakistan’s Share in World Trade .......................................................................................... 78 Government Incentives ........................................................................................................ 83 Constraints ........................................................................................................................... 83 Conclusion ............................................................................................................................ 84 Chapter 6: Survey of the Leather Garments Sector ................................................................. 85 Chapter 7: Case Study Nishat Garments Pakistan ................................................................... 98 Chapter 8: Case Study Mark Whole Traders Pakistan ........................................................... 105 Chapter 9: Recommendations ............................................................................................... 111 Bibliography ........................................................................................................................... 118 List of Figures Figure 1: Nature of the Business .............................................................................................. 37 Figure 2: Firms’ Location Wise Frequency ............................................................................... 37 Figure 3: Importance of Location ............................................................................................. 38 Figure 4: Problems Faced in Exporting .................................................................................... 40 Figure 5: Major Import Destinations ....................................................................................... 41 Figure 6: Reasons for the Unavailability of Skilled Labor ......................................................... 42 Figure 7: Performance of Different Departments ................................................................... 44 Figure 8: Social Limitations and their Imapcts on Cost of Operations ..................................... 45 Figure 9: Impacts of Various Policy Recommendations ........................................................... 47 Figure 10: All products ............................................................................................................. 55 Figure 11: Export Quantity Index (Seasonally adjusted) .......................................................... 56 Figure 12: Japan’s Total Imports from the World .................................................................... 58 Figure 13: Japan’s Overall Textile Imports ............................................................................... 59 Figure 14: Japan’s Total Imports from Pakistan ....................................................................... 63 Figure 15: Japan's Textile imports from Pakistan ...................................................................