1. Page 1 08.01.2009 Perspective Plan Project Pakistan Steering Committee Meeting for by 26.02.2009 MINISTRY OF TEXTILE INDUSTRY PAKISTAN DRAFT FINAL REPORT

2. Page 2 08.01.2009 MAJOR OBJECTIVES OF THE GHERZI STUDY PROJECT Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 THE MAJOR OBJECTIVES OF THE PERSPECTIVE PLAN ARE:  To safeguard the Industry  To arrest the decline in Exports  To prepare for the Post Crisis Years  To adjust thinking from “Business as Usual” to the culture of “Immediate Action”  To prepare Recommendations and Action Plans for the further development of Sustainable Textile and Garment Sectors

3. Page 3 08.01.2009 MAJOR OBJECTIVES OF THE GHERZI STUDY Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 The Textile and Garment Sectors in Pakistan have been derailed in line with the Textile and Garment Sectors of other countries Gherzi has tried to address some of the immediate challenges caused by the crisis during the course of the present contracted project

4. Page 4 08.01.2009 THE WORLD ECONOMIC CRISIS; IMPACT ON TEXTILES & CLOTHING WHERE ARE WE TODAY? Perspective Plan Project Pakistan - Karachi/ Lahore Workshops “CONSEQUENTLY, ONLY SHORT TERM STRATEGIES CAN BE FOLLOWED” “THERE ARE NOW NO SUCCESSFUL BUSINESS MODELS TO FOLLOW. STRATEGIES HAVE TO BE REVISED ” “THE PRESENT ECONOMIC CRISIS HAS DERAILED ALL COUNTRIES’ PLANS ”

5. Page 5 08.01.2009 WORLD ECONOMIC CRISIS; IMPACT ON TEXTILES and CLOTHING. WHERE ARE WE TODAY? Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 In place of Growth Oriented Strategies pursued by most countries, the Revised Strategies have to be focused on arresting the decline in exports.  Which are the product segments needing a Protection Strategy?  Where does Pakistan have inherent and sustainable strengths? How can they be protected?  What are the instruments for applying protection? ~ Free Trade Agreements with the US– what is today’s position? ~ For what products has asked for Duty Free Preference? ~ What has been the benefit of the FTAs signed until now? ~ Have the export gains for these products been evaluated? ~ If granted, what would be the impact on export performance?

6. Page 6 08.01.2009 THE WORLD ECONOMIC CRISIS; IMPACT ON TEXTILES & CLOTHING WHERE ARE WE TODAY? Perspective Plan Project Pakistan – Steering Committee 26 February 2009 1.Global Supply Capacity FAR EXCEEDS World Demand in 2008/09 2.Global Markets: As a result of Globalisation, 15 Retail Buyers control 80% of Textile & Clothing Trade from 4,000 suppliers. 3. Global Trend – Reducing Demand for an uncertain period resulting in Supply Capacity Closures around the World YEARWORLD DEMANDWORLD SUPPLY CAPACITY 2008/09DECLINEEXCESS CAPACITY 2010FURTHER DECLINECAPACITY REDUCTION 2011DECLINE- at best stableCAPACITY CONSOLIDATION

7. Page 7 08.01.2009 THE WORLD ECONOMIC CRISIS; IMPACT ON TEXTILES & CLOTHING WHERE ARE WE TODAY? Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009  IMPACT ON WORLD MANUFACTURING COMPANIES: 2009: Mill closures 2010: More mill closures 2011 – Hopefully Consolidation  IMPACT ON PAKISTAN MANUCTURING COMPANIES: 2009: Mill closures; job losses* [10% Mills closed; 20% partly closed; 30,000 jobs lost in last 3 months] Estimate of jobs that will be lost in 2009 = 300,000 {industry sources} [*Immediate damage limitation action required] 2010: More mill closures & job looses 2011: Consolidation

