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Textile industry has the largest potential to boost Pakistan's exports


Politics & Piolicy 

Excerpts from an exclusive interview with Mian Muhammad Latif, Chief Executive, Chenab Limited

Oct 16 - 22, 2000

Textile industry has the largest potential for boosting exports from Pakistan. The industry needs adequate supply of cotton at competitive prices and removal of the irritants affecting the performance. At the same time each player has to try hard for higher value-addition and quality improvement. The increase in average unit price realization and enhanced exports can help in boosting total exports and bridging trade deficit gap of the country.

The difficulties faced by the local textile industry are partly due to the narrow vision of a large number of players and partly due to the fast process of globalization. Between 1984 to 1990 many of the spinning mills did not go for upward integration. Inefficiencies were common to some spinning mills due to the availability of low price cotton. There were few organizations looking forward the facility of quota regime rather than to go for soliciting orders on the basis of quality of the product. If we look at the composition of Pakistan's textile exports, it mainly comprise of yarn, unbleached fabrics, low quality and low priced made ups. In other words Pakistan has an image of supplier of intermediate products.

As the world is going through the process of globalization, textile industry could not remain immune. I would go one step further and say, "The textile industry is going through a transition". Units are being relocated to attain competitive edge, efforts are to go for the highest value-addition and take the maximum advantage of blended fabrics. While many Japanese, Korean and Taiwanese companies have relocated their production facilities in Indonesia, Thailand and some other countries, Pakistan has failed to attract such investment.

It is mainly due to the fact that most of the manufacturing units in the country do not produce enough fine and super fine finished fabrics but there are few organizations, which are fulfilling the demand and requirement of fine and super fine finished fabrics. Commonly our work force, despite being cheaper, could not ensure production, productivity and quality due to low skill levels, but the exception are there.

All these facts were known to the previous governments but they were not able to give due attention to the industry and redress its problems. The present economic managers, for the first time in the history of Pakistan, are making efforts to address the problems faced by the textile industry. The result of their efforts is Textile Vision 2005. The first draft, after due diligence and with the fullest participation from all the stakeholders, was circulated in April. One may say that the time being taken for finalizing the draft was too long. But is it not the reality that various stakeholders are involved? Every group wants that its interest should be given priority, may be at the expense of other groups. We have witnessed in the past that various policies soon after the announcement became controversial. This was due to successful maneuvering of the various pressure groups. For a considerably long time, spinners got cotton at artificially low prices. Then the lobby of growers got strength and prices of locally produced cotton went up even higher than its international prices. This was due to inability of various governments to maintain balance and protect the interest of each stakeholder.

I have very strong faith that Textile Vision 2005 will be instrumental in developing long-term policies. The aim is to enable the country to meet the challenge and to reposition Pakistan in an era when there will be no quota regime. Pakistan has very little time to revamp its textile industry. The buyers will be free to buy from any country of their choice — quality standards will be the most important deciding factor. Most of our traditional competitors had started revamping their facilities way back. I will go to the extent of saying that Pakistan has missed many opportunities and it cannot afford to be lagged behind. The economy of the country and exports are largely dependent on textile industry. It also enjoys the advantage of raw cotton, Pakistan is among the top five cotton producing countries of the world. Ironically, Pakistan's share in the global textile trade is pathetically low keeping the potential in mind.

Saying this much, I would like to add that there are some textile companies who have been working hard — even during the difficult times. They have gone for BMR, expansion, product diversification, quality improvement and proactive marketing. Though, such companies are few, their performance shows that there is no short cut to success and one should respond to the changing trends. The companies who are able to read the trend earlier are the biggest beneficiaries and those who fail ultimately vanish.

To dilate further, I would say that the proactive companies do not need policy crutches. I understand some companies had started BMR/expansion even before the idea of Textile Vision 2005 was conceived. Plant and machinery of a number of units is either in the process of installation or arriving Pakistan shortly. Please allow me to quote the example of our own company. A Rs 700 million BMR/expansion is on the way. More than half of the machinery has already reached Pakistan and remaining would reach by December this year.

