The small and medium garment export units, which constitute most of the garment sector, will not be able to survive due to the World Trade Organisation (WTO) requirements of labour and social compliance.
This was stated by newly elected Chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (Prgmea), Sindh-Balochistan Zone, Dawood Usman Jakhura.
Talking to newsmen after his election, he said the government must provide incentives to the small and medium units to help them meet the WTO requirements.
Meanwhile, the large garment units have prepared plans for the new quota-free regime due to commence in January 2005 and decided to increase their production, keeping in view the international standards.
Dawood said the United States inspectors had started inspecting the garment units here with a view to checking the labour laws compliance, fire safety and sanitary arrangements for the workers.
He said some factories had paid about Rs 100,000 fee to the auditors for certifying compliance of WTO requirements.
The Prgmea zonal Chairman said the main ingredients of the quota-free regime were quality and productivity as well as stiff competition from China, India and Bangladesh.
He urged the government to announce measures to reduce the cost of business and help them compete in the quota-free world, and said the buyers would not be willing to accept the existing prices in 2005, as they would have a wide variety of sources of supply.
Dawood welcomed 10 to 25 paisa per unit concession for industrial consumers of electricity, and said the concession should be higher for the exporters.
The biggest challenge facing the new Prgmea Chairman is to strive for extension of the Generalised System of Preference (GSP) during 2005 in the absence of which the garment exporters would have to pay 11 percent additional import duty on the exports to Europe.
He said he would create awareness among his members about the WTO regulations and would get concessions from the government to save a large number of small and medium units for closure.
He said the garment sector, which contributed 2.25 billion dollars, out of the total textile exports of 6.2 billion dollars, would be affected most in the new era.
While the larger units would have their output increased by 20 percent, the overall exports were likely to decline due to the closure of small and medium units, he added.