8. Page 8 08.01.2009 1. The investment bubble following the end of the MFA regime created an over supply capacity in 2007/08 when exports were monopolised by China. 2. The realities for 2007 Exports are: ~ CHINA: US$ 180 bn - target achieved ~ PAKISTAN: US$ 11 bn - target not achieved ~ INDIA US$ 20 bn - target not achieved ~ BANGLADESH: US$ 11 bn - target achieved 3. Export Targets framed in 2005/06 for some countries are unrealistic for the actual economic situation, e.g. ~ CHINA: US$ 180 bn (with Macao) ~ PAKISTAN: US$ 22-25bn [VISION MINTEX(ACGR 13-18%) ~ INDIA: US$ 50 bn [VISION 2012] ~ BANGLADESH: US$ 11 bn Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 THE WORLD ECONOMIC CRISIS: IMPACT ON TEXTILES & CLOTHING WHERE ARE WE TODAY? Pakistan and other countries had over ambitious export targets ……..

9. Page 9 08.01.2009 Completed Questionnaires Submitted to Gherzi Type of Organization Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 Number Completed Questionnaires* Trade Associations8 Companies80 Total88 1 * Note: The study has been based on questionnaires; mill visits were not included in the project

10. Page 10 08.01.2009 THE PAKISTAN TEXTILE AND CLOTHING SECTORS Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  The Textile and Garment Sectors are the Drivers of the Pakistan Economy today and are the potential Engine for Future Growth and for Job Creation  Contributes more than 60% to Exports  Represents about 50% of Pakistan’s Manufacturing Industry over the Formal and Informal Sectors  The Industry employs about 2.85 million persons in links along the Textile Chain from Spinning to Consumer Products representing 38% of jobs in manufacturing.  Indirect jobs in service sectors- Machinery, Dyes & Chemicals, Printing, Packing Materials, Transport, Banking, Insurance, Courier Services, etc  Industry contributes 8.5% to Total GDP  5,000 Textile & Clothing Exporters

11. Page 11 08.01.2009 THE PAKISTAN TEXTILE AND CLOTHING SECTORS: STRENGTHS Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  Indigenous, Short Staple Cotton: 4 th largest global producer  Some Companies achieve Best International Practice Standards  Large Spinning Capacity  Large Weaving Capacity – the majority in the Undocumented Sector  High Quality, Wide Width Fabric Dyeing, Printing & Finishing Capacities  Modern, semi-integrated Knitting Mills  Home Textiles – Bed wear, Towels  Major Clothing Sector [Denims & Bottom eights] – growth potential  Competitive Labour Costs  Some companies have positive positions in the export markets  Large Position in the EU and USA Markets

12. Page 12 08.01.2009 THE PAKISTAN TEXTILE and CLOTHING SECTORS: WEAKNESSES Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  Industry did not prepare for the ending of Quotas (2004) –next slide  Country Perception: Law & Order  Country Image: Volume Producer, Basic Products, Low Prices  Cotton Contamination: continues to be a serious issue  Power outages and Gas supply issues disrupt production, add to costs and delay deliveries  The Documented Sector has cost and operating disadvantages compared to the Un-documented Sector  Limited Rotor Spinning and Narrow Width Processing capacities in the Supply Chain  Fabrics for Clothing are mainly limited to Denims & Bottom Weights  Low HR Skills at all levels resulting in Low Productivity- limited mill and institutional training

13. Page 13 08.01.2009 THE PAKISTAN TEXTILE and CLOTHING SECTORS: WEAKNESSES: unlike China, investments started late.. Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  TEXTILE MACHINERY IMPORTS: 1999/2000 – 2008/2009 (US$ bn) YearInvestments value% change 1999 – 00210.952 2000 – 01370.15575.47 2001- 02406.2089.35 2002 - 03531.90 30.95 2003 – 04*597.90- 12.41 2004 – 05928.60- 55.31 2005 – 06817.24- 11.99 2006 – 07502.97- 38. 45 2007 - 08438.27- 12.86 2008 – 09 (Jul – Dec)347.022- 37.03 * Quotas ended 31.12 04 Exports of US$ 10 bn a year need annual investments of US$ 1 bn

