KARACHI, Jan 6: State Bank Governor Dr Ishrat Hussain has advised exporters of textile made-ups to enhance their productivity through skilled labour and better wages to remain competitive in the post-quota free world market.

Speaking as a chief guest at the certificate distribution ceremony of Institute of Knitwear Technology, Karachi (IKTK), the governor said that era of subsidies had gone and the trade and industry had to learn to hold on its on burden.

Dr Ishrat said: "Subsidy culture has spoiled our habits, and we have to change the same at the earliest to face the emerging challenges of 2005." "Despite the fact that the cost of financing has come down to around five per cent from 21 per cent, the exporters are still complaining about high cost of production. Similarly, the export refinance rate has come down from 13 per cent to three per cent, but they still have a long list of complaints and demands," he maintained.

These were some of his candid observations in reply to some of the points raised by Imran Ali Sabir, the chairman of Pakistan Hosiery Manufacturers Association (PHMA), the parent body of IKTK, in his address of welcome.

The governor went on to say: "The only problem was that you have to concentrate on productivity and this means - efficiency, skilled manpower, lesser wastage and above all quality and innovative designs and products."

He explained: "If you give good wages to your workforce you can double you production and by imparting skill better results could be achieved." Citing the example of China, the SBP chief said that the only advantage they have was of skilled and disciplined labour and they consume every single pound of cotton that China produces and without wastage.

He said last year raw cotton and yarn prices were lower and the exporters made big profits, but this year when prices had gone up they started grumbling and seeking government assistance. Similarly, he said now the entire export refinance fund was being given to the value-added textile industry and cotton yarn export had been removed from this facility. He further said that in 1990, 70 per cent of textile exports constituted cotton yarn and grey fabric, but now the situation had reversed, which was evident from the fact that yarn exports were stagnant at $1 billion mark.

The governor said when there was no restriction on import or export of raw cotton and cotton yarn and there was no duty there remained no question of raising demand to stop yarn exports.

He said the exporters should be prepared for the quota free world because the industry had already invested around $4 billion under Balancing, Modernization and Replacement (BMR). Due to this, he said, Pakistan and China were presently the largest importers of textile machinery in the world.

The SBP governor said now the value-added industry was getting contamination-free cotton, all sort of yarns and good quality and long staple cotton, which were basic requirement for quality products of textile.

Citing an example, the SBP governor said that Bangladesh stayed competitive in the world market after importing yarn. "Today Bangladesh is earning $4.5 billion on textile exports against Pakistan's exports of $7 billion."

Referring to another point raised by the PHMA chairman, Dr Ishrat said power rates were high because for the last four year there had been draught in the country, and the costlier hydel power supplied by the IPPs at a rate of Rs6 per unit was being used more against a cheaper thermal power generate by Wapda at a rate of Rs2 per unit.

However, the SBP governor said that due to improved water supply the thermal and hydel mix could cut power rates, but still electricity consumption in the entire cost of production was not more than three to four per cent.

He suggested to the exporters to explore new markets and try to take advantage of costlier euro by penetrating into European markets. Similarly, he said East Asian markets were emerging fast where cost of production was higher and people had a lot of money to spent. He said Pakistan, China and India were still considered to be low cost countries where labour cost was still lower than other countries of the region.