The Central Chairman of Pakistan Readymade Garment and Export Association (Prgmea) Ijaz Ahmad Khokhar has said that textile sector should be divided into three sub-sectors including ginning, spinning and weaving if the government intends to save the industry from the crisis.
Prgmea has been conveying the message of the alarming situation with which the garments export sector was confronted with and the remedial measures; the association has been proposing to the Ministry of Commerce, Ministry of Textile Industry and the economic minister for the last two years but no heed was paid to the industry, he pointed out.
He said that there was no reality in the report published in the national press a few days ago claiming that the garment industry was producing poor quality basic garments, low value addition and used old machinery. Element of wastage in manufacturing processes is the maximum. No Research & Development activity is in motion in spite of 6% subsidy on FoB value of exports.
The Industry is baffled on the allegation on one-sided story. No officials even of junior ranks have ever bothered to call on Textile Associations to look into the working conditions of the units, international upheavals, in contrast with the neighbour's competitiveness.
Most of the countries have remained busy in Research & Development in co-ordination with the private sector. He made it clear that there was absolutely no truth that Prgmea has old machines; rather latest machinery was installed there.
The allegation of producing poor quality goods is also a false and baseless statement. Exports are continuing even after global quota free regime and exporters have installed latest high-tech embroidery and CAD/CAM computerised machines as well to meet the demands of buyers. The introduction of new technology is helping to fill-in the gap of shortage of skilled labour, he maintained.
He said that the allegation of wastage was also absolutely untrue. The routine conventional wastage is normal even in a newly set-up unit and the alleged wastage is not correct. The charge that no Research & Development activity is being carried out in spite of 6% R&D facility is simply wrong.
I can request for a visit to a factory in the industrial area in receipt of R&D subsidy and will find that more than 70-80% of 6% R&D subsidy has been spent on expanding working area, added high-tech machines, computerised system and 20% on training to produce skilled labour for the factory, he added.
He said that as far as marketing efforts were concerned, country was in the grip of uncertain security safeguards to the foreign buyers on tours. After travelling to India, the buyers prefer to rush back to their countries. He said that regretfully, the Commercial Attaches on behalf of Pakistan in foreign countries except a few, who are prompt in response hardly send economic reports of their areas of jurisdiction and the exporters have to seek support of internationally displayed reports of experts through internet. It is understood that even economic reports are marked "confidential" that is to remain out of reach to the business community.
He said that after 31 December 2004 while neighbours and other affected countries' introduced revised strategies to face the new conditionally. Regretfully Prgmea was unable to obtain any concession from European Community or USA while Sri Lanka and Bangladesh and other countries obtained duty free export status.
He further pointed out that there was also impression in State Bank of Pakistan that exporting community was not paying taxes but claiming concessions every now and then. He said that the industry was confused while sending invoices to buyers whose validity used to be six-month to a year with the increase in electricity rates; it is becoming difficult to revise the prices which would obviously result in loss of business.
He said that the EXPO 2007 had not brought any business to the exporters in spite of loud claims of improved law and order condition. Nothing has been done during 2006-2007. The low production is direct result of loadshedding of electricity in routine for long hours.
He said that the travel expenses have increased. Minimum 5% exemption should be allowed to enable touring for seeking business from the potential buyers. The uncertainty in cotton fabric etc supply should be eliminated.
He said that the government says that it has to look after sectors, which need support to increase exports and that textile sector has been provided incentives for a considerable period.
It is on record that various international agencies, which have studied and made recommendations for sector specific industries be looked after and textile sector is amongst the top. He suggested placing the fabric and accessories to be zero-rated to ease the situation.
The price difference in setting-up is that a Spinning Unit spending over Rs 500 million employ hardly 300-400 workers whereas a garment making unit investing amount of Rs 500 million will provide jobs to over 5000 skilled workers, he added. Any reduction in 6% R&D subsidy will ruin Pakistani exporters' business to a great extent.
He said that the government had formed a new body TDAP (Trade Development Authority of Pakistan) that sponsors delegations abroad. Similar to EPZ (Export Processing Zone); the exporting Industry Units of Prgmea exporting garments should also be included to the facilities which are being extended to EPZs, he said.
There is also the demand of the industry that the same facilities as are extended to the investors from abroad by made available to local investors to encourage setting up modern manufacturing facilities.
The institutions set up under the EDF (Export Development Fund) should be given annual grants to continue producing skilled workers for the industry. It is difficult to run the institutions due to shortage of funds. Recently, government has increased the minimum wages from Rs 3,000 to Rs 4,000 which has severely affected the cost.
The cost increase on this account should be subsidised in terms of some 'rebate' for three years. He said that government should use its influence to get "duty free" status in US market. This will help the industry fight against price competition of such privileged countries. He said that the major input of a garment is fabric.
Our fabric exporters have been given a support of 3%. He said that EDS be put in abeyance for a period of two years. A travel support fund to the extent of 2% of the exports of respective garment exporters should be established to compensate for the increased travelling, now needed for marketing purposes. Immediate simplification of the DTRE rules in order to facilitate imports of fabrics.
He said that the utilities supply and utilisation charges are increased without notice and also wages which registered increase up to 33% in 2006-2007. It is again rumoured that government is considering increasing minimum wages to Rs 5,000 per person. Unless the government compensates for the increased expenses it will be much difficult to continue exports.