Manufacturing in Pakistan Pakistan has steadily been growing as an industrial hub – with around 18% of its GDP contributed by the manufacturing industry as of 2021. With both opportunities and advantages as well as challenges, we cover Pakistan as a manufacturing base. What are the main industries in Pakistan? Employing around 25% of its population, Pakistan’s industrial sector has grown exponentially since the 1960s when the country focused predominantly on light industrial manufacturing – textiles, sugar refining – and other industries making use of local raw materials. Today Pakistan is a diverse manufacturer and exporter. While textiles, cotton processing, petroleum, metal, cement, and fertilizers are the primary areas of production, the automotive industry has emerged rapidly over the past few years, and pharmaceuticals, leather, and surgical instruments are other players on the market. While 55% of Pakistan’s main exports are textiles, vegetable products account for 13% of the exports, with mineral, food, and animal products making up a combined 12%. Manufacturing is spread across Pakistan with certain areas of the country dominating various industrial production: Karachi for textiles and automotive; Faisalabad for textiles, furniture, starch; Sialkot for sporting goods, textiles; Lahore for automotive and motorcycles, electronics, chemicals, textiles; Gujranwala for iron and steel, plastics, food, textiles, leather; Gujrat for furniture, jewelry, handicrafts, shoes, food; Sheikhapura for chemicals, automotive, ceramics, pharmaceuticals. What are the opportunities and advantages for manufacturing in Pakistan? One of Pakistan’s greatest advantages is its large pool of domestic engineering talent with skills across mechanical, industrial, electrical, and textile engineering. This is all due to the high level of engineering educational opportunities available there. Combined with a lower cost of labor, Pakistan’s engineering talent has been able to increase the diversification of manufacturing capabilities in the country. Another advantage is the fact that Pakistan is a beneficiary of the trading opportunities offered by the EU Generalized Scheme of Preferences (GSP). Enacted in 2014, this scheme has enabled Pakistan to benefit from mostly zero-duty tariff preferences (two-thirds of all product categories), on products being imported to the EU market. Enacted by the European Commission, the GSP scheme was designed to help developing countries alleviate poverty and created jobs based on international values and principles, which include labor and human rights. This has offered an opportunity for Pakistan’s growth as a manufacturing hub. What are the challenges of manufacturing in Pakistan? Social compliance, quality, and security are the three key issues that arise when assessing the challenges of manufacturing in Pakistan. A lack of transparency is the biggest contributor to the social compliance challenge when sourcing from Pakistan. With a low number of labor inspectors to enforce safety rules and labor codes, the working conditions can often be difficult across small manufacturing workshops – who also sometimes employ children. Only factory audits conducted by international brands enable some level of enforcement of safety and labor codes. Women are also rarely found working in the factories – within the textile industry many of them work from home, where they are not protected by any legislation, except in the south-eastern province of Sindh. This makes inspections more challenging as audits often do not include the work-from-home labor pool. As a result of social compliance issues, quality control can also be a challenge. With a lack of documented training there are difficulties in enforcing work instructions – and as a result quality control and quality management systems are generally not managed in many factories. With a small number of certified companies prepared to conduct quality control in Pakistan, there is a lower level of enforcement available. While a democracy, political unrest is not uncommon in Pakistan – and security challenges include terrorism and sectarian violence. However, the government has embarked upon several economic reforms, aiming to make the country more attractive as a place to do business – and if well managed through parties who are embedded in the business fabric of the country, the risks are slightly lower. Looking at compliance and product quality in Pakistan Before doing business with any supplier in any country it is always strongly recommended to spend some time learning more about them and the work they have done. It is equally important to conduct an audit to check the supplier exists and is not a fraud, that they have the right equipment, machines, production capacity, and industry experience for your product, as well as having a sufficient quality management system in place to ensure product quality matches both your specifications and expectations. Through this audit, we also recommend ensuring the supplier respects human and labor rights, as well as local regulations. In Pakistan, it is particularly important to verify the social compliance and quality management aspects to ensure human rights are respected in your supply chain, in order to reduce your risks and cost related to quality. Conducting quality control inspections in Pakistan With the understanding that quality control can be a challenge if expectations are not managed from the very beginning, conducting third-party quality control inspections is of the utmost importance. This ensures that the final product quality matches specifications before they are shipped from the factory. A third-party quality control inspection includes checks on workmanships, performance, packaging, labeling, certifications, and product quantity, before shipment. For more on how Pro QC conducts product inspections, you can visit https://proqc.com/inspections/. Without a local presence in Pakistan, it can be challenging to audit your supplier or manage quality control. If you are in this situation, a third-party quality control (QC) company such as Pro QC International can do the job for you. Contact us at info@proqc.com or visit our website to learn more about our quality solutions in Pakistan.
