Ontex has invested over $18m in the last five years in its Pakistan operations, making it the first multinational company in the baby diapers category to establish a local manufacturing facility in Pakistan. While briefing a group of journalists during the company's plant visit, Haroon Rashid, General Manager of Ontex Pakistan said that Ontex would look to expand its domestic manufacturing capability for exports to regional markets as well, if government policies remain favourable for further investment.
He informed that Ontex manufactures baby diapers in Pakistan at international quality standards, making Canbebe a leading baby diapers brand in Pakistan with nationwide distribution and brand recognition for its high quality. Furthermore, Ontex remains optimistic about Pakistan and sees the country as a hub for its future investment in manufacturing in order to serve both Pakistani consumers and exports to regional markets, he added.
"Pakistan is a key market for Ontex and our success here in recent years now positions us to consider making Pakistan an export hub to regional countries," he added. Haroon informed that in 2016 alone, Ontex has added almost Rs 1 billion to the national exchequer in the form of taxes. In the first half of 2017, Ontex has already contributed over Rs 600 million in taxes.
"With favourable circumstances, we believe our future tax contribution can enhance significantly, by investing in technology transfer and local manufacturing at international quality levels. Ontex exemplifies the type of foreign direct investment that Pakistan can most benefit from", he added.
Pakistan's large population and growing consumer understanding of the benefits of hygienic products for babies offers a large potential consumer base for diapers, he said. He noted that the increase in household incomes and a growing urban middle class, rising awareness of child hygiene and health, and consumer acceptance of using quality branded products are the key trends in recent years. Accordingly annual sales growth for the diapers industry as a whole should remain strong, in double digits, he added.
Haroon suggested that in order to take advantage of this potential demand growth in Pakistan, foreign investors that have established manufacturing operations in Pakistan should be supported by the government through incentives such as reduction in customs duties for raw materials and machinery. Further, tax incentives should be considered for export-oriented manufacturers. Duties on imports of finished products should not be reduced, which would create a disincentive for shifting manufacturing to Pakistan and would contribute to the country's already large and growing export gap, he added.
The diapers market in Pakistan is growing at a rapid pace with mainstream segment or Tier 1 (Premium quality) contributing approximately 60 percent and Tier 2 (discounted) segment roughly 40 percent of market share by value. The discounted diapers segment includes mainly low quality imported Chinese diapers, which have largely displaced local Pakistani manufacturers, he informed.
Haroon mentioned that Ontex is a leading global producer of disposable personal hygiene solutions for babies, women and adults with presence in more than 110 countries and 19 manufacturing sites are strategically placed across Europe, North Africa, Asia Pacific and Americas.
Established in 2011, Ontex Pakistan (Pvt) Limited invested in a state-of-the-art local diaper manufacturing plant in Port Qasim Industrial Area (Karachi), where it manufactures a baby diaper brand (Canbebe) at international quality standards to serve the Pakistan and regional export markets, he added.
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