Textile Industry

The textile industry is one of the most important sectors of Pakistan. It contributes
significantly to the country’s GDP, exports as well as employment. It is, in fact, the
backbone of the Pakistani economy.
According to recent figures, the Pakistan textile industry contributes more than 60%
to the country’s total exports, which amounts to around 5.2 billion US dollars. The
industry contributes around 46% to the total output produced in the country. In
Asia, Pakistan is the 8th largest exporter of textile products. The contribution of this
industry to the total GDP is 8.5%. It provides employment to 38% of the work force
in the country, which amounts to a figure of 15 million. However, the proportion of
skilled labor is very less as compared to that of unskilled labor. The world demand
for textiles is rising at around 2.5%, due to which there is a greater opportunity for
rise in exports from Pakistan.

Apparel (clothing) exports are relatively new for Pakistan. Its share in the total
merchandise exports of Pakistan is around 22 percent. It is important to mention
here that the major share of our textile exports goes to U.S.A., E.U., Canada and
Japan. U.S.A. is the largest market for our textile products. The exports to these
economies (except for Japan) are in the form of quotas.

The small share of Pakistan’s textile exports in the world total is the result of
increasing world competition. Their performance is in sharp contrast to that of other
Asian exporters particularly in Southeast Asia, advanced textile exporters like,
China, South Korea and Hong Kong. What is remarkable for these countries is the
increase in their world market share in the presence of institutional restraints like,
MFA (multi-fiber arrangements). Pakistan’s share in world textile trade has
increased by 1.1 percent. Compared to it, the share of countries like Hong Kong,
China, and South Korea has increased quite substantially, by 5.6, 3.5, and 3.8
percent respectively. At the same time, a noticeable feature is the decreasing share
of Japan, U.S.A, France, U.K., Netherlands and Germany. In other word, decrease in
the world share of textile exports from the developed countries as suggested in the
standard theory of trade and development. In clothing Pakistan’s share has
increased

In recent years Pakistan’s performance is even poor rather than increasing its share
has fallen. The share of developed countries (except for USA and Netherlands) in
the clothing exports (just like textile exports) has decreased, indicating the shift in
comparative advantage. What lead these countries (South East Asian) to achieve
the position in the world market is their resourcefulness (in terms of efficient
methods of production, capital intensive technology, and well-trained manpower);
adaptability—to the changing conditions i.e., changes in the patterns of world
demand, changes in technology; and also the favorable government policies.
These countries have diversified their product range and gone in for highly
automated capital-intensive technology. As a result they are producing goods close
substitutes to the DCs capital-intensive products. But the exports of Pakistan are
not even the close substitutes to these countries products.

Sports Industry

The sports industry of Pakistan is mostly concentrated in Sialkot. There are over
3,000 small and medium sized sports goods industrial units, and some 50 hi-tech
well established industries functioning in Sialkot. Nearly 40 million balls worth US $
210 million are produced annually. It is a labor-intensive industry providing direct
and indirect job opportunities to about 60,000 workers. Further employment is
generated by sub-contracting of work on a per piece rate. This clearly indicates the
importance of this industry in the national development of our country. US is the
major buyer of these goods along with UK, Germany, Hong Kong, France, Japan,
Korea, Italy, and Norway. Major sports goods items traded around the world include
gym fitness equipment (US$4.4 billion imports); articles and equipment for sports
and outdoor games (US$3.6 billion imports); golf equipment and balls (US$3 billion
imports); snow skis, equipment and wear (US$1.9 billion imports) and inflatable
balls (US$0.9 billion imports).

The production of this industry follows a roller coaster ride due to various reasons.
The prime reason for this fluctuation in output is due to the hike in demand of
soccer balls for the FIFA world cup, which is after every four years. Similarly the
business activity reaches unprecedented heights six to nine months before the
UEFA EURO Cup. The year immediately after these tournaments is extremely slack,
especially after the FIFA World Cup. These ups and downs in production cause
ripples in exports of our country. Due to this reason it becomes difficult to devise a
homogeneous strategy for this industry. Considering the important part played by
this sector the economic gurus of Pakistan need to formulate a strategy to meet up
with the fluctuating output.

The negative trend in the exports in the last 2 years owes much to the global
financial crisis, along with the deteriorating security situation in the country and
energy crisis that has hit the manufacturing sector of Pakistan hard. Pakistan is now
facing serious challenges from India, China, Taiwan, and South Korea in
international markets. India and China have an advantage of cheap labor and raw
material while countries like Taiwan, Japan and South Korea are experts in
mechanization and use of modern equipment. So Pakistan once the uncrowned king
of sports industry is now facing serious competition from Asian competitors. A few
years back Pakistan was the leader in the exports of sports gloves. Now China has
surpassed Pakistan and the gap is growing with each passing year. Chinese sports
industry is growing at a rate of 8% every year. It holds 50% share in the sports
market of cricket, hockey and baseball, while Pakistan and India merely have a
share of 8% and 6%. Similarly our industry is lagging in composite (graphite) based
sports goods. Sialkot used to be the hub of wooden (mulberry) hockey sticks but
with the shifting of world demand towards composites; the local industry failed to
cope up with the pace of the world which resulted in the reduction of our share in
the international market. Considering the changing dynamics of world trade, the
sports industry of Pakistan is placed at an advantage due to its long history of
exports. The entrepreneurial culture is very much export oriented which provides
the base for the growing industry.