14. Page 14 08.01.2009 THE PAKISTAN TEXTILE and CLOTHING SECTORS: WEAKNESSES continued Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  Domestic Market swamped by cheap, smuggled goods, e.g. from China  Many companies have limited knowledge of the export markets’ dynamics, buyers’ specific needs and the strengths / weaknesses of their competitors. This restricts their attractiveness to buyers and contributes to low prices  Reliability in terms of service, honouring delivery dates, quality issues due to political instability, infra-structure, country perception,  Investment Climate – weak due to the recent export performance, uncertainty of the industry’s future

15. Page 15 08.01.2009 Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 THE PAKISTAN TEXTILE and CLOTHING SECTORS: CHANGES IN EXPORTS AT THE START OF THE WORLD ECONOMIC CRISIS. Decline in key products … except Cotton Cloth, Towels & Knit Garments July-Jan 2007/08 Volume M kg July-Jan 2007/08 Value M$ July-Jan 2008/09 Volume M kg July-Jan 2008/09 Value M$ % change Volume % change Value Cotton Yarn334.5772.7295.0651.2- 11.8- 15.7 Other Yarns12.230.25.413.1- 55.8- 56.5 Cotton Cloth1082.31087.51229.71184.313.68.9 Bed wear M kg193.71121.5194.31013.40.29- 9.64 Towels M kg81.8333.5103.6381.326.5914.3 Other Made ups-290.7-294.4-1.3 Tents/Canvas14.946.113.034.8- 12.7- 24.6 Knit Garments57.41090.862.51094.88.80.37 RM Garments21.9822.319.5724.2- 10.9- 11.9 Syn. Fabrics288.6263.8270.1224.0- 6.4- 15.1 Carpets, etc2.28127.92.194.4- 8.0- 26.2

16. Page 16 08.01.2009 THE WAY FORWARD: CHALLENGES TO BE ADDRESSED Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 1.Assist the Industry to sustain its existing market shares 2.Synergise all policy initiatives to support the Industry to develop its competitiveness in the changing global environment 3.Focus on Short Term Strategies with result oriented approaches to help companies progress 4.Promotion of the Clothing Sector – the Sector achieved exports of US$ 2.9 bn in 2005 and US$ 2.7 bn in 2008 and has potential to increase foreign currency earnings. This Sector has the possibility to create more than 1 million additional jobs – more than any other sector

17. Page 17 08.01.2009 THE WAY FORWARD: CHALLENGES TO BE ADDRESSED IMMEDIATELY Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 1.Assist the Industry to sustain its existing market shares Availability of:  Utilities- Power, Gas, Water at international prices, reflecting all changes in oil and gas prices. Stop cross subsidies of all products. Identify areas for continuous supplies at competitive prices.  Raw Materials at competitive prices / delivery times- Cotton, Man Made Fibre, Dyes, Chemicals, Accessories  Finance (capital investments, working capital) at competitive rates  Zero rating of taxes along the Supply Chain  Implementation of the Trade Policy / Budget Initiatives already approved and announced

18. Page 18 08.01.2009 THE WAY FORWARD: CHALLENGES TO BE ADDRESSED Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 2.Synergise all policy initiatives to support the Industry to fully develop its competitiveness in the changing global environment  A single policy for all stakeholders / Ministries to be developed on a “war footing”  “Level Playing Field”  Government to support companies wanting to develop / invest in brands  Review the “cost of doing business”  Foreign Exchange Loss: Identify opportunity to compensate for losses caused when the foreign exchange rate changes adversely in the case of shipments in the pipeline from overseas  Clusters and Mergers: Examine the possibility for setting up ROZs with all facilities (power, gas, water & waste water treatment), to assist exports. ROZs to ensure anti-waste programmes are included.

19. Page 19 08.01.2009 THE WAY FORWARD: CHALLENGES TO BE ADDRESSED Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 3.Focus on Short Term Strategies with result oriented approaches to help companies progress  Productivity increase through training at all levels  Increase in unit value  Diversification – increase product base, including Technical Textiles  Market Access – finalise Free Trade Agreements- Option A; aim for reduced rates as Option B  Education: Industry has too few good managers. Duration of training is long term – facilitate expatriate staff at zero income tax  Infra-Structure – wet/ dry ports, container handling in ports, container prices, shipping lines/ services.  Re-structuring the Industry – The undocumented weaving sector to convert to the documented sector to benefit from ‘Upgrading Support’

