‘…de­spite all the prob­lems our in­dus­try is fac­ing, our tex­tile ex­ports are show­ing signs of growth.’

Enterprise - - Interview -

Un­til a few years ago, Pak­istan was a ma­jor cot­ton pro­duc­ing and tex­tile ex­port­ing nation. Do we still re­tain that po­si­tion? If not, where do we stand now and what are the fac­tors that have brought our po­si­tion down?

Yes, we do re­tain a com­pet­i­tive edge but all will be lost if our lead­ers do not act fast. There are some ma­jor fac­tors which have af­fected our rank­ing in global tex­tile mar­kets and our in­dus­try is still suf­fer­ing. The floods which hit Pak­istan last year dam­aged con­sid­er­able crops which re­sulted in short sup­ply of cot­ton to our in­dus­try, cou­pled with wrong poli­cies to al­low ex­port of cot­ton and not pro­tect­ing our ex­porters. This prob­lem was fur­ther ag­gra­vated by in­ter­na­tional cot­ton prices. On the other hand, ba­sic lack of in­fra­struc­ture is bring­ing our po­si­tion down even fur­ther. Worl­dover, due to high costs, our im­ports have be­come very ex­pen­sive which has re­sulted in a high pro­duc­tion cost.

How did Bangladesh over­take us in world cot­ton ap­parel mar­kets?

There are sev­eral rea­sons which have en­cour­aged the Bangladesh RMG (Ready Made Gar­ments) sec­tor and have made it

stronger than Pak­istan’s RMG sec­tor. As per Ex­port Pro­mo­tion Bu­reau of Bangladesh, the ex­port of Ready Made Gar­ments in the Jan­uary-De­cem­ber 2010 to­talled US $14.846 bil­lion against US $11.892 bil­lion in the pre­ced­ing year. Jan­uary 2011 was set to bring more buy­ers to Bangladesh. Some re­cent pos­i­tive de­vel­op­ments such as China’s pol­icy of shift­ing from low-value to high-value gar­ments pro­vided am­ple op­por­tu­nity for Bangladesh to fill the gap.

There is no duty on ex­port of Bangladesh tex­tiles to the Euro­pean Union coun­tries but ex­ports of Pak­istani tex­tile goods to EU coun­tries are charged 10 per­cent duty. Bangladesh en­joys such ex­port fa­cil­i­ties be­cause of its sta­tus as a Least De­vel­oped Coun­try (LDC). Fac­tors such as their pos­i­tive Gov­ern­ment poli­cies are also im­por­tant. The Bangladesh gov­ern­ment of­fers fa­cil­i­ta­tion in mak­ing fi­nance, power and util­i­ties avail­able at rea­son­able cost, cheap labour, bet­ter en­trepreneur­ship, man­age­ment skills and pro­fes­sion­al­ism and has good rep­u­ta­tion in per­for­mance of ex­port con­tracts in letter and spirit.

Lo­cal law and or­der sit­u­a­tion and busi­ness con­di­tions in Bangladesh are bet­ter than in Pak­istan. Ac­tu­ally, Bangladeshi peo­ple gen­er­ally pre­fer to live a sim­ple and nat­u­ral life in­clined to less spend­ing and more sav­ings. There is only one cen­tral gov­ern­ment in Bangladesh with one cabi­net of rea­son­able size and no prov­inces, whereas in Pak­istan we have five prov­inces and a large num­ber of min­is­ters and par­lia­ment mem­bers cost­ing many times more than in Bangladesh.

At the start of the 21st cen­tury, there were am­ple hopes and enough op­por­tu­ni­ties for Pak­istan of be­com­ing the third largest coun­try in world tex­tiles but now it ap­pears to be los­ing this po­si­tion to Bangladesh.

It is re­ported that the global tex­tile in­dus­try is mov­ing to­wards a slow but steady re­cov­ery. Would you agree?

I am in favour of the re­port that the global tex­tile in­dus­try is mov­ing to­wards a slow but steady re­cov­ery. Now in­ter­na­tional buy­ers have ac­cepted the price in­crease in prod­ucts and are pur­chas­ing goods at high prices as com­pared to the past. In the cur­rent mar­ket sit­u­a­tion, buy­ers and sell­ers have joined hands and are sup­port­ing each other to stay in the mar­ket.

What are the re­cent mar­ket de­vel­op­ments in pro­duc­tion, con­sump­tion and trade in tex­tiles and cloth­ing in­dus­try?

Cur­rently, the Euro­pean Union (EU) is plan­ning to lift the anti-dump­ing duty on Pak­istan’s tex­tile prod­ucts which In­dia and China are op­pos­ing as this will make Pak­istan their com­peti­tor in EU mar­kets. On the other hand, In­dia has banned ex­port of 100 per­cent cot­ton yarn to other coun­tries of the world.

De­spite all the prob­lems faced by the in­dus­try, Pak­istan’s Tex­tile ex­ports are also show­ing signs of growth ac­cord­ing to gov­ern­ment fig­ures. Do you see a con­tin­u­ing pos­i­tive trend in the near fu­ture? What could be a long-term strat­egy in this re­spect?

Yes, I agree partly with the state­ment that de­spite all the prob­lems our in­dus­try is fac­ing, our tex­tile ex­ports are show­ing signs of growth. But di­rect im­pact of high value cot­ton has re­sulted in in­creased dol­lar value. Pak­istan’s tex­tile sec­tor has per­formed well dur­ing the first half of the cur­rent fis­cal year (July 2010 to June 2011), as its ex­ports surged by 25.79 per­cent com­pared to the same pe­riod in the last fis­cal year.

