Gul Ahmed says spending pattern has taken a hit

Director laments government policies, explains his company’s strategy

KARACHI: When leading companies that mainly propel their growth due to higher efficiencies complain about slowdown in earnings, you better take notice as it may point towards a bigger problem in the economy.

Gul Ahmed Textile Mills Director Ziad Bashir, in an exclusive interview with The Express Tribune, said that people’s spending spree has slowed down in the wake of political uncertainty in the country

“People are not spending for the last many months and this is a disturbing trend for many retailers,” said Bashir. “There are various reasons for this trend, but this also points towards shrinking disposable income in Pakistan.

“The situation has deteriorated so much for some retailers that they have to completely shut down many of their stores,” said Bashir while commenting on the growing problems of the textile industry.

His comments are in stark contrast to a recent report by research group Euromonitor International that has recently forecasted Pakistan to be the fastest growing retail market in the world, ahead of India, South Korea, and the UAE.



Company’s plans

Gul Ahmed currently operates over 70 stores throughout Pakistan. The company, which is one of the leading composite textile mills, is better known for its lawn prints though only 30% of its produce ends up in the local market. The rest of the products (mainly home textiles) are exported to different countries.

Gul Ahmed does not operate any store outside Pakistan and does not have any plans to expand internationally either.

“We first want to consolidate our position in the domestic market, which is growing fast. We will not go outside Pakistan unless we are satisfied with our position in the local market,” he commented when asked about any plans of running an overseas store.

Pakistan’s population is growing and even if we say 20% of its population constitutes the middle class, it still makes up 40 million which is bigger than the size of many European countries, added Bashir.

Export-based industry needs cheap electricity

Pakistan has faced acute shortage of electricity in recent years, which badly affected the growth of the industry. However, in coming years, leading industrialists are hopeful of strong industrial growth due to the availability of power in the country.

There are two challenges before the government. It first has to provide electricity with the help of the China-Pakistan Economic Corridor (CPEC), and secondly, that electricity should be cheap enough that it encourages export-based industries to aim for expansion.

Uncertain government policies hurt industry

Bashir believes one of the main reasons of the continuous decline in Pakistan’s textile exports is the uncertainty in government policies. In absence of long term policies, companies compel to focus on short-term measures and that badly hinders overall growth.

“Unless our governments start respecting the policies of other governments, we cannot achieve stable growth in our exports,” he said on continuous friction between the exporters and the concessive governments.



Strong hope in ongoing reforms in the tax system

While most industrialists are unsatisfied and even deplore the role of the Federal Board of Revenue (FBR), Bashir is confident that the ongoing process of reforms in the tax system will help resolve many problems.

Special Assistant to Prime Minister on Revenue Haroon Akhtar has been working on proposals in the tax system in which he has taken input from all the stakeholders. Bashir believes the proposals are expected to revamp the tax system in Pakistan.

“I am positive about the reform process undergoing in the FBR. These reforms, if approved by the Prime Minister Shahid Khakan Abbasi, will definitely improve the tax system in the country,” he said.

Published in The Express Tribune, November 4^th, 2017.

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