Oct 20 - 26, 2003



KAISER SHAFI ULLAH of Ghurba Textiles is a distinguished name among the manufacturers and exporters of hosiery products from Pakistan. His contribution in making the textile quota distribution policy more transparent is enormous. His dedication to protect the interest of small exporters has hurt his own business interest, some times. He hails from Hyderabad and family business is construction, other brothers are still involved in this business. He started his professional career from construction industry but then gradually got involved in hosiery manufacture and export business. He is still involved in construction business. He was also Chairman of Pakistan Hosiery Manufacturers Association. At present he is Chairman of Pakistan Export Development Forum.

PAGE: How do you review the growth of hosiery industry in Pakistan?

KAISER SHAFI ULLAH: There has been enormous growth of hosiery industry in Pakistan over the last two decade. However, the country has not been able to attain the level of exports it should have got. In my view the slow growth of this industry can be attributed to the prevailing working environment. Many people, even the policy planners, believe that exports are due to large business houses. Whereas the fact is that medium and small manufacturers are the backbone of this industry. While large exporters produce only 15% of the total quantity of hosiery products exported, the remaining 85% is being produced by small manufacturers. The small manufacturers mostly work on CMT or job order basis.

PAGE: Why small manufacturers are forced to work on CMT basis?



KAISER: The main reason for this dilemma has been the textile quota allocation system being followed in the country. Since bulk of the shipments are made in the name large exporters they get the allocations. These exporters have also become the 'quota barons', attained the largest say in the formation of textile quota policy and quota management. They also submit the highest bids at the time of quota auction. Since the quota acquired in auction cannot be transferred to another party, they usually sell part of the quota got of performance basis. In some of the categories the premium on quota is double or triple the value of product. Therefore, it is almost impossible for a new entrant to export items belonging to 'fast moving' categories.

PAGE: Are there other reasons also for small manufacturers remaining small?

KAISER: The sole reason for small remaining small is the financial system of this country. Financial institutions are ready to dish out millions to those who have billions but never ready to lend the money to those who need it the most. Though, lately many financial institutions have been established with the specific mandate to lend to small and medium enterprises the lack of expertise has also made their lending also collateral-based. The other reason is that these specialized institutions lend such meager amounts that do not suffice the needs.

PAGE: Do you believe that Export Promotion Bureau help the small exporters?

KAISER: The Export Promotion Bureau (EPB) has two important responsibilities 1) arranging participation of exporters in international fairs and 2) arranging delegations to different countries. However, in both the cases preference is given to large exporters, who are already making millions of dollars exports. I believe that the EPB must include the names of small exporters in the list of exhibitors and delegation members. Though, this should been done by the trade associations, but the fact is that associations have also become the platform for self-projection.

PAGE: Aren't the small exporters also responsible for the prevailing situation?

KAISER: It may be true that at times the small exporters are helpless before the associations and EPB. However, unless they start asserting themselves they will remain small. The unfortunate part of the story is that the representatives of small exporters once attain a 'nuisance' value are obliged by the associations and soon become part of the system. Since they also have the stake they also start following a famous old saying 'I scratch your back you scratch my back'.

PAGE: Do you believe that local manufacturers have got ready to face the challenge once textile quota regime is completely phased out?

KAISER: It is being said that Pakistani manufacturers are making substantial investment to improve productivity and attain greater value addition. However, I believe not much has been done as yet. First, we woke up very late and our competitors are far ahead of us. Second, a lot of investment is being made in second-hand machinery. The manufacturers installing old and obsolete machinery will never be able to compete with those who have installed state-of-the-art machinery. If we are serious in retaining our market share, once the quota regime is completely phased out, we must invest only in the latest technology. The GoP must also ensure availability of fund to all and sundry.