Pak textile exporters to move bases

Karachi, February 5:

Pakistani textile exporters say they are looking to move their operations to Bangladesh and Sri Lanka due to high manufact-uring costs, despite gains from abolition of import quotas.

The key industry has replaced worn-out equipment to face global competition after the 30-year quotas ended in January 2005. The quotas ensured developing countries had access to the key EU and US markets. But while their $5.5 billion investment over the past five yea-rs has given good returns, they say cost overruns at home thr-eaten their hopes for the future.

The issue is enormous for debt-burdened and poverty-stricken Pakistan, which relies on textiles for about 67 per cent of its total $13 billion exports or over 11 per cent of the Gross Domestic Product (GDP).

“A number of bedwear and home textiles manufacturers have been forced to relocate their factories to Bangladesh and Sri Lanka,” said Bilal Mullah, chairman of Pakistan Readymade Garment Manufacturers Association (PRGMA). Hundreds of textile companies upgraded their equipment and operations to compete with giant rivals like China and India under the quota-less regime, but high costs — coupled with regulatory and bureaucratic hurdles — have rendered them uncompetitive, he said.

“I am seriously looking at relocating my textile units to Bangladesh as the cost of manufacturing here is going beyond our control,” said Shabbir Ahmed, one of Pakistan’s largest bedwear exporters, who spent $25 million dollars on modernising his factories.

Pakistani exports to the EU dropped by 33 per cent in January-May 2005 compared to the same period last year, whereas Chinese exports climbed by 57 per cent and India’s increased 28 per cent, he said. Ahmed said he led a delegation of the Pakistan Bedwear Exporters Association on a fact-finding mission to Bangladesh in December and was now conducting ‘feasibility studies’ on a possible move there. The government is skeptical of the business’s claims.

“Pakistan’s textile industry has shown more than 17 per ce-nt growth in exports during the first ten months of the quota-free environment,” textiles minister Mushtaq Ali Cheema said, “Of this, garment exports have increased by 48 per cent, bedwear 14 per cent and other ma-de ups by 78 per cent,” he said referring to the trade statistics for January-November 2005.

But the industry says Bangladesh and Sri Lanka offer lucrative incentives to counter the cost of doing business in Pakistan, while skilled labour is also cheaper in these countries.

“Bangladesh also enjoys the advantage of women working shoulder to shoulder with men, whereas in Pakistan women are restricted from working outside except some major cities like Karachi and Lahore,” said Mullah of the PRGMA. The businessmen are also annoyed by Pakistan’s many regulatory agencies, accusing them of exploiting their role instead of improving working conditions.

“There are over two dozen government agencies we have to deal with and they are appeased only with bribes, a hidden price, which adds up to the cost of manufacturing here,” said Mullah. Problems in accessing bigger markets like the EU and US — which cumulatively import over 56 per cent of Pak textile products — have also caused problems.