The Ready-Made Garment Industry of Pakistan
Ready-made Garment Industry Problems
The RMG (Ready-Made Garment) industry of Pakistan has expanded dramatically over the last four Decades. The RMGI of Pakistan established in 1970 since than it is working hard to make a prominent share in Pakistan's economy. In 1999-2000 the exports of Pakistani RMGI were US $ 772 million or 8.5% of the total exports.
Pakistan is an agriculture based country. Export of textile to different countries is the backbone of its economy. According to Pakistan's Economist Report textile exports in 1999 were $5.2 billion which rose to $10.5 billion in 2007. Cotton and cotton blended fabrics, yarn and fiber's export is the biggest genre of Pakistan. On the contrary to textile's foreign and indigenous market, ready-made garment industry is only holding a very limited market locally as well as internationally. Local demand of readymade garments during the past five years increased manifold due to increase in GNP, urbanization and population. Growing tailoring charges have induced the people to purchase readymade garments in larger quantities in the coming years.
Problems faced by the Readymade Garments Industry
With all opportunities and strengths at the back still Pakistan's ready-made garment industry is failed to develop a niche in local and foreign market. What are those problems garment industry is facing today.
i- Inappropriate Governmental policies:
One of the very important problems faced by not only garment industry but all other industries as well is: lack of conducive industrial policies, absence of foreign direct investment, insufficient export processing zones and no trade fairs inside and outside the country. These initiatives can become the main cause of export-led industrialization in Pakistan. Government should provide the advantage of duty-free raw material imports usable in the manufacturing of export products to encourage and accelerate such industrialization. Another concern is the proper and on-time implementation of policies and strategies. Rules and regulations that exist only on paper are meaningless if they are not duly and properly implemented. Bureaucratic complexities, corruption, political instability and lack of good governance are some areas which the Government needs to address in order to ensure the proper implementation of its strategies and policies. Infrastructure development is another area where the support of the Government is undeniable in a developing country such as Pakistan.
ii- Technological factors:
Rapid changes and development in technology has increased competition. To address to this fast pace of technology garment industry needs to learn and adopt new and innovative approaches. Pakistan is still far from it. The machinery that is being used for different operations is usually outdated and obsolete. Government should provide funds and loans to the owners of garment industries so that they can install new machinery which can perform tasks in easier and faster manner.
iii- Socio-cultural factors:
Though this does not directly influence the garment industry but on the long run its effects can not be minimized.
iv- Economic factors:
In the last two decades economic depression has been seen worldwide. Due to increased war on terrorism countries are forced to put lots of budget on the defense than on other sectors. A sudden downfall in the purchasing power of the general consumers has also been seen. Textile is the first main ingredient of Pakistan's economy. Internal political problems and instability is another cause of economic downfall. Poverty level, FDI (Foreign Direct Investment), and export are on fast decline. Many garment industries have been closed today due to all these factors.
v- Power Failure:
Power failure is one of the biggest problem garment industry is facing. Long duration electricity load shedding without any schedule; instable prices of electricity, per unit price of electricity raise after every few month; shortage of gas supplies in winter; increase rates of petroleum products; lack of CNG; as well as water shortage are some of the prominent causes of garment industry downfall in the lat two or three years.
Garment and textile industry of Pakistan suffered great losses in November, December and January this year. Though large industries have developed their own power plants (running on gas) but these are few. As a result of loss suffered by the garment industry they reduce the wages of employees.
vi- Frequent Price Fluctuations:
Create a serious problem for the industry, particularly for those who manufacture garments on orders. After announcing the budget in June every year government keep on raising the rates of raw materials, processing materials, auxiliary products and other products used in the processing. The industry owners can not make their own budget because it keeps on changing with price fluctuations.
vii- Lack of infrastructure:
Physical and organizational structure of Pakistan's garment industry is as worse as other systems. Infrastructure cannot be enhanced in a day it is a result of years of hard work but today most of the infrastructure is getting destroyed by the crisis of terrorism etc.
viii- Purchasing Power:
Consumer's purchasing power has declined in the lat few years. With frequent price fluctuations garment industry is forced to increase the price of their products which consumers are not willing to purchase. Even in foreign market Pakistan is facing severe competition with India, china and Bangladesh; these countries are offering high quality products at low prices because their economy is much more stable than Pakistan.
ix- Facts & Figures Regarding Production:
Although garment industry made a rapid growth till few years back but no organized data is available that can show the expansion or reduction in the growth of this sector. Firstly, most of the garment industries are not working on large scale; they are small industries working at their homes or in small rural places which are not even registered. Secondly, government has not made any statistics of their growth. Thirdly, many industries close each year and new ones develop but there is no stability except for few bigger names.
x- Research and Development:
In educational sector there is no trend towards researches. Lack of research-oriented attitude also leads to lack of improvement in the industry. New and innovative products are introduced by the garment industry of other countries but Pakistan is legging behind in this context.
With these problems the quality of the product has been deteriorated. Consumers on the other hand today are more aware of the product quality and they do not waste their money on poor quality products. To complete the process of production, industries try to cut down their investment on product promotion, publicity and advertising; they are firing many employees to reduce the budget, this has in turn increased poverty rates.
Pakistan has lots of potential and the raw material for the garment industry–the fabric- is also of superior quality but the environment to develop and progress is not compatible.