APTMA Shares Ambitious Plan to Increase Yearly Textile Exports to Over $50 Billion in 5 Years

The All Pakistan Textile Mills Association (APTMA) has devised a new plan to increase Pakistan’s textile export manufacturing capacity from $25 billion to over $50 billion per year in the next five years.

Highlighting steps for the new government to take in a report, APTMA recommended setting up 1,000 new garment plants, incentivizing product diversification to increase the variety of exportable products, and providing a conducive environment free of economic distortions.

“By focusing on export diversification, expanding manufacturing capacity, and fostering a competitive environment, we aim to double our export manufacturing capacity from $25 billion to over $50 billion annually over the next five years. This goal, while ambitious, is grounded in the reality of our capabilities and the untapped potential of our sector,” it said.

The Association said it was important not just for the economic health of the sector, but for the overall stability and growth of Pakistan’s economy.

The textiles and apparel sector—the single largest contributor to the economy’s export earnings, accounting for 50 to 60 percent of total exports—is particularly well-positioned in this regard.

The industry has an installed export capacity of approximately $25 billion per year that can be realistically increased to around $50 billion per year over 5 years and only around $5 billion worth of investment, conditional on a distortion-free business environment that allows firms to be competitive in international markets.

1,000 Garment Plants

The textiles and apparel sector currently has approximately $25 billion worth of annual export capacity. Setting up 1,000 new garment plants, the appetite for which exists in the industry can take this number up to around $50 billion, while also providing direct and indirect employment for up to 1.4 million workers and numerous positive spillovers for other sectors of the economy, especially the external sector.

Based on FY2022 data, Pakistan has sufficient surplus production of yarn and cloth to generate an additional $8 billion worth of higher value-added garment exports with only $2 billion worth of investment in forward linkages, including weaving, processing, and garment production. This could take annual textiles and apparel exports up to $33 billion.

To fetch an additional $17 billion and achieve $50 billion in annual textiles and apparel exports would require an investment of approximately $11.3 billion across the value chain, from spinning to final garment production.

Financing Needs

Moreover, around $12 billion worth of rolling working capital finance would be required to operationalize these production units. Essentially, $25 billion worth of total investment, which includes $10 billion worth of imported machinery, in expansion of manufacturing capacity can yield $25 billion in textiles and apparel exports annually.

To facilitate investment in the expansion of export production capacity, the government should set up industrial and export processing zones near all major textiles and apparel manufacturing hubs, namely Lahore, Sheikhupura, Faisalabad, Kasur, Multan, Sialkot, Rawalpindi, Karachi, Peshawar.

These will be designated areas where goods may be manufactured, imported, and exported with fewer bureaucratic barriers and more favorable economic regulations than the rest of the country. Their role in attracting foreign direct investment, enhancing industrial activity, and promoting export-oriented growth is critical. One of the most important features the industrial zones must offer are developed factory sites and plug-and-play facilities.

Easing Logistics

APTMA suggested starting with a pilot of setting up 100 factory sites, 25 each near major textiles and apparel manufacturing hubs of Karachi, Lahore, Faisalabad, and Rawalpindi and should be gradually expanded to 1000 sites across Sheikhupura, Faisalabad, Kasur, Multan, Sialkot, and Peshawar, that can bring in over $20 billion in export earnings from the textiles and apparel sector.

To attract investment, the government must also at least match the fiscal and other incentives being offered by regional economies for similar purposes.

The association added that in addition to industrial zones, establishing free commercial zones in proximity to international gateways including seaports and airports can further facilitate textiles and apparel exports by reducing costs and easing logistical barriers to export growth.

The implementation of this policy agenda will demand unwavering commitment, innovative thinking, and collaborative action. It is a journey that we must embark on together – as an industry, as a nation, and as part of the global economy.

APTMA remarked that to achieve a robust economic recovery while generating much-needed employment and achieving sustainable growth, achieving a sizable and sustained increase in exports is the only way forward.

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