Saadia Qamar talks to Ishtiaq Baig to discover challenges being confronted by the textile sector and the potential of growth in textile exports and its value addition.

Q: how do you see performance of textile sector in Pakistan?

A: Pakistan’s performance in textile sector, especially in value-added products has been the worst in the region despite having competitive advantage as apparel exports from china, India, Bangladesh and  Sri Lanka remained higher than Pakistan though the last two countries do not have basis textiles nor they produce cotton. T could be said that Pakistan is serving other nations to earn more foreign exchange from export of value-added products.

The exporters would have to perform extraordinarily to face the challenges in textile trade quota free era. The most disturbing aspect in this regard is that even those countries that do not have a sold textile base have outperformed Pakistan. While Pakistan’s apparel exports during the decade in creased y 111.6 per cent. China excluding Hong Kong recorded an increase of 273 per cent. Bangladesh in creased its apparel export during the same period by whooping 560 per cent and Sri Lanka  showed a healthy growth of 360 per cent in its apparel  exports. Both Bangladesh and Sri Lanka were far behind Pakistan in apparel export.

Pakistan had advantage of having the cheapest apparel labor in the world with average wages of apparel worker, which according to ILO was US $0.23 per hour. The wages in Sri Lanka are more than two times higher at US $0.57 per hour. The Indian and chine’s apparel workers get 3 times higher wages per hour being US $ 0.71 and US $0.86 per hour.

Despite having state of art apparel machines, experts pointed out to be better than India, which is fast catching up its own cotton and basic textile units and lowest wages, the apparel exporters are most worried about china factor. The country has become a semi-finished raw material source for those nations involved in value additions and apparel production. The government should take steps to ensure Pakistani exporters stay competitive in quota – free market. The industry is over burdened with numerous taxes and duties and huge funds were blocked as over due sales tax refunds. The Bangladesh government had removed value – added tax from all industries that export their entire product. Besides that , there was a large number of governments agencies that collect “ legal and illegal” charges from the export industries, resulting in higher cost of production.

Q: How did you venture in this business?

A:  My family was already in the textile business when I completed my MBA from USA. When my father past away, we took over this textile business; we are pioneers of spinning. About 15 years ago we thought that there was a huge demand of denim at the global level. In Pakistan, the best cotton is produced, hence we came into this field. Before we were exporting cotton yarn to European countries and North America, but about 15 years ago, we started of exporting denim and now we are the leading exporters of this product. For the last 9 years, we are receiving the awards of “Best Export Trophy” due to our dedication in the textile industry.

I’ve been counsel general of Pakistan to Morocco, in 1994 the reason behind my appointment was to increase the trade b/w the countries. At the moment, I am the chairman of Pak- Moroccan business council. I am heading the two committees of the FPCCI.

I was even the part pf the delegation that signed the GATT agreement. Baig group has business interest in many countries; we are in UAE for the last 30-35 years. We’ve offices in countries far and wide, including Turkey and Bangladesh.

Q: How you read Pak Denim with competitors?

A: It is not for us to decided, it is usually the buyers who need to decide this factor. There are just a few manufactures of denim in Pakistan but when exporting, you are exporting at the global  level. With India and china, these two countries are even manufacturing denim products.

Pak denim is considered the best denim in the world, not because it is produced by us it is considered because of the pure cotton product that is used in its production.

Q: what is the trend of exports?

A: our group’s export is more than a billion rupees on annual basis, the same amount we earning through local sale. Pakistan’s total export this year amounted to 17 billion dollars, with 10 billion dollar share of the textile sector. In textile, either we are exporting the garments or fabrics. We are supplying around 40% to the local market and 60% we are to the different countries.

Q: Do you see any support in new budget to meet global competitions?

A: Before the announcement of budget we gave a number of proposals because textile sector is the largest sector than other sectors. Somehow in the international market, our prices are becoming higher, the reason is not because of the raw material is expensive but our cost of doing business has increased many folds. Every three months there is an increase in local utility prices, the interest rate has gone up also.

We’ve asked the government that the utility price be the same at par, only then can we compete at the global level.

 Taking in the case study of Bangladesh they don’t even produce cotton but their export is of US $ 9 billion. What they are doing is buying raw material from us and exporting it and competing with us. Their cost of doing business is less than Pakistan for the last three and four years; there is no increase of price electricity, no increase in gas, their labor is cheap from Pakistan. This is the biggest advantage they have.

