From Pakistan to Bangladesh - Business - DAWN.COM
Over the past three years, manufacturers have faced numerous obstacles to smooth operations and profitability due to power shortages, security issues, and widespread corruption. - File photo
FAISALABAD: Tauseef Salamat, the owner of a Pakistani textile mill, grinned ruefully as he read a text message that reminded him to turn off the plant's natural gas supply for three days under a government programme to ration scarce energy resources or face a penalty.
These are tough times for Pakistan's once-thriving textiles industry. The long-running energy crisis along with security concerns in a country plagued by militancy and political violence have taken a heavy toll. Now it faces a new threat: competition from Bangladesh.
"Bangladesh also has energy problems but, unlike us, they are managing it and managing it well," said Salamat, whose company, Tauseef Enterprises, has 3,000 employees in Pakistan. "The energy crisis has increased the cost of doing business in Pakistan."
Indeed, Salamat has already voted with his feet. His enterprise now has more than 800 workers some 2,000 km (1,250 miles) away in what used to be the eastern wing of Pakistan.
Bangladesh is making a strong play to lure Pakistani textile businesses to relocate or expand to Dhaka, which split from West Pakistan and gained independence in 1971 after a bloody civil war and Indian intervention.
Its advantages are clear: not only does it share a common culture and history with Pakistan, it has more investor-friendly policies, cheaper skilled labour and, crucially, tax-free access to 37 countries, including the European Union, Canada and Australia.
The movement of textile business from Pakistan to Bangladesh is also evidence of an emerging trend in labour and capital movement in a globalising world: first there was a shift from the West to rapidly developing economies, now transfers are happening between frontier markets.
"There is a third wave of globalisation into frontier markets," said Frederic Neumann, chief Asia economist at HSBC in Hong Kong. "As some emerging markets climb up the value-added ladder, frontier markets are increasingly finding a competitive niche."
WORRYING TREND
Pakistan's textile industry accounts for 38 percent of workers in the manufacturing sector and over half of its exports, which stood at nearly $25 billion (15.3 billion pounds) in fiscal 2010/11.
Textile exports rose 35 percent to $13.80 billion in 2010/11, but that was mainly because of high cotton prices which are expected to come off. Indeed, exports fell by about 15 percent in July, the first month of the 2011/12 fiscal year.
The country is also beset with a Taliban insurgency, gang violence and ethnic tensions, which are a drag on the economy and a deterrent for investors.
"They are trying to come to our country because investment in Pakistan is too risky," said a Bangladesh commerce ministry official, speaking on condition of anonymity because he was not authorised to speak to journalists.
"Foreign buyers are reluctant to place orders in Pakistan due to security concerns."
The energy crisis in Pakistan is also a major hindrance.
"Work in factories is closed for three days a week due to gas load-shedding, because of which the industry is working at 30-40 percent of its capacity," said Wasim Latif, chairman of the Pakistan Textile Exporters Association.
Bangladesh has its own power problems, facing up to 2,000 MW of shortages because of a gas supply crisis that forced a cut in power plants' output and growing domestic demand stemming from economic growth that has averaged 6 percent in recent years.
But it is taking steps to address the energy shortage. The government is aiming to triple power generation to 15,000 MW over the next five years, with plans for as many as 89 power plants to be built on a fast-track basis.
Meanwhile, Pakistan - beset by crises on multiple fronts - is struggling to tackle its energy troubles.
The country is facing a gas shortfall of nearly 2.0 billion cubic feet per day. Total electricity demand in summer months outstrips supply by 22 percent -- or about 6,000 MW -- during peak hours.
According to the Asian Development Bank 2011 report released in April, energy deficits are lowering Pakistan's real growth by at least 2 percentage points annually.
Over the past three years, manufacturers have faced numerous obstacles to smooth operations and profitability due to power shortages, security issues, and widespread corruption. - File photo
FAISALABAD: Tauseef Salamat, the owner of a Pakistani textile mill, grinned ruefully as he read a text message that reminded him to turn off the plant's natural gas supply for three days under a government programme to ration scarce energy resources or face a penalty.
These are tough times for Pakistan's once-thriving textiles industry. The long-running energy crisis along with security concerns in a country plagued by militancy and political violence have taken a heavy toll. Now it faces a new threat: competition from Bangladesh.
"Bangladesh also has energy problems but, unlike us, they are managing it and managing it well," said Salamat, whose company, Tauseef Enterprises, has 3,000 employees in Pakistan. "The energy crisis has increased the cost of doing business in Pakistan."
Indeed, Salamat has already voted with his feet. His enterprise now has more than 800 workers some 2,000 km (1,250 miles) away in what used to be the eastern wing of Pakistan.
Bangladesh is making a strong play to lure Pakistani textile businesses to relocate or expand to Dhaka, which split from West Pakistan and gained independence in 1971 after a bloody civil war and Indian intervention.
Its advantages are clear: not only does it share a common culture and history with Pakistan, it has more investor-friendly policies, cheaper skilled labour and, crucially, tax-free access to 37 countries, including the European Union, Canada and Australia.
The movement of textile business from Pakistan to Bangladesh is also evidence of an emerging trend in labour and capital movement in a globalising world: first there was a shift from the West to rapidly developing economies, now transfers are happening between frontier markets.
"There is a third wave of globalisation into frontier markets," said Frederic Neumann, chief Asia economist at HSBC in Hong Kong. "As some emerging markets climb up the value-added ladder, frontier markets are increasingly finding a competitive niche."
WORRYING TREND
Pakistan's textile industry accounts for 38 percent of workers in the manufacturing sector and over half of its exports, which stood at nearly $25 billion (15.3 billion pounds) in fiscal 2010/11.
Textile exports rose 35 percent to $13.80 billion in 2010/11, but that was mainly because of high cotton prices which are expected to come off. Indeed, exports fell by about 15 percent in July, the first month of the 2011/12 fiscal year.
The country is also beset with a Taliban insurgency, gang violence and ethnic tensions, which are a drag on the economy and a deterrent for investors.
"They are trying to come to our country because investment in Pakistan is too risky," said a Bangladesh commerce ministry official, speaking on condition of anonymity because he was not authorised to speak to journalists.
"Foreign buyers are reluctant to place orders in Pakistan due to security concerns."
The energy crisis in Pakistan is also a major hindrance.
"Work in factories is closed for three days a week due to gas load-shedding, because of which the industry is working at 30-40 percent of its capacity," said Wasim Latif, chairman of the Pakistan Textile Exporters Association.
Bangladesh has its own power problems, facing up to 2,000 MW of shortages because of a gas supply crisis that forced a cut in power plants' output and growing domestic demand stemming from economic growth that has averaged 6 percent in recent years.
But it is taking steps to address the energy shortage. The government is aiming to triple power generation to 15,000 MW over the next five years, with plans for as many as 89 power plants to be built on a fast-track basis.
Meanwhile, Pakistan - beset by crises on multiple fronts - is struggling to tackle its energy troubles.
The country is facing a gas shortfall of nearly 2.0 billion cubic feet per day. Total electricity demand in summer months outstrips supply by 22 percent -- or about 6,000 MW -- during peak hours.
According to the Asian Development Bank 2011 report released in April, energy deficits are lowering Pakistan's real growth by at least 2 percentage points annually.
