Interview with M M Khourma

M M Khourma
Chairman
Jordan Garments, Accessories, & Textiles Exporters’ Association (JGATE)

.. the total exports (2011) from the sector is to cross the one billion dollar figures amounting to 17-20% of the total national exports.

Established with an aim to serve as the focal point for all activities related to the Jordanian Textile and Clothing (T&C) sector, thereby providing leadership and support to principal industry stakeholders and supporting partners, the Jordan Garments, Accessories, & Textiles Exporters’ Association (JGATE) is a private sector initiative. This non-profit association carries various activities across the sector promoting Networking, Investment, Professional Development, Product & Manufacturing Development, Strategic Alliances, Export Readiness, and Advocacy amongst the industry players. Graduated in 1983 from USIU / San Diego, California with a BS degree in Business Administration, and in 1985 from IUE, England with a Masters Degree in Management & Organizational Development, Mr. Mohammad Mustafa Khourma is the Chairman of JGATE. He has over seven years experience in the field of garment manufacturing and exporting. He is also the partner & co-founder of Prime Five Garment Manufacturing Co. Ltd – the leading manufacturer of military and civilian high quality uniforms and active wear. Besides, Khourma is also the member of Project advisory committee- Better Work Jordan and Academic Research Council- University of Jordan. In Face2Face talk with Ms. Madhu Soni –Sr. Editor & Correspondent, M M Khourma shares key notes on the performance of Jordanian T&C industry since a decade.

Face2Face wishes a great year ahead, Mr. Khourma! During the Face2Face talk with JGATE in the year 2009, we learnt that T&C industry contributes vital share in Jordanian economy. Is the story same for current times too?

The Garment sector became a major component of the Jordan national exports figures since its existence beginning 1995. The peak was in 2006; the sector exports reached USD 1,181,000,095. There came a slight drop in 2010 but the sector managed to maintain the one billion figure reaching USD 1000,110,000, and the current figures indicate the total exports (2011) from the sector is to cross the one billion dollar figures amounting to 17-20% of the total national exports. In recent past, an independent study made by Professor Brown from Tufts University, reveals that the value added of the Jordanian garment sector is 36%.

Interesting. To learn better about the sector, can you please provide us the growth pattern that it has followed for last 2 years, for these years have seen critical times?

Export figures in 2008 were USD 926mn, with a drop of about 19% in 2009 due to world economic crises. This was followed by an increase of about 33% in 2010 due to stock replenishment in the US market.

Well as the globalization is here to stay increasing competition, Sir, if asked – how competitive is Jordan as MENA country in T&C sector, what would be your comments?

Jordan signed the QIZ agreement with the US in late last century, followed in December 2000 with the signing of the Free Trade Agreement (FTA) with the US, which came into full effect in 2010. Both agreements gave Jordan a competitive edge in the market by allowing Jordan made products including garments to enter the US market duty free and quota free. That is besides the fact that Jordan was able to provide a stable and secured environment for investment in an unsettled region, which was enough of the reason for investment to migrate to Jordan especially after what is called the Arab Spring. I would like to mention that Jordan also signed two other FTAs in 2010: one which is considered to be a great opportunity to enter the EU market for the Jordanian garment industry, was signed with Turkey, and the other FTA was signed with Canada, which again will give the sector and Jordan a variety of markets.

Kindly also share with us updates on the Qualifying Industrial Zone -QIZ, about which you mentioned in your previous comments?

As I mentioned earlier the QIZ agreement was signed with the United States in 1998 designating thirteen QIZs in Jordan. The purpose of this trade initiative has been to support the prosperity and stability in the Middle East by encouraging regional economic integration. For an article made in a QIZ to gain duty-free entry, QIZ factories must add at least 35 percent to the value of the article in orders. This 35 percent minimum content figure can include value added in Jordan, Egypt, United States or Israel. The signing of the Jordan-US FTA in December 2000 changed the rules of origin and maintained the same benefits. In this case any article made in Jordan (inside or outside QIZ) adding 35 percent local component will gain Duty Free entry to the US market. After Jordan-US FTA (Dec 2000), a very high percentage of the exports figures now is based on the FTA and very little on the QIZ. This is mainly due to the fact that most of the components that factories used to obtain from Israel are currently manufactured locally and at lucrative prices.

Knitted and crocheted fabrics were best performer sectors for Jordan about a decade ago. How about present times?

Both Woven and Knitted fabrics are still performing well in Jordan, in relation to the export figures and garment quantities produced. The main controlling factor is the composition of the yarns used in knitting and weaving, which allows higher benefit of the FTA agreement, where Man-Made Fibers has higher duties (around 33%) for access to the US market than Natural Fibers. With all that said, still garments made of knitted fabrics are dominant due to another fact as well, that Jordan lost a big portion of washed garments made of woven fabrics (Denim) due to the high cost of water in Jordan.

On technological advancement front, how equipped is Jordanian T&C?

Jordan is still not grown adequately on the technology of the apparel sector. The reason is that even after 10 years of manufacturing garments for exports to the US, Jordan is still only offering cut and make services in addition to some basic value addition components, such as printing, embroidery and washing. From the designs to the choice of the fabrics and trims suppliers every decision is made by the buyers, and even the logistics service is controlled by the buyers, which leaves Jordan with very little to add. Several efforts were made to enhance the design capabilities in the apparel sector but still it is at its early stages. A major part of research and development is applied at the fabric stage which Jordan does not possess as all fabrics are either knitted or woven outside of Jordan.

Our last talk also helped us to know the role of JGATE in resolving operational bottlenecks by lobbying for the regulatory change. So, for present times, what set of challenges lies ahead for the industry to fight out?

The main challenge facing the industry today is increasing the minimum wage. Currently the minimum wage in Jordan is JOD150 equivalent to USD211 / month. The government, based on recommendations of an official committee formed by the government, is to study the economic situation and its impact on the social status. This committee recommended increasing the minimum wage from JOD150 up to JOD200 (USD281).

So, as voice of the industry, what agenda JGATE took to resolve such issues?

JGATE got the support of the Chamber of Industry as they are also opposing any increase since the overall economic situation worldwide is not encouraging. Besides that, the Chamber of industry is representing the private sector in the Trio committee. The Trio committee is the government, the labor (represented by the unions), and the private sector (represented by the chamber of industry), this Trio committee will have to reach to a collective agreement on any increase on the wages. We also met with both, the Minister of Industry and Trade and later the Minister of Labor on separate occasions followed by Sector / Government meeting with both ministers at the same time under “Meet the Government Event” that JGATE organizes periodically. This time also it was organized by JGATE in co-operation with the Chamber of Industry. A letter was also sent to the prime minister alarming that the sector will lose its competitiveness incase any increase was made on the wages and thereby such increase will put all positive contribution of the sector at stake.

Many thanks for the candid conversation Mr. Khourma! We wish all the very best for the Jordanian T&C sector and your association’s valued efforts in its sake.

Thank you too for your interest in the garment sector in Jordan and for giving me this opportunity to give an idea on this industry.

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Click here to read previous Face2Face with JGATE.

Published on: 09/01/2012

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.