But they are able to compete with us, they were one country nobody ca think of competing with.

In the present scenario, Pakistan is not the first choice of the buyer. The first choice is China, Bangladesh or srilanka. We come either on number four or number fifth stand, for the buyer to choose from. Reason being we are expensive, also sometime due to load shedding we are unable to deliver the goods on time.

Q: What did you really observe during your recent foreign trip with Shukat Aziz?

A: I was with the prime minister and I use to see that he starting his day at the nine in the morning, meeting people and convincing them to come to Pakistan and invest in the country. He had a convincing power and the best sales man for Pakistan. I visited with him four countries; recently and I informed him that Pakistani exporters needed leveling playing fields and incentives being provided in the other neighboring countries. Our exports can be double; Pakistan has got cotton, the best commodity for textile. Out of US $ 10 billion exports, US $ 3 billion is cotton-yarn, fabric. We are selling it to our competitors, who are giving us a tough time, also. So if we suppose, in case our cost of doing business is less, than this US $ 3 billion can change into US $ 10 billion.

So if there is a value addition we can change our product of pure cotton fabric into a finishing product called” Jeans.” So eight times the price changes and we can change this US $ 3 billion into US $ 15 billion, through the export of the final product we can change it into value addition.

Unfortunately, previously in Pakistan the government did not invest in the infrastructure of last 20 years. Then how can we ask foreign investor to come and invest in our country. This time the government has allocated in the budget  an amount of 415 billion for infrastructure, last year, the growth was 8.4 %, which has the 2^nd highest in Asia. GDP growth has come down to 6.6 % but still this being considered a good growth.

Q: How exactly has our budget been for the textile sector?

A: I believe that it is a good budget. It aims at a common man’s relief. I’ve about 2000 people working for me in the industry, but I could see that my workers were in a problem, because of the wages factor,  with expenses increasing day by day. They could not meet their living expenses. This budget is based on a common man, but it does not talk about the textile industry.

But the prime minister is of the view that we are going to work on a package , where we are going to see  what better packages can we give to the industrialist hence to reduce the cost of production. Today, the tickle down affect has struck those on the top brass, managing the government affairs; keeping the lid on regarding the problem being faced by the common man.

Earlier, the common man was paid a salary of Rs. 3000 but now things are different. A new worker when he is hired he gets to be paid Rs. 4000 minimum. More so, the government is giving in Rs 100 billion subsides to the poor man, through this budget.

Only recently, at the international level, the prices of the pulses and sugar increased. Since, these commodities will be imported and then they will be subsidized, hence eventually a lesser share of burden will fall on the common man.

Q: where do you see Pakistan standing in the textile market in the next decade?

A: if only we get to deal with most of our issues at the earliest in the textile sector alone, we will be benefiting in a better manner. Textile sector is providing about 30 percent of the entire employment all over Pakistan. This sector earns $10 billion foreign exchange. If only we reduce the cost of doing business here in Pakistan, we can definitely be able to grow  our export. We essentially need to do just two things, the government’s incentive must be on two things; firstly that we will not export the raw material; secondly the government needs to reduce  the cost of input.

When we export the raw material, we help out other countries, which are busy competing us. Now after the WTO, the quota regime is over; we can export as much as we like. Initially this was not so, every country was restricted because there was a quota; Pakistan could not afford to export more than certain amount of textile fabric. Now we are free. In case if suppose we control our input cost and bring it on the same level of Bangladesh and China, we might just do well.

Textile industry is the backbone of Pakistan; we are hopeful that in the next ten years Pakistan will progress. Last year, textile growth was around 16 percent, but unfortunately our textile growth this year reduced. This year it stands not even at 9 percent. This is a sad thing. Cost of doing business, is not under our control.

Our own group, the baig group lost $5 million worth of orders, due to a difference of 5 cents. Because when one loses an order, this is not because of one or two dollars, it is usually due to minimum difference. These same orders are now being placed at china or India. Since, you lose one order; those customer don’t come back to you. Our demands are based on reducing the input cost, each industry has been asking the government to reduce the input cost.

Our export policies for the last 5 to 6 years, have tremendously changed and there is continuity these policies. On the last count, I am hopeful Pakistan will definitely do better than any neighboring country, as far as the growth of textile industry is concerned.

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