GOVT. FOR PRIVATE PROPOSALS TO CONTROL COSTS
Jan 18 - 24, 2010
Due to fierce competition by India, China, and Bangladesh in international market and high cost of doing business, Pakistan's apparel sector is fast becoming uncompetitive; local businessmen are losing their businesses due to high cost of doing business.
Apparel industry of Pakistan is already at the verge of collapse due to the non-availability of electricity and high electricity tariffs. Pakistan's share in the global market, according to WTO data, declined by more than 38 per cent to 0.13 per cent in 2009 from 0.21 per cent in 1999.
According to sources in Pakistan Readymade Garments Manufacturers and Exporters Association, uninterrupted power supply has resulted in a complete catastrophe for the industry but mainly for the small players who do not own emergency power generators. Due to power outages, we are unable to deliver the foreign orders on time thus, we are losing credibility in the world and India, China, and Bangladesh are fast filing the gap with cheap rates and timely delivery of apparel goods.
The industry sources are of the view that the government needs to cap the electricity prices for two years for textile sector so that we could work out better pricing to compete in international markets, they pleaded.
According to these sources, the government has set the export target of $25 billion for textile sector. Based on this target, proper marketing strategy needs to be defined and implemented. For this we have to set up trade houses worldwide like Korea, Indonesia etc. Local professionals must be hired for this purpose to create an image of Pakistan and promote its product. The exposure of our products in international markets through trade officers should be the government's priority while good quality, good compliance and timely delivery could ensure the respect of label "Made in Pakistan".
They called for further establishment of training centers across Pakistan to introduce textile as a subject in the curriculum so that new generation could learn about the potential of this industry. Training of middle management is fiendishly a weak area. We would have to set up institutes giving diploma for merchandising since in today's world communication is given utmost importance.
"One single factor which would give boost to textile exports is the exemption of duty on our products by the European Union and America. Regional competitors like Sri Lanka and Bangladesh are already enjoying the status."
The textile is one of the leading export-oriented sectors in Pakistan, which accounts for more than 60 percent of total exports of the country. About 95 percent of its inputs are locally produced and by making energy out of their reach, government is in fact curbing the use of local inputs, a leading Textile Industrialist Mian Faraz Alam told Page.
According to him, even the slightest enhancement in their cost of production at this critical juncture would, therefore, cast doom and oust them from the international export market which would deprive the exchequer of valuable forex to the tune of billions of dollars.
Mian Faraz Alam said the textile sector was presently exposed to tough competition and the biggest problem was the ever-increasing cost of doing business in the country. The textile sector was experiencing depression and stagnation since the last year, continuously, due to the energy crisis of gas and electricity load shedding. Resultantly, industrial production has significantly fallen, which in turn, caused a decline in the exports of textile products.
Faraz emphasised that due to the unjustified and inept policies of the government, the cost of doing business became exorbitantly high and as a consequence numerous units were working under-capacity. Many industries closed down and several have decided to close.
He said that textile was the baseline of Pakistan's economy, but due to distorted priorities, this base was gradually being eroded and the industry and exports being crushed. He demanded the government to set its priorities right and accord preferential treatment to the textile sector and save the industry and the economy from collapsing. He further said the industry was already passing through a worst situation due to unprecedented load shedding of electricity and gas, high mark up rate and restrictions on import of raw materials, a phenomenon that has multiplied its cost of doing business.
The spinning & weaving industry is not entitled to concessionary finance, duty drawback or any other incentives, he added.
Chairman senate standing committee on textiles, Gul Mohammad Lot said the government was concentrating on bringing down the rate of markup and inflation to the single digit for the expeditious revival of the industrial sector. He said that the steps were being taken to help strengthen textile sector, boost exports and create new jobs besides shoring up textile sector and fetching the much-needed foreign exchange.
LCCI Vice-President, Faisal Iqbal Sheikh said that for the past several years Pakistan had been multiple internal and external challenges and the only way to get out of this critical state of affairs is to regain the economic stability, which can be achieved through the revival of the industrial sector, especially the export-oriented textile sector.
It may be noted that the textile industry contributes 8.5 percent of the GDP and employs 38 percent of the workforce in the manufacturing sector. It is responsible for about 55 percent of total exports. Export of textile products had reached $10.62 billion in the year 2007-08 from $5.5 billion in 2003-04, showing an increase of $5.12 billion in value term or by 93 percent and it still has the potential to beat this rate of growth in future.
According to Pakistan Industrial and Traders Association Front (PIAF) Chairman Irfan Qaiser Shaikh, the recent increase in gas tariff would also leave adverse impact on all kind of industries, transporters, CNG sector. He was of the view that increase in gas prices was a sheer injustice with the entire industrial sector that had already been facing multiple internal and external challenges and fighting for its survival due to globalised competitive environment.
"At a time when the country is facing acute electricity shortage and Pakistani merchandise is fast losing their due share in the international market, the increase in the gas prices would be adding fuel to fire and bound to increase input cost further," he said.
Irfan Qaiser Shaikh said the government is neglecting the economic condition of the Pakistani people and only fulfilling the IMF conditionalities. He said that potential foreign investors were already showing reluctance to put their money in any new venture in Pakistan due to law and order situation and in the wake of hike in gas prices. They are selecting other regional market as their investment place.
Businessmen of Kot Lakhpat Lahore Industrial Area said that due to wrong government policies and mismanaged affairs the industry had almost collapsed and industrialists were left with no other option but to stage protest. They said that Lahore Township Industrial Estate was the largest industrial area of the Punjab where more than 400 industrial units including textile, engineering, auto parts, plastic, ghee, ice cream, dying, pharmaceutical, steel, hosiery and food etc., were operational.
They said that these units were providing employment to near 40,000 people while paying billion rupees to the national exchequer but unfortunately the gas and power load shedding punctuated the business activities.
They said Lahore Township Industrial Area was facing massive unannounced load shedding of gas and electricity, which was hitting industrial production very hard. They said that the economic crisis would further deepen in coming days as industry had failed to fulfill existing export orders what to talk of any new orders. In order to fetch precious foreign exchange, it is necessary that local businessmen need to be facilitated for which the government should announce a comprehensive package. On the other hand, responsibility also lies on businessmen to give realistic proposals to the government on the issue of reducing cost of doing business that is a major source of concern for our exporters.