Fed­eral Bu­reau sta­tis­tics show that tex­tile ex­ports dur­ing July to De­cem­ber in 2010 were recorded at over $6.284 bil­lion against ex­ports of $4.995 bil­lion dur­ing July-De­cem­ber 2009. Tex­tile ex­ports in De­cem­ber 2010 also wit­nessed a re­mark­able growth of 15.47 per­cent and 42.65 per­cent over Novem­ber 2010 and De­cem­ber 2009, re­spec­tively. Tex­tile ex­ports dur­ing De­cem­ber 2010 were recorded at $1.174 bil­lion against ex­ports of $1.017 bil­lion in Novem­ber 2010 and $823.583 mil­lion in De­cem­ber 2009, the fig­ures re­vealed.

My sug­ges­tion is that a bet­ter long-term strat­egy for Pak­istan Tex­tile ex­ports would be to con­cen­trate on Value Added Tex­tiles rather than ex­port­ing raw tex­tile prod­ucts like yarn and fab­rics. The prod­ucts that con­trib­uted in pos­i­tive growth of tex­tiles ex­ports dur­ing the first half of the cur­rent fis­cal year in­cluded cot­ton cloth, ex­ports of which in­creased by 30.63 per­cent and sim­i­larly ex­ports of raw cot­ton in­creased by 13.91 per­cent.

As in ear­lier years, is our in­dus­try again in­vest­ing in mod­ern tex­tile ma­chin­ery to meet mar­ket de­mand?

Our tex­tile in­dus­try is in­vest­ing in mod­ern tex­tile ma­chin­ery to meet global re­quire­ments and en­hanc­ing its pro­duc­tion ca­pa­bil­i­ties but the level of in­vest­ment is not like in ear­lier years. In the cur­rent mar­ket sce­nario, many small and medium-sized and even largescale pro­duc­tion units are shut­ting down due to higher pro­duc­tion costs and cap­i­tal re­quire­ments, among many other rea­sons.

Col­lec­tively, the signs may be en­cour­ag­ing for the tex­tile in­dus­try in Pak­istan but do cur­rent gov­ern­ment poli­cies sup­port this, es­pe­cially, in view of the acute en­ergy cri­sis?

No, our gov­ern­ment poli­cies are not sup­port­ing our tex­tile in­dus­try. Our gov­ern­ment tried to cap the ex­port of yarn but did not suc­ceed. Our gov­ern­ment is un­able to sup­ply en­ergy to the in­dus­try and sup­port in­dus­tries. Our pri­vate sec­tor is in­vest­ing for their bet­ter­ment and help­ing them to stay alive in the mar­ket.

What ad­di­tional mea­sures would you sug­gest to the gov­ern­ment to bring the tex­tile in­dus­try out of its prob­lems and

be­come as vi­brant as it was in the past?

In my opin­ion, these mea­sures would be as fol­lows: • Im­age Build­ing of Pak­istan to at­tract FDI • Fo­cus on Value Ad­di­tion • Hu­man Re­source De­vel­op­ment • Ac­qui­si­tion of Ac­cred­i­ta­tions and Cer­tifi­cates • Re­duc­ing the cost of do­ing busi­ness in Pak­istan • Bet­ter in­fra­struc­ture

How can Pak­istan in­crease its reach in world mar­kets? Does par­tic­i­pa­tion in in­ter­na­tional tex­tile events help in pro­mot­ing Pak­istani tex­tiles? If so, are we us­ing this route wisely?

Due to sev­eral in­ter­nal and ex­ter­nal rea­sons, Pak­istan’s im­age in global mar­ket is af­fected and our in­dus­try’s growth is at stake. Yes, par­tic­i­pa­tion in in­ter­na­tional tex­tile events is an ef­fec­tive way to pro­mote our in­dus­try but high raw ma­te­rial costs and high cost of do­ing busi­ness do not al­low our man­u­fac­tur­ers to of­fer com­pet­i­tive rates to in­ter­na­tional buy­ers and even if our man­u­fac­tur­ers man­age to of­fer low rates, the profit mar­gins are very low. Our lead­ing man­u­fac­tur­ers are par­tic­i­pat­ing in in­ter­na­tional tex­tile events and are get­ting busi­ness from there.

What would be the im­pact of RGST on the in­dus­try?

The ma­jor im­pact of RGST would be an ad­di­tional bur­den on cap­i­tal re­quire­ments for busi­ness.

How has gas and power load shed­ding, ram­pant corruption, etc. im­pacted your com­pany’s per­for­mance?

All afore-men­tioned is­sues have hurt our com­pany’s pro­duc­tion ef­fi­ciency, in­creased our prod­uct lead times which has re­sulted in the ser­vice level not be­ing up to cus­tomers’ ex­pec­ta­tions. Our con­fi­dence level has dropped as the con­di­tions are so un­cer­tain that we can­not pre­dict where the con­di­tions will set­tle down. In the past we never faced en­ergy short­ages, but now we are suf­fer­ing badly.

What is the po­si­tion of home tex­tiles in world mar­kets and where does Lucky Tex stand in this re­spect?

The po­si­tion of home tex­tiles in the world mar­ket is good and on the path to re­cov­ery. We have ob­served that af­ter the global re­ces­sion, now buy­ers are again in­ter­ested in pur­chas­ing goods in large vol­umes.

What are the fu­ture plans of your com­pany in terms of ex­pan­sion and mod­ern­iza­tion?

We are plan­ning to equip our fa­cil­ity with ma­chin­ery that can add value to our prod­uct and brings our costs down. We are plan­ning to shift some ca­pac­ity to so­lar en­ergy. As a group, we are look­ing to diver­sify into other non-tex­tile re­lated busi­nesses

An ex­clu­sive in­ter­view with Gul Muham­mad Tabba, Chief Ex­ec­u­tive Of­fi­cer, Lucky Tex Pak­istan (Pvt.) Lim­ited

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