Inside Financial Markets

Garment City may not fully exploit GSP Plus

Garment City may not fully exploit GSP Plus

LAHORE – (The Nation )The proposed garment city in Sheikhupura is projected to help Pakistan benefit from the free market access to the EU countries by enhancing its textile export share, which is mere 1.68 percent of the global market due to lack of institutional support.
With half of 12 billion cotton bales going out of the country unprocessed, the timely completion of garment city – renamed as Punjab Apparel Park – could be a step forward to enhance value addition capacity. At the moment, the country’s 250 textile processing mills add value to only 6 billion cotton bales while rest of the expensive raw material is exported without textile processing.
However, some industry stakeholders, who want their names not to be mentioned, observed that the garment or the apparel city could be a good, long-term project, but as far exploiting the GSP Plus status, the proposed city will be unable to help improve textile export immediately as the infrastructure and setting up of industrial units will take a long time of five years. Hence half of the duration of the total 10-year duty-free market access period will be lost, they claimed.
Moreover, they said the apparel park may prove to be another white elephant as the authorities have not so far considered the non-availability of thousands of skilled workers required for the industrial city. The management should also plan for preparing a skilled workforce.
According to them, maximum relaxation in import of fabric is needed to take optimum advantage from GSP Plus status as producing high-value garments required availability of a variety of fabric the shortfall of which is presently almost 50%.
On the other hand, industrial experts say that besides increasing foreign exchange, the garment city has a tremendous potential to generate considerable employment with a relatively low investment and less energy consumption. They said it would enable Pakistan to grab major share of textile export market being ceded by China, which is moving away from the clothing industry.
All Pakistan Textile Mills Association Punjab Chairman SM Tanveer said the country is strong, competitive and better than China and India in basic textile which includes yarn, fabric, processing and finished fabric. However, lack of institutional support coupled with a severe energy crisis and poor law and order have held up the industrial growth, he added.
“The proposed apparel park is an attempt to provide proper institutional support to the textile sector where stitching, washing, dying, accessory making, embroidery, labeling and knitting units will operate under one roof and share several facilities,” Tanveer said.
The APTMA chief said the planned city is particularly important in the context of Pakistan’s gaining duty-free access to the EU under the GSP+ scheme and the prospects of including readymade garments for export to China under the FTA regime granted by China to the ASEAN countries. He did not discount the hope that trade with India has been liberalising. All of the above need capacity building and new industrial infrastructure for readymade garments industry, he added.
SM Tanveer, who is also heading Punjab Industrial Estate Development and Management Company which is developing the garment city, stated that 1,580 acres of land acquisition process for the city had been started and the court had recently dismissed a stay against the land acquisition while NESPAK had been hired to design infrastructure development. He claimed that the Apparel Park will be operative within one and a half years after the land acquisition process is completed.
The apparel city, having more than 600 manufacturing units, is expected to create around 234,000 skilled jobs, generate exports worth $2.5 billion and contribute about $7 billion to the country’s GDP.
Mubashir Bashir, Nishat Textiles spokesperson, observed that the project had immense potential to create jobs with comparatively low investment and less energy needs. He said this vital project should be carried out expeditiously.
Jawwad Ch, senior vice chairman of Pakistan Readymade Garment Manufacturers and Exporters Association, said that countries like Vietnam, Cambodia and Indonesia were holding major share in global garments market while Bangladesh and India were also preparing to grab greater share. He suggested that garment cities should also be established in Multan, Rahim Yar Khan, Gujranwala, Jhelum and Rawalpindi.
Sajid Minhas, the vice chairman of the board of management which is running affairs of the Park, said that the proposed city would offer flexibility in producers to compete in a wide variety of garment categories. “If Bangladesh has managed to cross over $20 billion garments export without growing cotton, why Pakistan – a cotton-growing country – could not do so,” he questioned.
Minhas, who is former chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), said that management board of the garment city is wholly governed by the private sector as not a single bureaucrat has been inducted so as to save the project from the red tape.

Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)