Policy analysis on Pakistan textile sector

Future Vision of Pakistan, 2018Industry and Manufacturing

Subsector: Textile Industry

Group 335th OMG Specialized Training

ProgrammeSecretariat Training Institute,

Islamabad

Group Members

Mr. Hasan Javed BhattiMs. Fatima BurkiMr. Azeem SarwarMr. Badar Ahsan UllahMs. Aqsa Liaquat

Industry and Manufacturing Sector Industry accounts for 24 % of GDPManufacturing accounts for 13% of GDPManufacturing employs 13.8 % labor force

Sub SectorTextile IndustryIntegrated textile industryPakistan’s largest industryLargest production chainAmong top 10 textile exporters in the world8 % of GDP66% merchandise export40% labor force employed60% of national Exports

National Textile Policy 2009-2014 Salient FeaturesTextile CitiesGarments CitiesQuality ManagementBrand Acquisition SupportIndustrial Relocation SupportJoint Venture SupportSkill Development CouncilHiring of Consultants from Abroad

Sectoral Vision Statement To enhance maintainable growth in Industry and manufacturing sector at 10-15 % annual growth rate for next 1o-20 years

Sub Sector Vision StatementTo enhance Textile Industry at 10-15 % annual growth rate by 2018

Current & Desired Situation Current State Desired Situation

Energy Crisis Increase share in Exports

Closure of Textile units Expansion of Textile Sector

Shifting of Textile Units to Bangla Dash

Maintain Textile Growth

Low investment Return of Textile units back to Pakistan

Law & order situation More Investment in Textile Sector

Downsizing of Labor Development of Textile Zones

PESTEL Analysis Worksheet 1/4PESTEL Factors

Own Notes Potential impacts

Time Frame

Type Impact Relative Importance

Political

•Stable Government + Smooth Democratic transition • law and order

High

Medium

6-12 months

24 + months

Positive

Negative

Increasing

Increasing

Critical

Important

Economic

•Lack of foreign investment • Flight of local capital • Energy Crisis Increasing Competition from International markets Cheap labor

Medium

High

High

High

Medium

24+

24+

12-24

24+

0-6

Negative

Negative

Negative

Negative

Positive

Increasing

Increasing

Increasing

Increasing

Increasing

Important

Critical

Critical

Critical

Important

PESTEL Analysis Worksheet 2/4PESTEL Factors

Own Notes Potential Impact

Time Frame


Social •Provision of employment opportunities

•Urbanization

•Community service-Social Responsibility

High

Medium

Low

0-6

0-6

12-24

Positive

Positive

Positive

Increasing

Increasing

Increasing

Critical

Important

Important

Technological

•Obsolete Technology

•Absence of R & D in Pakistan

High

High

24+

24+

Negative

Negative

Increasing

Increasing

Critical

Important

PESTEL Analysis Worksheet 3/4

PESTEL factors

Own notes Potential Impact

Time Frame


Environmental

•No proper wastage disposal•Establishment of Industrial zones•Ineffectiveness of Pak. Environmental Protection agency•Production of electricity from waste material

High

High

Medium

Low

0-6

24+

24+

24+

Negative

Positive

Negative

Positive

IncreasingIncreasing

Increasing

Increasing

Critical

Important

Important

Important

PESTEL Analysis Worksheet 4/4PESTEL Factor

Own Notes Potential Impact

Time Frame


Legal •No Proper Implementation of Labor laws•No implementation of min. wage•Corporate governance code of SECP

Medium

Medium

Medium

12-24

12-24

0-12

Negative

Negative

Positive

Unchanged

Unchanged

Increasing

Important

Important

Important

EERI Model application for Textile IndustryIndicators of EERI modelEffectivenessEfficiencyResponsivenessInnovation

EffectivenessVariable Indicator Scale

Effectiveness •Value Addition; $ 1 billion•Out put valuating; $ 36 billion

1 2 3 4 5

1 2 3 4 5

EfficiencyVariable Indicator Scale

Efficiency • Budget- Financial•Manpower/HRM•Vocational Trainings

1 2 3 4 51 2 3 4 51 2 3 4 5

ResponsivenessVariable Indicator Scale

Responsiveness •Producer- Satisfaction•Clients- Satisfaction•Employee- Satisfaction•Government- Satisfaction

1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5

InnovationVariable Indicator Scale

Innovation •Exports•Energy Mix•Foreign market•New Technology

1 2 3 4 51 2 3 4 51 2 3 4 51 2 3 4 5

Performance DiamondE

R I

E

Stakeholder Analysis Matrix 1/3Name of Stakeholder

Stakeholder Description

Potential Role

Level of Knowledge

Level of Commitment

Available Resources

Investor/Entrepreneur

Funding & Giving Direction to the Sector

Provides Capital & Determines fate of a Firm

High- keep an eye on change in trends in market to keep firm competitive

Strongly- support / opposes directly affected by it

Capital- the backbone of any industry

Human Resource

Provision of Skilled/ unskilled manpower; determines efficiency of the firm

Carries out work & implements the policies of the firm

Skilled- HighUnskilled- Low to medium

Strongly- their livelihood is based upon prosperity of industry

Technical Knowledge –SkilledManpower/ Labor- unskilled



Potential Role

Level of Knowledge

Level of Commitment

Available Resources

Government

It regulates the sector by formulating policies; determines the business environment (tax/ subsidy)