20. Page 20 08.01.2009 THE WAY FORWARD: CHALLENGES TO BE ADDRESSED Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 4. Promotion of the Clothing Sector.  The Clothing Sector is based on denims & bottom weights (trousers). There are opportunities to increase these exports  Other garments were made for export earlier, e.g. shirts, but the fabrics are not made locally. The procedures for importing fabrics are costly, time consuming and bureaucratic.  TDAP / SMEDA help clothing companies. What additional support is required to facilitate exports? ~ Assistance with Business Strategies for individual companies ~ “One Stop Shop” import / export procedures – duty free import for re- export (bonded warehouse system) ~ Training Institutes- upgrade: Consider association with international institutes

21. Page 21 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Ensure supplies of Gas & Power meet the Industry’s needs in terms of price & availability  Identify selected areas for continuous supplies  Stop cross subsidisation of other industry & agricultural sectors  Reduce pilferages of 30% - 40%  Water at international prices 2009 80 50 90 30-40 75 MINTEX -Task force of stakeholders Ditto  1.1 Utilities- Gas & Power Budget:

22. Page 22 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  To become self-sufficient  Project: Achieve Clean Cotton- select 3 areas for trial runs to produce for selected companies  Additional Crops of Organic Cotton as unit value twice normal cotton  Clarify policies on Bt cotton  Enforce Provincial Cotton Standardisation Acts  Upgrade cotton research institutes to increase yields & long staple To 2015 To 2014 2009 2019 2015 50 100 80 100 80 100 MINTEX- Task force of Stakeholders Ditto Prepare status report Ditto Task Force  1.2 Raw Materials - Cotton Budget:

23. Page 23 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Ginning: review technology levels / condition of sector  Modernise Gins – “soft loans”  Synthetic Fibres – examine supply and demand- varieties, prices, quantities  Polyester- examine industry supply issues  Duties on MMF to be addressed  Research Institutes to be upgraded 2010 2012 2009 2010 100 MINTEX, Prov. Govts. Consultants Study-  1.2 Raw Materials - Budget:

24. Page 24 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Consider “Soft Loans for capital investments. 5% lower than commercial bank rates  Reduce Bank mark up- Banks charge high interest rates between deposits & lending rates: limit to 4%  Working capital loans- convert to longer term facilities where appropriate  Financing to Exporters: Financing appears to have been settled at 7.5% with R&D claims settled by 30.06.08 2009 2010 2009 100 2009 GOP  1.3 Finance at competitive rates Budget:

25. Page 25 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  APTMA is studying this issue and expects to resolve this shortly.  Since R & D Support was removed (as per IMF), studies are underway to consider enhanced duty drawback rates to exporters and allowing duty and tax refunds on inputs [not previously permitted on power, gas, diesel, etc] (Gherzi can compare with systems in other countries  Review the tax burden on companies in the Documented Sector to bring it in line with competitors 2009 100 APTMA Task Force, GOP Task Force, consultants  1.4 Zero rating of taxes along the supply chain Budget:

26. Page 26 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Implementation of the Trade Policy / Budget initiatives already announced – undertake an audit of all the initiatives to identify the exact situation 2009100Taskforce- MINTEX, MOC, MOF  1.5 Implementation of Trade Policy / Budget initiatives Budget:

27. Page 27 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Ministries have divergent policies for the same sector, e.g. MINTEX/TDAP. A single policy for all Stakeholders/ Ministries to be developed on a “war footing”  Competing countries offer incentives to their manufacturers. Are Pakistan companies disadvantaged? “Level Playing Field  Government to support companies wanting to buy brands from foreign companies. Joint-Ventures to make Image change.  Review the cost of doing business across the industry 2009 100 GOP MINTEX MOF, MOC Task Force, consultants  2.1 Synergise all policy initiatives………… Budget:

28. Page 28 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Productivity increase through training:- (i) Skills Development at Mill Level (ii) Vocational Schools  Increase in Unit Value through new product development. Recruit expatriate staff  Diversification, e.g. technical textiles. Product development Start 2009 2009 Continuous 75 100 Mill managers Mills, R&D Mills, Research Inst.  3. Focus on Short Term Strategies to help companies progress Budget:

