RASHID SOORTY'S COMMENTS ON EXPORT CHALLENGES
SADAF AURANGZAIB, Senior Correspondent
Aug 27 - Sep 02, 2007
Rashid Soorty is a renowned name in the business and Textile Circle of Pakistan, he is the chairman of Soorty Enterprises (Pvt) Ltd. He has devoted his life towards the activities surrounded the textile industry and is actively involved in the re-enactment of textile as a whole. He has his paradigm that clearly identifies the major obstacles that the industry is facing at the moment and he also gives solutions to sort these problems. There are the few key points that I have taken out after studying the numerous objectives that he raised at many places.
While defining the National Textile Strategy, he explored the in-depth issues surrounding the export trade of Pakistan.
"The emigration of the textile products particularly value-added apparel from the high cost countries will set the decline as long as the cost differences are acting as weight but not moving. The core competencies in the value determination are:
Design -The originality to create an image of product in demand.
Creativity -To produce to match consumers fast changing trends.
Projection -The display at retail outlets
Dispersal -The availability of product to consumers brought about by Commerce/Trade.
The relating and supporting efficiency of industries i.e. raw materials, adoption of advance technology, quality control facilities, textile and clothing education and training of workers and professional management for continuous upgrading.
The larger the demand, the greater manipulation in cost control. Domestic supply with price structure to obtain somewhat higher than export price, which is usually the practice in industrialized countries to get marginal difference in export price competition Moreover, the management plays the role of sheet anchor to keep its instinct for technology upgraded and reducing lead time of total manufacturing and delivery cycle from the fiber to finish product. The objective to control more steps to achieve shortening of Lead time, better maintenance and control of inventories, alive to customer demand (short term and long term) and zero fault product.
The Planning Commission need to survey the status of value-added apparel and garment facilities available with SME who have been able to attract foreign buyers by their personal approach to export varying lots and have credibility, know-how and financial resources still require some push and encouragement from government and financial institutions to meet their financial shortfall.
Under existing conditions, Pakistan has little prospects in the short term to enhance their export substantial for the reasons that our country has to initiate massive reforms to come up to international competition. The national competitive level revolves round "Efficient Consumer Response" (ECR) depending on country's all movements and activities to shorten the total reforms in manufacturing and selling cycle from the fibre to the customers' 'Shelf' to serve the final customer faster and better. The reformative policy 'must' to achieve objective of enhanced exports and unless ground infrastructure improvement with enforcement of minimum requirement of education and training of the workers are met with honest intention even technological advancement will be 'half measures'.
The target of achieving US$ 40 billion by 2015 including non-traditional addition can only be achieved by industrialization, assured energy, power and gas supply available within days and not months. By industrialization, we need addition industrial build-up to supplement our traditional exports by stepping up further introduction of value-added products. Keeping an eye on what China and India gain by their strategy to produce attractive attire, which catch consumers imagination.
Continuous market research and close proximity to end users to give them challenging product lines within their reach in respect of quality and budget. Once infrastructure built up on international standard and water resources developed for continuous supply to agriculture for raw material and industry, there are immense opportunity to increase cotton development of staple fibre for better price of yarn and diversified production of garments. With the availability of staple yarn locally, garment/apparel manufacturers go for full range of more value-added fashion clothings.
An equally ambitious strategy geared up by the government and private sector by engaging top class intellectuals involved in intensive marketing technology, well update with international consumers taste and challenges of fast changing fashion trends is needed.
According to United National report, 102 countries import textile and apparel products and 104 countries export these products. Global trade in textile and apparel products account for at approximately US$ 440 billion .
The global markets are monopolized by exporters only from a handful of countries. Some of these countries which hold the potential to dominate world markets, reap enormous unfair advantages because of preferential treatments by advanced countries and numerous subsidies given to Least Developing Countries by their own governments. This has put country like Pakistan in a desperate position to match competitiveness posed by Bangladesh, Vietnam and Sri Lanka and some of the developing countries of Latin America, which enjoy free trade status with North America. There are at least 49 Least Developing Countries which enjoy preferential trade benefit.
