Following the second session of the Joint Trade Committee (JTC) in Islamabad on February 11, 2026, Pakistan and Cambodia have formally committed to a high-level industrial partnership aimed at restructuring regional textile supply chains. Having recorded a historic $6.39 billion in textile exports during the first trimester of FY2025, Pakistan is positioning itself as a primary alternative to China for Cambodia’s upstream requirements. Currently, Cambodia imports nearly 90 per cent of its yarn and fabric, with China holding a dominant 60 per cent market share. By integrating Pakistan’s specialized weaving and spinning capacities - responsible for approximately 60 per cent of its total export revenue - Cambodian garment manufacturers aim to mitigate over-reliance on single-source suppliers while enhancing resilience under RCEP rules of origin.

Expansion into technical textiles and SEZ

The bilateral roadmap prioritizes a transition toward high-value segments, specifically technical textiles, a global market projected to reach $271.83 billion by 2026. This collaboration focuses on ‘Mobiltech’ and ‘Meditech’ applications, leveraging Pakistan’s raw material base and Cambodia’s sophisticated assembly infrastructure. To facilitate this, Cambodia has proposed country-specific investment clusters within its Special Economic Zones (SEZs), offering 10-year tax holidays to Pakistani enterprises. This engagement serves as a gateway for Pakistani value-added goods into the ASEAN bloc, noted Jam Kamal Khan, Federal Minister emphasizing, the proposed Preferential Trade Agreement (PTA) will be instrumental in reducing the 10% VAT and associated tariffs currently impacting bilateral trade flows.

Contributing 8.5 per cent to the national GDP and employing 38 per cent of the manufacturing force, the Pakistan textile sector remains the nation’s industrial backbone. Specialized in home textiles, cotton yarn, and denim, the industry is currently undergoing a $5 billion technological upgrade to boost annual export capacity toward $30 billion. With a fiscal focus on sustainable high-performance fabrics and synthetic blends, the sector is increasingly targeting ASEAN markets to offset traditional volatility in Western demand.