29. Page 29 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Market Access- negotiate Free Trade Agreements with countries where we need to increase market shares. As Pakistan is a major importer of US cotton, arrange special re-entry terms for goods.  Education: Strengthen educational institutes to match industry’s requirements 2009- ongoing 2009- 2020 90 100 GOP Task Force, GOP consultants  3. Focus on Short Term Strategies Budget:

30. Page 30 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Infra-Structure: Up-gradation of all essential facilities; dry/wet ports, container terminals, container prices, shipping lines/ frequencies, customs practices.  Re-structuring the Industry- (i) The Undocumented weaving sector to convert to the Documented Sector to benefit from Upgrading Support 2010 100 70 MINTEX, MOF, MOC, Task Force, consultants MINTEX  3. Focus on Short Term Strategies Budget:

31. Page 31 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Prepare for the Post Crisis Years: There is no better opportunity to invest in new machines than the present. Tax credit to be arranged as the TUF programme in India. The next slide indicates the typical machine types required are to be evaluated 2009100GOP  3. Focus on Short Term Strategies Budget:

32. Page 32 08.01.2009 THE PAKISTAN TEXTILE INDUSTRY – MACHINE INVESTMENTS REQUIRED Perspective Project Plan Pakistan Steering Committee Meeting 26 February 2009  ANALYSIS SUGGESTS THAT INVESTMENTS IN THE FOLLOWING MACHINE AREAS ARE REQUIRED: Costs, technologies and quantities have yet to be determined. Automatic Winders, to assist in the production of cleaner yarn Fancy Yarn Machines Yarn Dyeing Units Weaving Preparation Shuttle less Looms Narrow Width (165 cms) Dyeing, Printing & Finishing Garmenting Accessories

33. Page 33 08.01.2009 THE WAY FORWARD In this section, these challenges are addressed individually Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TargetTime Frame Probability % Action / Responsibility  Increase export sales of denims and bottom weights  Study opportunities to make/ export other garment products  Facilitate all procedures for importing raw materials  SMEs – review work now undertaken by SMEDA / TDAP to identify what additional support should be given to companies. 2009 100 MINTEX, TDAP Mills, MINTEX, TDAP GOP Task Force  4. Promotion of the Clothing Sector Budget:

34. Page 34 08.01.2009 TEXTILE and CLOTHING SECTORS; an essential need……. Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009 TEXTILE and CLOTHING SECTORS RE-STRUCTURING UNIT – in the Ministry of Textile Industry  Responsible for co-ordination of the Task Forces & their meetings  Task Force Members with the authority to take decisions on behalf of Ministries, Stakeholders and Institutions  Undertaking the required field work and analysis [consultants]  Preparation of all Recommended Action Plans, on the basis of the Task Forces work, and of a budget for each Action Plan  Agreeing the Action Plans and Time Frames needed for complete Implementation  Implementation of the Action Plans  Monitoring all progress- fine tuning, costs/budgets, progress  Maintain a library of all data relating to the Textile & Clothing Sectors and their markets

35. Page 35 08.01.2009 Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  CONCLUSION  THE FINDINGS OF THE STUDY HIGHLIGHT THE FACT THAT IMMEDIATE GOVERNMENT INTERVENTION IS REQUIRED ACROSS ASPECTS OF THE INDUSTRY.  ALL STAKEHOLDERS NEED TO BE INVOLVED AND TO REFORMULATE THE TEXTILE AND CLOTHING POLICY THAT TAKES INTO ACCOUNT THE CHANGED MARKET CONDITIONS.  THERE ARE OPPORTUNITIES FOR THE INDUSTRY TO GROW IN THE FUTURE PROVIDED ALL THE PRESENT POLICY ISSUES ARE RESOLVED NOW.

36. Page 36 08.01.2009 Perspective Plan Project Pakistan Steering Committee Meeting 26 February 2009  THE NEXT STEPS  To Finalise Draft Final Report  Gherzi to submit power, water, steam and labour for China, Egypt, India, Bangladesh and Turkey  Complete - The recovery of Labour related and other Federal, Provincial and Local Government Levies from textile Units as “One Window Operations”  Complete - Review the Taxation Policies and the rationalisation of existing taxes and duties.