Please allow me to say some thing more about Chenab Limited, (previously known as Chenab Fabrics and Processing Mills Limited). We started our operations in 1975 and over the years worked hard to produce the best possible quality. Our efforts are visible from the growth in exports — from Rs 13.5 million in 1986 to Rs 3.17 billion in 1999. We also accepted the year 2005 challenge when we introduced the concept of ChenOne fashion stores in 1997. Initially we planned to introduce fourteen such stores in Pakistan and also establish the chain in Middle East and some countries under quota regime at present.

We opened the first ChenOne stores in Islamabad, the federal capital. The objective behind this was to let the policy planners know about our efforts and establish the credibility of the brand name. This also provided us an opportunity to convey our message to diplomatic missions and foreign visitors. I am proud to tell you that we have been able to achieve this target, by the grace of Allah.

After establishing a number of stores in Pakistan, our next destination is United Arab Emirates (UAE). Our first stores, in the citycenter of Ajman, will be operational in November 2000. ChenOne products will also be available in Abu Dhabi and Dubai within couple of months. We have initially selected UAE because there are no quota restriction, however, we have plan to open these stores in quota countries by the year 2004. Is this not a clear manifestation of erudition and faith in Textile Vision 2005?

I would also like to share with you the jubilant feeling of being the first textile mills in Pakistan to acquire ISO-9001 certification in 1996-97. Though, there was no pressure at all from our buyers, we at our own, decided to get certified. We had a feeling that our operations were efficient, but the whole process of documentation and subsequent auditing helped us in containing wastage, improving performance of our workers and optimizing cost of production. All these factors have improved our competitiveness in the global markets. Therefore, allow me to say that it may be true that our buyers now have a greater confidence in Chenab and its products but the biggest and ultimate beneficiary is the Company and Pakistan.

To conclude, please let me say that while the efforts of present economic managers are plausible, they need to work even harder and redefine long-term strategy to combat emerging challenges. At the same time it is imperative for the industry to adjust, at the earliest, to cater to changing customer preference. The industry must give up the tradition of living on crutches and learn to face the competition. Neither the growers should demand a rate which does not commensurate with international prices of cotton, nor the spinners should look forward for a subsidy. Each of us must play the due role. The country has already missed many opportunities and cannot afford to loose more.

Mian Muhammad Latif is the driving force behind Chenab Limited (formerly known as Chenab Fabrics & Processing Mills Limited), a family owned enterprise. He strongly believes that Pakistan should get ready to face the challenge of the year 2005. Chenab is an upward integrated unit equipped with the latest and sophisticated machinery. It was the first ever textile mills to acquire ISO-9001 certificate in Pakistan. Exports of the Company have been constantly growing from Rs 13.5 million in 1986 to Rs 3.17 billion in 1999. Chenab Limited has been the recipient of Special Merit Trophy from1989 to 1995 continuously and from 1996 to 1999 have been awarded the Best Performance Award Trophy by the FPCCI.

Mian Muhammad Latif has also introduced the concept of ChenOne family stores in Pakistan. Very shortly ChenOne brand will be available in the United Arab Emirates. During the journey of success his younger brother Mr. Muhammad Naeem, Director Marketing & Planning, Mian Muhammad Javaid Iqbal, Director Operation & Administration and Chaudhry Muhammad Ashfaq, Director Procurement has assisted him.

Now the second generation is coming in, to share their responsibilities for the greater interest of the organization. Mr. Muhammad Faisal Latif and Mr. Farhan Latif are responsible respectively for Exports and Garments Division of the organization and Mr. Muhammad Kashif Ashfaq is responsible as Director ChenOne Store's affairs. They have joined the management in order to strengthen the progressive team of Chenab Limited