Pakistan needs to address its energy problems on a war footing if it wants its industry to prosper.
With Fibre2Fashion Correspondent Cindrella Thawani, Shehzad Salim shares significant facets of Pakistan’s RMG industry.
Synopsis:
Established in 1981, PRGMEA is representing the Readymade Garment (RMG) industry of Pakistan, which is one of the principal trade organisations of its country.
Further, the organisation is recognized by the Government of Pakistan as well as affiliated with the Employers' Federation of Pakistan.
Shehzad Salim caters as the Chairman of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA).
Moreover, he started his career in 1998 with Citibank and then moved to Master Textile Mills Ltd. In the year 2007, he was elected as the Zonal Chairman of PRGMEA.
Besides, he is graduate in Business and Economics from Knox College, U.S.A.
Excerpts:
Where do you see globally elevating market for Pakistan’s readymade garments?
In phase one this would have to be in our traditional markets such as E.U and US. We are trying to gain more market access into the E.U. if this comes through, we will see a fast elevation in market share. Meanwhile, we are trying to negotiate better terms with U.S.
Moreover, in phase two, I see elevations of market share with our regional trading partners namely China and India. Trade negotiations are underway with both the countries and I am confident that with a short period of time we will see export growth with both of these countries. Phase three would entail new market development in regions like Latin/ Central America, Australia, Japan and Africa.
Recently, ready made garment exporters had started shifting to Bangladesh. How is this leaving its impact on Pakistan’s RMG industry? What are those steps that government should undertake and has also taken?
In my opinion this is just hype. Only one company has officially set up and subsidiary in Bangladesh in the last year. A few more may have set-up collaborations, etc. But none of the major players have moved.
Bangladesh has its own problems such as shortage of gas, energy and labor unrest. I am now seeing a renewed interest from many foreign buyers who are looking to buy from Pakistan because of the difficulties they are facing in Bangladesh.
Pakistan has a big advantage of raw materials availability and this leads to better lead times for deliveries and that is what all major buyers are looking for today. All we need from the government is a focused strategy to give priority to the textile sector which is the main driver of Pakistan’s economy.
Gas and Energy supply needs to be prioritized for this sector and the law and order situation needs to be controlled. If this is done on a priority basis I am very confident that Pakistan’s textile industry has a bright future.
Bangladesh is competing with Pakistan’s textile industry. What are those measures that Pakistan should take to make strides in this industry?
Pakistan needs to address its energy problems on a war footing if it wants its industry to prosper. Now the industry is taking measures to address this problem on its own and investing in renewable energy sources.
In contrast to Bangladesh, Pakistan’s textile industry is much more flexible and has a big advantage in that the supply chain is complete, modern and efficient, raw materials are grown/produced locally; as is the case of cotton and polyester.
There is a huge market for small and medium sized orders and the industry needs to focus on this segment, which will not only bring better profit margins but would allow adding more value to our products.
The need of the hour for the sector is to invest in R&D, styling, color forecasting, etc and integrating these across the board within the industry. Pakistan needs to focus on products where it has definite advantage, like denim, jeans/trousers etc, namely bottom and diversify with the same group.
However, how do you see the export scenario?
Due to the recession in the EU and weak economy in US, which are our traditional export destinations, Pakistan’s textile exports registered a decline of about 10 percent in the last fiscal year.
The European and the US market may remain subdued for another year or two due to their weak economies; therefore we have to shift our focus towards non-traditional markets like China, India, Brazil, ASEAN and Africa.
In the near term, I see exports going back up to previous year levels, basically due to a greater stability in raw material prices, thus enabling seller to enter into longer contracts at cheaper rates with their buyers.
Increased trade with neighboring countries and non-traditional markets is now required to offset the declines from our traditional partners. However, all these markets are not easy to excess and thus trading with them will take time.
Pakistani rupee has been depreciating. How do you see its outcome on outsourcing?
Traditionally, the rupee depreciation was seen positively by the textile industry as it made our exports cheaper, but in the long run it is detrimental because cost of imports and local raw materials become dearer, as they linked to the international markets.
Besides, I see no real advantage of rupee devaluation. It is inflationary in nature and causes too many uncertainties, drastically reducing local investment in plant and machinery. A stable rupee with low inflation is an ideal combination for our industry.
How do you see future of RMG industry in Pakistan? What are those challenges this industry is facing, presently?
I am very hopeful that Pakistan’s RMG industry will get its due global recognition because we have most modern machinery, skilled labor force and ample raw material availability. These are the three main ingredients, which make any industry viable and we are blessed with all three.
Currently, the industry may be facing energy challenges, security concerns and a weak demand but the situation is fast improving and I am positive that within three to five years we will be able to make great strides in exports of readymade garments.
Unprecedented energy crisis seems to be a crucial element for Pakistan’s RMG industry as well as international retailers. How do you see the current scenario? Please interpret.
Energy crisis is not only a problem for Pakistan, but it is in fact a global phenomenon in all the developing nations. We have been suffering from an ‘energy crisis’ for the past four years or so, but this has not made any significant impact on our exports because the industry and the entrepreneurs have adapted to this threat.
Large scale manufacturers have now installed their own electricity generating plants and are rapidly moving to alternate energy sources. The SME’s are investing in energy efficiency programs, conservation programs and better practices. The government has also initiated several mega projects to counter the lack of energy, which are now coming online.
It will no doubt take some time to completely overcome such a large problem, but both the private sector and government can overcome this issue by setting up coordinated energy production and distribution projects
How does PRGMEA encourage to RMG industry and exporters from Pakistan? Please elaborate.
PRGMEA is working in many fronts for the development of Pakistan’s garment industry and for growth of our exports as well as we provide active research based feedback to the government for trade related issues and trade policy matters. Further, we regularly highlight impediments to trade and actively take-up all matters concerning our members in particular and our industry in general.
Besides, it is very active in development of skilled labor force for the garment industry and is currently running two vocational training institutes and a third is under construction.
Moreover, we are also participating in several sustainable production programs for energy efficiency and environment management systems and greener production. PRGMEA was instrumental in lowering the trade barriers with India and fully supported the idea of enhanced trade between the two countries and the region in general.
‘Being sustainable’ how do you see this term goes well with the Pakistan’s textile industry?
Pakistan’s textile and RMG industry is very pragmatic and adaptable. It is quick to adopt new measures in order to keep itself sustainable. The industry has realized that it has to keep its wastages, energy and utility requirements low in order to be competitive globally and at the same time invest in skill development and adopt better practices.
Through various government, semi government and private sector initiatives this has already began. PRGMEA have recently initiated an energy saving and greener production program and the response has been overwhelming. Similarly, other programs like re-use of water and reduction of pollutants into waterways, are also being implemented successfully.