37. Page 37 08.01.2009 THE WORLD ECONOMIC CRISIS; IMPACT ON TEXTILES & CLOTHING: WHERE ARE WE TODAY? Perspective Plan Project Pakistan – Steering Committee Meeting 26 February 2009 Pakistan Textile & Clothing Exports: 2007, 2008, 2009 est 2009 & Revised Target 2012 [US$ bn] Product 200720082009Target 2012 Cotton Yarn1.401.161.051.0 Cotton Cloth1.951.621.461.5 Bed Wear1.941.731.504.0 Towels0.570.650.672.0 Garments (woven/ knit)3.213.263.204.0 Others0.971.211.201.0

38. Page 38 08.01.2009 Perspective Plan Project Pakistan: Terms of Reference 1.The TOR will address the following three specific points:  Draw a Perspective Plan for the Pakistan Textile and Clothing Industry up to the year 2013 in 2 phases: Phase 1 for the period 2007 to 2013 and Phase 2 for the period 2013 to 2020. [Phase 2 will be a separate proposal to be prepared at the conclusion of Phase 1.]  Suggest measures for reducing the cost of doing business by identifying the various costs and suggest measures for reducing each cost factor.  Propose measures for skills development in the different sectors of the Textile and Clothing Industry, especially in textile processing, garment and home textiles.

39. Page 39 08.01.2009 Perspective Plan Project Pakistan: Terms of Reference 2. In order to achieve the 3 points of the TOR, the consultants will:  Identify the market issues that Pakistan exporters need to address  Make a SWOT analysis of the Industry  Address the need to increase the competitiveness of the Pakistan, Textile & Clothing Industry keeping in mind the strategies of China, India, Bangladesh, Sri Lanka, etc, to increase their shares of the global markets  Update/ revise Textile Vision 2005 to strengthen the Value Chain in Textiles and Clothing  The recovery of labour related and other Federal, Provincial and Local Government Levies from Textile Units as “One Window” operations  Review the Taxation Policies and the rationalisation of existing taxes & duties

40. Page 40 08.01.2009 Perspective Plan Project Pakistan: Terms of Reference 3. The Phase 1 will be a quick assessment of the situation and preparation of short to medium term plans:  The Market Performance- What are buyers’ views of Pakistan Exporters’ performance in the markets? What is their performance relative to the major competing supply countries? Amongst the aspects to be considered are customer service levels, knowledge of the markets, reliability, response times, quality consistency, new product development, competitiveness and other issues.  Margins: As Pakistan manufacturers have competitively priced, indigenous raw materials and low manufacturing costs, do they achieve competitive product costs and selling prices that earn reasonable margins? If not, why not? Are these issues concerning limited manufacturing efficiencies and productivity levels that need to be addressed? Can these issues be related to management & production operative skills? What other production issues need to be addressed?

41. Page 41 08.01.2009 Perspective Plan Project Pakistan: Terms of Reference 3. The Phase 1 will be a quick assessment of the situation and preparation of short to medium term plans: continued  Access to the Markets- Does Pakistan have access to the global markets as per competitors through bi/ multi- lateral trade agreements? At a time when buyers demand shorter lead times from their suppliers [and getting them], can Pakistan respond with improved transportation times from the factories to the ports, through the ports and from the ports to buyers around the world?  Operating Environment: Is the operating environment in which Pakistan companies work, one that enables them to achieve export competitiveness? Does the Government’s Policy Framework need to be adjusted to facilitate export competitiveness?

42. Page 42 08.01.2009 Perspective Plan Project Pakistan: Terms of Reference 4. 5 Modules:  Module 1: Project preparation – collection of earlier reports, including reports to Government by Trade Associations, Preparation of questionnaires & identification of target companies  Module 2: Market Performance – EU, US, Dubai  Module 3: Analysis of returned questionnaires  Module 4: Conduct workshops  Module 5: Perspective Plan – Phase 1