Provision of conducive & competitive environment

High- aims to promote its industry & keep it competitive in international market

Strong- textile is an imp. Industry & contributes a lot to nation’s economy

Taxes or subsidies; industrial zones; information; agreement with foreign countries

Community

Industries lead to social uplift- employment ( direct + Indirect); environment

Safeguard interest of public; protects environment

Medium- cannot understand the technical aspect of policies

Low- Not directly affected by it; involved in their own jobs

NGO’s + Pressure Groups



Potential Role

Level of Knowledge

Level of Commitment

Available Resources

Chamber of Commerce

Bridge between govt. & industry; protects interests of businessman

Provides a forum of interaction between government & industry

High- they advocates change in policy & keep track of changing trends

Strong- support or opposition- its very objective is to drive changes in policies

Funds-Information

Stakeholder Engagement Plan 1/3

Stakeholder Potential Role Engagement Strategy

Follow Up Strategy

Investor/ Entrepreneur

Provides capital & determines fate if a firm

Give incentives- tax rebates and concessions, Subsidies, investment friendly environment

Organizing business conferences+ regular meeting of minister with investors exhibition

Human Resource

Carries out work & implement the policies of the firm

Invite leaders of textile labor unions- get feedback about the working conditions

Feed back from labor union + representatives of associations of technical workers

Stakeholder Engagement Plan 2/3Stakeholder Potential role Engagement

StrategyFollow up strategy

Government Provision of conducive & competitive environment

Minister of industries will represent the govt. in policy making- ensures implementation of incumbent government

Revisiting the policy & analyzing results of its implementation

Community Safeguard interest of public; protects environment

Taking onboard NGO’s+ Civil Society organizations who have a stake in the proposed policy

Feedback + interaction with relevant NGO’s + CSO’s+ Surveys

Stakeholder Engagement Plan 3/3Stakeholder Potential Role Engagement

StrategyFollow up Strategy

Chamber of Commerce

Provides a forum of interaction between government & industry

Taking input from the presidents of various chambers of commerce across the country

Organization of exhibitions in local + international marketsFeed back

Driving ForcesVariable Hasa

nBadar

Azeem

Aqsa Fatima

SME’s Promotion 5 4 7 5 6

Tax concessions 8 8 9 7 8

Industrial zones 6 8 6 5 6

Cheap labor 5 4 6 5 5

H R development 6 6 5 7 4

Markets around Globe 8 8 8 8 8

Foreign investors are interested to invest

7 7 6 9 5

Potential for more development

4 5 4 6 5

Technological advancement

7 6 5 7 6

Energy supply 8 8 6 7 5

Restraining ForcesVariable Hasa

nBadar

Azeem Aqsa Fatima

Energy Crisis 8 8 8 8 8

Law and order 5 6 7 5 5

Red Tapesm 5 6 3 4 4

Low Economic Growth

6 5 4 4 4

Lack of Investment 6 5 5 4 6

Absence of international markets

8 8 6 5 4

Global Recession 3 5 7 6 5

Inflationary Pressures

4 3 4 5 5

Lack of Textile Research

5 5 6 6 5

Lack of technical know how

5 4 6 6 2

Total Score

Driving Forces = 309Restraining Forces = 274

The difference is 35 which is positive, so we should go with the plan

Milestones1. Textile Industry own Generation power

plants2. Creation of R & D Centers3. Proper Promotion of Textile products for

getting share in International markets4. Development of Textiles zones on the

pattern of industrial Estates5. State of the Art technology for Textile

Sectors

Solutions and Time FrameMilestones

Solution 2014

2015

2016

2017

2018

Resources Required

Limitations

1 Installation of Power plants by Industry

√ Investment

technical

2 Spending on Research Centers

√ √ √ √ √ Investment

3 Participation in Exhibitions

√ √ √ √ √ Pro Active approach & government help

Delays

4 Government Policy

√ √ √ √ √ Policy implementation

Priorities by govt.

5 Importing Machinery

√ √ √ √ √ Investment

Duties & Tarrifs

Recommendations 1/2Modernization of machinery and technologyBuilding the required infrastructureSkills Development Promoting Standardization throughout the

chainEstablishing a zero-rated export RegimeTariff rationalizationRemoving Regulatory bottleneckMarket Access

Recommendations 2/2Market Insurance schemeDevelopment of Indigenous Power plants in

Textile UnitsUse of Information technology for better

development of sector

ConclusionTextile sector is most important industrial

manufacturing sector in Pakistan that it employs 40% industrial labor force , contributes 8 % of GDP and its part in national export is at 60 %. Therefore, the need of the hour is to revamp and upgrade this sector so that Pakistan can get maximum out of this sector

Policy analysis on Pakistan textile sector

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