Washington D.C.: A denim factory in Karachi is a bright spot in Pakistan’s textile industry. Power cuts, an expensive exchange rate and what they claim is government indifference – have all hit the manufacturers hard. Retailers looking towards cheaper and timelier suppliers in rival Bangladesh and Vietnam have led to the shutdown of hundreds of factories in recent years.
But there’s a ray of hope as Artistic Denim Mills Ltd., which operates as a one-stop shop turning cotton into jeans, is doubling production and has built a new factory in Pakistan’s financial hub.
Chief executive officer Faisal Ahmed, who is bullish and supplies retailers such as Zara and Next Plc, revealed, “We have been able to get many orders that used to go to Turkey earlier,” Toronto Star reported.
The move shows a rare sign of promise in a stagnant industry that has been part of Pakistan’s economic backbone for decades.
Because of the declining foreign reserves ahead of elections in July, the Pakistan government is under pressure to revive its exports and avoid going to the International Monetary Fund. The textile industry accounts for more than half of all overseas shipments.
According to World Bank data, Pakistan has lost market share with exports growing 27 per cent during 2005 to 2016, falling behind Bangladesh’s 276-per-cent increase and 445 per cent in Vietnam. India is the second-largest apparel exporter in South Asia after Bangladesh. Nonetheless, Pakistan still has the advantage of homegrown cotton that it can capitalize on, unlike Bangladesh and Vietnam.
With Textile industrialists continually lobbying the government for subsidies and incentives, Prime Minister Shahid Khaqan Abbasi said in a recent interview that no further giveaways to the industry were likely before the elections.
As per Ahmed Lakhani, analyst at Karachi-based JS Global Capital Ltd, “Bangladesh and Vietnam governments are giving huge support to industries, unlike ours. The tax breaks are a good step, but we need to decrease electricity tariffs and keep a check on wages. I don’t think we will give all those incentives and compete globally.”
Majyd Aziz, president of MHG Group of Companies in Karachi, noted, “About 95 per cent of Pakistani exporters’ mentality is waiting for a customer rather than going out and finding them. In the global world, you need integration and economies of scale, if you do that, you make money.”
Artistic Denim is one of them. It has chased premium brands in Los Angeles that pay more for smaller deliveries to keep changing designs rather than bulk orders.
The company said this will help revenues reach as much as eight billion rupees ($72 million U.S.) in year ending June with new garment production capacity increasing sales.