Bangladesh’s Woes Open a Window for Pakistan’s Textile Exports

Bangladesh’s Woes Open a Window for Pakistan’s Textile Exports

Amid labor strikes in Bangladesh over dissatisfaction with a government-mandated pay increase, nearly 40 factories have closed, creating a potential opportunity for Pakistan’s textile exports.
The wage rate adjustments in Bangladesh occurred close to the country’s elections, resulting in strikes and a higher risk profile for businesses. Major retailers, such as H&M, which source 60% of their goods from Bangladesh, have adjusted orders, providing Pakistan a limited window to attract some orders.

However, Pakistan faces challenges in competing with Bangladesh’s pricing. While there may be opportunities in the new year, the window for holiday season orders has passed.

While some orders may flow Pakistan’s way in the new year, the ship has sailed for the holiday season in the West, for which orders are placed in summer. Due to the six-month lead time in international markets, Christmas orders must be placed in June-July to ensure timely delivery three months before the holiday season.

Last year’s recessionary pressures and high inventory stocks, combined with ongoing global economic challenges, have led to a 9.95% drop in Pakistan’s textile and clothing exports in Q1 FY24. Despite an uptick in garment exports and a surge in large-scale manufacturing, Pakistan’s cost of doing business remains higher than competing countries like Bangladesh, India, and Vietnam.

The situation is particularly challenging for small and medium-sized enterprises (SMEs) in the textile industry, which face hurdles in production efficiency, import controls, and limited dollar availability.
While optimism exists for orders coming to Pakistan from January onwards, the anticipated jump is expected to be in single digits. Companies are advised to actively pursue orders despite the challenging economic climate.

However, there has been an uptick in garment exports. Over the July-September period of the current fiscal year, large-scale manufacturing numbers show a surge of nearly 40pc. “There was some activity in the holiday season. Exports have improved because buying power has slightly revived in our exporting countries,” says Sheikh Mohammad Shafiq, Managing Partner of J Text Exports. “But, our cost of doing business is 15-18pc more than competing countries such as Bangladesh, India and Vietnam.

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