Taiwanese textile companies are willing to relocate their units outside Vietnam. Taiwan Textile Federation President Justin Huang has indicated their interest in relocating Taiwanese textile companies from Vietnam to Pakistan due to the favorable labor market in the country.
Vietnam had been a favorable country for Taiwan to run its textile Industry in. Vietnam textile and garment industry employs more than 1.6 million people, accounting for more than 12% of the industrial workforce and nearly 5% of the country’s total labor force. But some factors had made Taiwan think to relocate to Pakistan.
Cheap and Excess Labor
Justin mentioned that “Vietnam is crowded, which causes difficulties for Taiwanese textile firms there, such as labor shortages. In Pakistan, however, labor issues will not emerge at least for the next 10 years and this is something attractive for us.”
We all are aware of the fact that Pakistan’s population is on-trend of increase. Unemployment is increasing directly with the instability of the economy. This provides a chance for Taiwan to get cheap and excess labor. Pakistan ranks as the fourth cheapest in the world. It has a minimum wage of $1,751 a year in nominal terms, and by this estimate about a third of the 182 million people were living below the official poverty line a year ago.
Justin added that he would forward all the information collected from Pakistan to other federation members in Taiwan including the fact that Pakistan was a huge market of 200 million with excess labor and the government was willing to support foreign investment.
Pakistan needs foreign investment to surplus its Current account. With this foreign investment, the Pakistan government can generate jobs and ask the industry to reinvest some amount of revenue in Pakistan. To make Pakistan’s economy better.
Justin pointed out that under CPEC, China has invested in Pakistan’s infrastructure and energy sectors. Taiwanese businessmen can also benefit from these CPEC projects.
CPEC has been the biggest investment in Pakistan through which Pakistans’ infrastructure has flourished. The value of CPEC projects is worth $62 billion. Moreover, the renewable energy project has been increased with CPEC. That can provide sources to run textile factories. For example Kohala Hydropower Project.
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He voiced hope that the FTA with China would also assist Taiwanese companies, which had already invested in China and had set up their units in the country.
At the moment, Pakistan enjoys duty-free access to European markets. In December, the second phase of the Free Trade Agreement (FTA) with China will also become effective. Both of these factors can be helpful for Taiwanese investors and industrial development in Pakistan, said Huang.
From 1 January 2014 Pakistan benefits from generous tariff preferences (mostly zero duties on two-thirds of all product categories) under the so-called GSP+ arrangement aiming to support sustainable development and good governance. In order to maintain GSP+ Pakistan has to keep ratification and effectively implement 27 core international conventions on human and labor rights, environmental protection and good governance.
Duty-free access to Euro markets will be cheaper for the textile industry from Pakistan. Taiwan Exports Major Textile and garments good to the US and China. Due to the presence of CPEC exporting good China would be easy and cheap from Pakistan. Free Trade Agreement (FTA) with China will also become effective.
Under the Phase-II of China Pakistan Free Trade Agreement, both countries will liberalize 75% of tariff lines for each other. In a period of 10 years by China and 15 years by Pakistan. China will immediately eliminate tariffs on 313 most priority tariff lines of Pakistan’s export interest. China has granted concessions to the textile industry and garments industry Products.
One other reason might be a huge order for the textile industry. It has orders from renown companies such as Nike, Addidas. They manufacture it and deliver it to China and the US. Not only this but sixteen teams in Football Worldcup used Taiwan Fabrics in their playing kit. The industry might need an extension in order to full fill the demand and order. In 2017, Taiwan’s textile exports reached a value of $10.08 billion.
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It has been noticed that South-Asian Dress sense is better and this can be one reason that Taiwan wants to relocate. Possibly The better Dresses the better Market share. The past few years have seen a rise in South Asian designers who create for a modern local and global audience
Pakistan might be reluctant to let Taiwan get in, as it has a good relation with China. They have invested a lot in Pakistan and supported Pakistan on an international level. The two countries have regularly exchanged high-level visits resulting in a variety of agreements. The long-standing ties between the two countries have been mutually beneficial.
Taiwan has disputes with China. Their relationship is complex and controversial due to the dispute on the political status of Taiwan. With the relocation of Taiwan textile in Pakistan. Taiwan can spy on them. Because of the fact that the US has good relations with Taiwan. The United States and Taiwan enjoy a robust unofficial relationship and close cooperation on a wide range of issues. There might be any Attempted attacks on Chinese. Pakistan would not let this thing happen.
But on the other side, China and Japan do not like each other but are probably each other biggest trading partners. This means Capitalism only cares about profits. If Pakistan can sort out things they can get a good investment opportunity.
Justin stressed the need for easing the visa approval process for Taiwanese investors.
“Right now, it is difficult for us to visit Pakistan due to a long process of applying for the entrance visa,” he said. “It took me more than three weeks to get approval for a Pakistani visa.”
These all points show that Mr. Justin is clear about all the policies of Pakistan and he with his federation has conducted deep research on it. On the other hand, Pakistan has to deal with some situations. They have to Work on Textile engineers and visa issues. Similarly, they have to ensure safety for China.
“If things follow the right direction, we will transfer new technologies and manufacturing processes to Pakistan, which will facilitate the country in upgrading its products,” Justin stressed.