In spite of low labour cost, Pakistan no more enjoys competitive advantage because of high cost of production and inadequate infrastructure and low workers' productivity.
How do our country manage to enhance exports to say level of US$ 30 billion by 2010? We must prepare short term strategy to 'beat' competition and penetrate into the world market. A few recommendations are here to provide some food for thought for long-term strategy.
*The main markets for Pakistan export are USA and European countries. Our exporters are very much familiar with buyers in those countries but still unable to advance against global competition. Prices still remain the most critical selling point. China, India and Least Developing Countries (enjoying GSP benefits) like, Bangladesh, Sri Lanka, Vietnam pose greater challenge, though these countries don't have natural advantage of indigenous cotton availability. Most of the raw materials are imported by LDC. Our exporters have to strive hard to reduce their production cost which has been becoming very difficult in the face of frequent increase in cost of electricity, gas, water, transportation, sea freight etc. Besides, exporters have to improve on delivery time, service and marketing approach. Chinese labour productivity is higher and our exporters need to study the causes of high production cost in our country. Pakistan is also amongst the high cost producers within the SAARC region.
*Though Pakistan is not categorized as poor, but our developing stage has several drawback and limitations for building infrastructure and halfhearted measures for utilization of resources. This will reduce Pakistan's position as an exporter of raw materials instead of potential source of leading value-added supplier.
*Let us turn our thoughts to achieve goal of progressive promotion of exports to US$ 30 billion by 2010. Till such time, textile will continue to contribute 60% of export earnings whereas non-traditional markets need intensive exploration and building of IT sector to further enhance contribution of at least additional 10 billion by non-tradition export. This is an achievable target by intensive global market R&D studies and professional follow up.
*Diversification of textile export to China need to be explored as China in recent years has imported several billions of basic textiles to meet the need of clothing of its 1.5 billion population without causing disruption to its exports.
*Pakistan may follow the line of European countries which have formed China ñ Europe Textile Alliance (CETA) in 2005 by the Swiss Textile Federation which was joined by other European countries. The aim of this Alliance is to help member countries to gain access to the Chinese markets through their outlet in Shanghai. Pakistan needs to negotiate such an arrangement with China. China (Main land) is expected to import a record 2.8 million tons, more than twice the value it imported in 2004/05.
*In order to infuse update strategy to suit the current global changes in marketing strategy among our Commercial Counselors at foreign Consulates, there is the need to engage young qualified generation as roving ambassadors of marketing caliber, diplomacy and professional approach. Pakistan commerce intelligence may chalk out plans to reach every regional bloc with in-depth study of each regional trade bloc, their inter-regional and intra-regional trade and how to seek which Pakistan products could penetrate into those markets.
*What we have lacked is the Thrust for industrialization Western countries aimed at extending their productivity in those areas which had demand in international markets. Till now, we keep on stretching our resources in similar products resulting in only a few billion growth without going for high rate of growth. The success of industrialization lies in providing multi-dimensional infrastructure and strategy to private sector which has great awareness and financial resources for domestic investment. Let private sector select viable projects by in-depth study and research carried out extensively of international market.
*WTO provide enough opportunity for access to international market as multilateral scope of trade is open for those who have capability and vision to measure the potential of not only multilateral trade but also major scope of access to regional markets. It is estimated that more than half of world trade is now under Regional Trade Agreements (RTAs). Almost 197 such agreements in force have been notified to the GATT/WTO. The most glaring deviation for benefit of developing countries is the inclusion of bilateral and free trade agreements between countries that are not in the same region. It has become so wide spread that all but one WTO Member are now parties to one or more of RTAs. Pakistan must prepare comprehensive strategy to initiate negotiation with various countries and groups to come to understanding on mutual trade development. We have already been fast losing traditional and African markets and also failed to capitalize on speedy growth of Latin American countries.