Leather Industry

Leather industry, including leather products, is the second largest export-earning

sector after textiles. Currently, this sector is contributing around $800 million a year
but has the potential to multiply volume of exports with the improvement of quality
and diversification in different range of products, specially garments, and footwear.
Basically, it is a job-oriented sector providing employment to a very large segment
of the society besides earning foreign exchange for the country. The leather
finishing and made ups industries represent an important sector in Pakistan,
contributing almost more than half a billion US dollars in foreign exchange earnings
to the national exchequer. The leather industry consists of six sub-sectors namely,
Tanning, Leather. Footwear, Leather Garments, Leather Gloves, Leather Shoe
Uppers, and Leather Goods. The Tanning industry plays a vital role in the progress
of these sub-sectors by providing the basic material i.e. leather. Today, Pakistanis
among the leading countries in the production of Leather Garments and Gloves. The
leather and leather made-ups industry plays a significant role in the economy of
Pakistan and its share in GDP is 4%. Ten years ago, it was the fifth most important
export industry in the manufacturing sector, and now it is the second.

Looking at the data for the past decade, there are two very important trends, which
are important to discuss. First would the significant growth that the sector was able
to achieve during the first three quarters of the years 2007. It would be better to
say that the Pakistani Leather industry was steadily increasing towards its peak and
ended up achieving that in the first three quarters of 2007. Low wages in Pakistan,
high quality leather, good foreign relations and steps to increase the ease of
business at Pakistan were some of that steps which increased the exports to
Pakistan. In addition, this was also the era when many foreign investors were
wrapping their business in China. These include Bali of Italy, Luis Vatuan of Spain,
Gucci of France.

The other significant leap to discuss is of the serious decline of 2009, which took the
exports of the leather industry to lowest possible levels in the past 10 years. There
were many reasons for same. First, international competition became fiercer. Since
mid 2000s, India had been trying to strengthen its leather industry and its steps
appear to be successful since it was able to steal much of the Pakistani share of the
market. Second, the opportunity of growth, Pakistani exporters, and government
were not able to exploit these opportunities. When Bali of Italy, Luis Vatuan of
Spain, Gucci of France were leaving China, Pakistan had to try and attract these and
many other potential investors to its country, however, the same did not happen
and the administration remain quiet. Only fourteen production houses have been
able to achieve the ISO standards, however, there are hundreds of them in Pakistan.
Third, the industry was deprived of basic facilities like Infrastructure facilities like
undisturbed supply of gas, electricity, water, proper security arrangements, better
roads, clean environment, and facility for dispatch of export goods are needed for
uplifting the tanning industry. Fourth, this was also the time when the international
trends kept on changing in the market but the Pakistani administration failed to pay
any attention towards the research and development sector, allowing professional
people to work in the sector and helping the industry to decrease its costs.
Therefore, the industry suffered badly during the 2009 period and is still trying to
recover from that bruises.

Pharmaceutical Industry

Pakistan has a very vibrant and forward looking Pharma Industry. At the time of
independence in 1947, there was hardly any pharma industry in the country. Today
Pakistan has about 400 pharmaceutical manufacturing units including those
operated by 25 multinationals present in the country. The Pakistan Pharmaceutical
Industry meets around 70% of the country's demand of Finished Medicine. The
domestic pharma market, in term of share market is almost evenly divided between
the Nationals and the Multinationals.

The Pakistan pharma industry is relatively young in the international markets with
an export turnover of over US$ 100 Million as of 2007. Pakistan Pharma Industry
boasts of quality producers and regulatory authorities all over the world approve
many units. Like domestic market, the sales in international market have gone
almost double during last five years. The pharma industry is focusing to an Export
Vision of USD 500 Million by 2013. In the meantime, exports are also likely to be
boosted by new regional and global opportunities
Without any doubts, the export sector of pharmaceutical and surgical products is
one that sectors which has been growing with passion and ambition over the past
decade. The reason of the same remains the high quality products and price
competitiveness of these products. The three major importers of the Pakistani
products are the US, UK and Germany. However, the pharmaceutical industry of
Pakistan did face a rough patch during the 2009 period, which is pretty much
explainable due to the price hikes, electricity shortages, and inflation, increasing
cost of labour, pathetic law and order situation and others. The exports feel down
by fifteen percent during the 2009 but the industry is once again trying to grow and
emerge as a major player of the Pakistani export market.

Engineering Sector

Pakistan's engineering industry is a crucial sector of the fast developing industrial

bases. It has kept pace with the demands of the country's industrial development in
the production of light engineering goods, chemical fertilizers, tyres, rubber
products, and steel products. Heavy industries such as shipbuilding, sugar, and
cement plants are increasing in response to local needs and export potential.
Since venturing into the international market, Pakistan's engineering goods have
acquired a reputation for top quality, reliability, and performance. Since
Independence in 1947, the country's low industrial base has developed rapidly
under progressive government policies, incentives, and acquisition of modern state-
of-the-art technology. Updated technology brings quality and versatility to the
manufacture of engineering industry.
Fortunately, yet surprisingly, engineering sector is the only industry in Pakistan,
which has been able to pose growth in the last year, and in fact, growth of more
than 300 percent compared the bad year of 2009. The reason remains the efforts of
the private sector to increase the competitiveness of their products in terms of both
product and price.

Furthermore, the outlook for the Pakistani industry looks extremely terrific. The
country’s engineering goods exports have the capacity to kiss $5 billion mark in
next five-year, as the secret has been opened on local exporters that Central Africa
and Latin America were the potential markets, which could be easily exploited and
Islamabad could get a large chunk out of more than $165 billion markets

Analysis of Pakistani Industries

 Assignment # 1

Muhammad Ahmed

Sajeel Qureshi

Arsalan Abdul Qadir

Suhail Anjum