Mehmood ul Hasan Qadir — Economist & Financial Analyst | Dubai, UAE

The Pakistan Ledger | Opinion

In 2005, Pakistan’s textile exports and Bangladesh’s textile exports were roughly comparable — both nations were in the $6–8 billion range, competing for the same markets with broadly similar product categories. By 2023, Bangladesh’s garment and textile exports had reached $47 billion. Pakistan’s textile exports — after two decades of policy debate, capacity investment, and governmental attention — stood at approximately $16 billion. The divergence is not a trade statistic. It is a policy verdict.

The Value-Added Gap — Cotton to Couture

Pakistan’s fundamental problem in textiles is not production volume. Pakistan produces approximately 15 million bales of cotton annually, making it one of the world’s largest cotton producers. The problem is what Pakistan does — and does not do — with that cotton. The value addition per kilogram of textile fibre in Pakistan’s export basket is significantly below Bangladesh’s, despite Bangladesh importing virtually all its raw cotton and yarn.

Pakistan remains concentrated in upstream and mid-stream products: raw cotton, cotton yarn, grey cloth, and basic woven fabric. Bangladesh has moved aggressively up the value chain into readymade garments — shirts, trousers, knitwear, outerwear — which carry two to five times the per-kilogram export value of the raw and semi-processed materials Pakistan exports. APTMA data shows that value-added garments represent approximately 30–35% of Pakistan’s textile export mix. For Bangladesh, the equivalent figure exceeds 90%. This gap represents billions of dollars in annual foregone export revenue and thousands of higher-skill jobs that do not exist in Pakistan.

GSP+ — The Opportunity Pakistan Barely Uses

The EU’s Generalised Scheme of Preferences Plus — GSP+ — grants Pakistan preferential, near-zero tariff access to European markets for its exports, including textiles and garments. It is one of the most valuable trade preferences available to any developing country. Bangladesh does not have GSP+. India does not have GSP+. Vietnam does not have GSP+. Pakistan has it, and the utilisation rate — the proportion of eligible exports actually being exported under GSP+ preferences — has historically been well below optimal, with estimates suggesting 60–75% utilisation compared to theoretical maximums.

The reasons for underutilisation are structural. GSP+ eligibility requires compliance with 27 international conventions on human rights, labour standards, environmental protection, and governance. Pakistan’s certification compliance — audited supply chains, documented working conditions, environmental standards — lags behind what European buyers require for large-scale sourcing commitments. The compliance certification gap is not insurmountable, but closing it requires investment in factory standards, worker welfare systems, and third-party auditing infrastructure that neither government policy nor industry bodies have systematically funded.

Fast Fashion and the Reshoring Window

The global fast fashion supply chain is undergoing structural change. European and American brands — under pressure from ESG requirements, supply chain transparency legislation, and consumer scrutiny — are seeking to diversify away from single-country dependence on Bangladesh and China. This diversification creates a sourcing window for alternative manufacturing locations. Pakistan is geographically positioned to compete for a share of this shift. But competing requires meeting the compliance, logistics, and speed-to-market requirements of international brands — and Pakistani garment manufacturers, with notable exceptions, are not yet consistently meeting these benchmarks.

The investment required to upgrade Pakistan’s garment sector to international brand sourcing standards is not beyond Pakistan’s industrial capacity. It requires focused policy: subsidised compliance certification programmes, export development fund reorientation toward value-added garments, dedicated logistics infrastructure for time-sensitive fashion shipments, and a labour standards regime that makes certification credible. None of these are conceptually difficult. All of them require political commitment that has been consistently deferred in favour of protecting the existing upstream industry’s cost advantages.

The Choice Pakistan Must Make

Pakistan’s textile industry faces a strategic choice that cannot be deferred much longer. The commodity end of the market — cotton yarn, grey cloth — is increasingly price-competitive from Central Asian and African producers. The value-added end of the market is where margin, employment quality, and export growth lie. Bangladesh made this choice in the 1990s, invested in garment manufacturing infrastructure, accepted the compliance requirements of international brands, and built a $47 billion export sector from a standing start with no natural cotton endowment.

Pakistan starts with a natural advantage Bangladesh never had: domestic cotton production. The question is whether the political economy of protecting cotton growers and yarn mills will continue to take precedence over the strategic imperative of building a garment export sector capable of competing in 2030. Bangladesh climbed. Pakistan can climb further. But not if it keeps standing at the bottom of the value chain calling it a foundation.

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Mehmood ul Hasan Qadir is an Economist and Financial Analyst based in Dubai, UAE. He writes on Pakistan’s economic structure, policy failures, and reform pathways for The Pakistan Ledger.