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