Textiles and apparel is the largest industrial sector of Pakistan and plays a significant role in its economy, particularly in export earnings. It has been observed that the small and medium enterprises (SMEs) within the apparel sector also contribute to exports. However, this contribution is marginal when compared to the role played by SMEs of other South Asian apparel exporters. This qualitative study is conducted to explore the challenges and opportunities for the apparel exporting SMEs in Pakistan. After literature review, 6 SMEs – 2 from each apparel clusters of Lahore, Faisalabad and Karachi – were selected using purposive sampling. In-depth semi-structured interviews were conducted with senior managers at these firms. Findings suggest that the burden of terrorism on the SME is far greater than that of the energy crisis. The energy crisis and compliances drive up the costs of production and reduce international competitiveness of the suppliers. However, terrorism creates an unlevel playing field that has a much larger impact on the overall apparel sector. This study finds that opportunities lie in policy reforms and the GSP Plus Status granted to Pakistan by the European Union. The paper ends by recommending how institutions, bilateral trade and particularly the China Pakistan Economic Corridor can sustain the SME sector of Pakistan.
Keywords: SME, Apparel Exports, Challenges, Opportunities, CPEC, GSP Plus