KARACHI: The declining exports of the country have convinced some exporters that they cannot continue with their businesses unless they diversify and explore new markets.
Zahra Industries Director M Abdullah Abid is one of those who have tightened their belts. He has recently returned from Japan, a non-traditional market for textile exporters, where he went to scout for trade opportunities.
“Our exports are persistently falling and we need new markets to sustain,” says Abid in an interview with The Express Tribune.
He believes Pakistan is in deep crisis and its exports are under severe threat but the government is unable to assess the gravity of the situation. “The damage is much more than what the government data tells us; I really doubt the textile export figures quoted by the government,” he says.
Pakistan’s textile exports dropped to $12.46 billion in fiscal year 2015-16, down 7.42% from $13.45 billion in the previous year, according to the Pakistan Bureau of Statistics.
Like many garment exporters, most of Abid’s shipments go to Europe and the US and about 10% to Gulf countries.
He has two factories in Karachi – one caters to the demand for readymade garments like children’s wear and men’s trousers while the other markets tarpaulin tents.
His father, who is currently CEO of the company, ventured into the tents business in the early 1970s while his brother expanded the family enterprise in 1985 when he entered textile manufacturing.
“The situation of the value-added textile sector is unsatisfactory. Looking at what I see around me, I believe that about 50% of the knitted garment industry has been wiped off,” says Abid.
“At present, Pakistan has a strong presence only in the denim industry; otherwise we have conceded a lot of ground to our competitors.”
“Factories are closing down in my industrial zone because of shortage of water and gas and the rising cost of production,” says Abid, who is also the president of Federal B Area Association of Trade and Industry.
The Federal B Area industrial zone, located in the city centre, has over 2,000 running units. Of these, 90% export their products to different destinations.
The European Union (EU) awarded the Generalised Scheme of Preferences (GSP) Plus status to Pakistan in December 2013, which allowed the country to sell many of its products duty-free or at concessionary rates of duty for the next 10 years.
Abid believes that Pakistan has failed to fully benefit from the EU scheme because neither the government nor exporters were prepared for the opportunity.
“Instead of hiring, we have actually gone for rightsizing in our factories,” he says in response to a question about whether he has expanded or hired workers to cash in on the GSP Plus over the last two and a half years.
“For instance, if we could afford 10 workers, we are now working with eight. We do not want to lay off our staff as we know that unemployment is on the rise, but we do not have any other choice,” he adds.
Rising cost of living
Although Abid has over 200 permanent and about 100 contractual employees in his two factories, he thinks it is difficult to expand in the prevailing situation.
Backing his argument by citing State Bank of Pakistan’s recent data, he says Karachi is expanding much faster than any other city of Pakistan and it is getting very difficult for labourers to live in the city.
“Gone are the days when labourers from small towns look towards large cities for work. The minimum wage of Rs14,000 is too little for the labourers to work and live in Karachi or any other big city,” says Abid.
Another big factor that is going to affect industrial growth in Karachi is government’s move to increase industrial land prices.
Abid points out that notified prices have been increased by more than 100%, which will discourage investors from expanding their operations because land rates have gone out of their reach. “I can’t even think of acquiring a factory just because of higher land prices,” he adds.
Courtesy : Express Tribune