KARACHI, Feb 5 (AFP): Pakistani textile exporters say they are looking to move their operations to Bangladesh and Sri Lanka due to high manufacturing costs, despite gains from last year's abolition of import quotas.
The key industry has replaced worn-out equipment to face global competition after the 30-year quotas ended in January 2005. The quotas ensured developing countries had access to the key European Union and US markets.
But while their 5.5-billion-dollar investment over the past five years has given good returns, they say cost overruns at home threaten their hopes for the future.
The issue is enormous for debt-burdened and poverty-stricken Pakistan, which relies on textiles for about 67 per cent of its total 13- billion-dollar exports or over 11 per cent of the Gross Domestic Product.
"A number of bedwear and home textiles manufacturers have been forced to relocate their factories to Bangladesh and Sri Lanka," said Bilal Mullah, chairman of Pakistan Readymade Garment Manufacturers Association.
Hundreds of textile companies upgraded their equipment and operations to compete with giant rivals like China and India under the quota-less regime, but high costs-coupled with regulatory and bureaucratic hurdles-have rendered them uncompetitive, he said.
"I am seriously looking at relocating my textile units to Bangladesh as the cost of manufacturing here is going beyond our control," said Shabbir Ahmed, one of Pakistan's largest bedwear exporters, who spent 25 million dollars on modernising his factories.
Pakistani exports to the EU dropped 33 per cent in January- May 2005 compared to the same period last year, whereas Chinese exports climbed 57 per cent and India's increased 28 per cent, he said.
Ahmed said he led a delegation of the Pakistan Bedwear Exporters Association on a fact-finding mission to Bangladesh in December and was now conducting "feasibility studies" on a possible move there.