Dec 28 - Jan 05, 2003

SOHAIL AZIZ is Managing Director of Intermode (Pvt) Limited, a company in the business of manufacturing and export of ready-made garments. The company's main market is the United States of America and products being exported fall in the category of clothing for infants and children. Sohail completed his M. Com and MBA from Karachi. He started his career A. F. Ferguson and Company as management consultant and also worked for a garment exporting company. Then he joined Pakistan Cotton Fashion Apparel Manufacturers and Exporters Association (PCFA) as Executive Director. The biggest achievement on his credit is holding Fashion Apparel Fair (FAF) for ten consecutive years. He is also associated with an event and exhibition organizing company, NASA International.

PAGE: Are the manufacturers and exporters of textiles and clothing from Pakistan getting ready to face the global competition once quota regime is completely abolished?

SOHAIL AZIZ: The local entrepreneurs can be divided into two categories: 1) those who consider this a real threat and are taking steps to face the competition and 2) those who still believe that quota regime will not be abolished according to the agreed time frame. Therefore, it is most important that those who still face some illusion must be waken up to face the reality. Let be go one step further and add that, once quotas are abolished the exporters will face other non-tariff barrier like child labour, AZO dyes, ISO certification, etc. Some of the leading buyers have already asking the exporters to complete their own certification programmes.

PAGE: Lately Pakistani exporters have faced declining unit price realization phenomena, what could be the possible rationalisation?

SOHAIL: After the September 11, 2001 the global markets witnessed lower demand temporarily. At this juncture some of the local exporters became a little impatient and tried to solicit even small orders from their regular customers at discounted prices. As the situation improved, the buyers insisted on confirmation of larger orders at lower prices and the exporters accepted those fearing loss of business, if they insisted on higher price. And the trend continues. On top of this the local exporters cater to the lower segment where the largest selling point is price and not the quality.

PAGE: The declining unit price realization seems to negate the belief that local exporters are going for higher value addition. What is reality?

SOHAIL: It is true that a lot of investment is being made in the textiles and clothing sector. However, bulk of the amount has gone into spinning, the lesser percentage has gone to weaving and processing and the least to made-ups manufacturing sub-sectors. The government only because of the strong lobby of spinners has endorsed the policy of large-scale investment in the spinning. As against this, the made-up manufacturers failed in submitting a convincing argument that the government should abstain from repeating the mistake it had committed in the past. If Pakistan wishes to enhance exports of textiles and clothing the objective can only be achieved by boosting exports of made-ups though greater value-addition and improvement in quality.

PAGE: Am I right in assuming that there is lack of commitment by the government?

SOHAIL: I could not be as blatant as you are. The government has expressed its commitment repeatedly but the steps taken to implement its commitment are not sufficient. For example there is no incentive for achieving higher value addition at the time of quota allocation. Those exporters who export larger volume, despite exporting at the lowest price, are the favourites. On top of this, the quota policy has also helped in proliferation of 'quota tycoons'. At times, the premium on quota is even higher than the cost of product. This prohibits manufacturers of higher quality products from entering the export trade. The government must redefine its quota policy to encourage higher value addition.

PAGE: Is the lower unit price realization an outcome of negative perception about Pakistan?

SOHAIL: The general perception about Pakistan is that it is a source of low quality and low price products. While it is true that many exporters manage to get US$ 40 for a dozen units of category, it is also a fact that some get as high as US$ 120 for the similar quantity of the same category. To change this perception both the government and exporters must participate in international trade fairs and exhibitions.

PAGE: Does participation in fairs and exhibitions help in soliciting orders?

SOHAIL: The PCFA arranged the FAF for ten consecutive years that helped in boosting exports of made-ups, particularly knitwear manifold. Allow me to refer to yet another international fair ASAP. An exporter can ensure his/her participation at as low as US$ 4,000 including rental of the stall, printing of company profile in the catalogue and four-night stays at a five-star hotel. The added advantage is that organizers also arrange one to one meeting with the buyers. If the foreign buyers are reluctant to visit Pakistan, we must approach them to solicit business.