Garment manufacturers in Jordan are competent, want consistent policies … – MENAFN.COM

Garment manufacturers in Jordan are competent, want consistent policies — JGATE chairman

AMMAN, Mar 24, 2013 (Menafn – Jordan Times – McClatchy-Tribune Information Services via COMTEX) –By shifting to man-made fibre, garment manufacturers in Jordan were able to face international trade liberalisation and weather competition from world textile industrialists who export to the United States.

Mohammad Khourma, chairman of the Jordan Garments, Accessories and Textile Exporters Association (JGATE), told The Jordan Times and Al Rai Arabic dailies in an interview this week that man-made fibres give local apparel manufacturers some price advantage under the free trade agreement (FTA) Jordan signed with the United States in October 2000.

“Although man-made fibre production in Jordan entails higher costs, the FTA allows these garments in the US at a lower price and, consequently, [Jordan apparel is] more competitive and appealing to US consumers than other traditional clothing that floods the American market from so many countries,” he said.

According to Khourma, also a partner and Chief Executive Officer of Prime Five Garment Manufacturing Company, apparel industries in Jordan would have been at a disadvantage without this man-made fibre (polyester and nylon inputs) niche and the lower pricing for it under the FTA, because, “unlike before, there are no quotas that restrict countries from exporting apparel to the US market and, as such, the Kingdom is no longer competitive as a quota-free zone”.

Because of these preferential terms, Khourma said Jordan is having an edge over production costs in Cambodia, Thailand, Sri Lanka, Vietnam, Bangladesh, India and China, which top the list of traditional garment exporters to the US.

The association chairman stressed the benefits the FTA gives to Jordan, which are “an unrivalled international status as a magnate for profitable investments in the Kingdom and an important edge over others for those who seek to export to the US market”.

But despite the success on the export front and in the production upgrade, “further advancement is being hampered by domestic inconsistency, marked by frequent unsettling developments and counterproductive measures”, according to Farhan Ifram, chief executive officer of Madaba satellite project and a JGATE board member, who added that these negative aspects are responsible for the fact that “not a single textile investor came to Jordan in the past three years”.

“Foreign investors examine Jordan’s economic environment from various perspectives and when they establish a business here, they do not expect changes to laws and regulations regarding investment, taxes, rents, energy prices, bank interest rates and minimum wages that went up from JD80 in 2000 to JD190 at present,” Ifram said.

He noted that the textile industry, represented by 85 factories, had been unchanged for a number of years. Initially there were 120 plants, but some moved to Egypt when it was granted a QIZ (qualifying industrial zone) status by the United States in the late 1990s.

Khourma said the instability in Egypt may influence some industrialists there, making them consider returning to Jordan, especially that the FTA here is more favourable than for the Egyptian QIZs where an 11.5 per cent Israeli input is still required if the apparel exports are to enter the United States customs free.

As for the QIZ programme in Jordan, Khourma indicated that only two or three industries apply this formula, which requires an 8 per cent Israeli input, because either the US importers or the owners themselves want this arrangement to continue.

Khourma noted that because the FTA is a larger framework that strikes down all barriers, the QIZ is now irrelevant in Jordan.

The JGATE chairman was upbeat about the potential and capabilities for growth and progress in the Jordanian textile industry, stressing that although there are no newcomers, many investors already operating here are now expanding their scope of operations to the higher chain value.

Yet, he stressed that the government should refrain from taking decisions that unsettle investors and cause disruptions in plans and strategies, adding that “with long-term strategy and vision, it is paramount to maintain high credibility in the business community here and abroad”.

“Authorities are under the illusion that textile industrialists generate high profits and therefore do not deserve support or incentives,” said the chairman, emphasising that the profit margin does not exceed 5 per cent.

Noting that the sector alone accounts for 1.2 billion of Jordan’s 7 billion total exports, he described the textile industry as the most beneficial to the economy because it is also labour intensive, with unlimited job availability, compared to the IT sector.

“All our members are more than willing to continue training Jordanian labourers regardless of their educational levels,” the JGATE chairman stressed, noting that of the 40,000 textile workers at present, 10,000 are Jordanians, of whom 65 per cent are women.

He emphasised the industrialists’ desire to develop the governorates and to help the government ease poverty pockets by operating satellite factories in Mulayhh/Madaba, Shouneh, Karak, Al Koorah/Irbid and Tafileh.

Yet, this is a quick, temporary, remedial action that could fade or get suspended at any time, under various pretexts.

For example, he elucidated, the government gave land and buildings to textile industrialists in underprivileged areas to operate such “satellite factories” and employ residents, with the government providing part of their wages. After a short period, this initiative was stopped for lack of funds.

Khourma said the industry treats workers according to the Better Work/Jordan guideline that was formulated by the International Labour Organisation, in order to secure textile labourers’ full rights. Delegations from US importers also make unannounced visits, occasionally, to check compliance with international labour standards.

“Industrial jobs teach discipline and work ethics, besides developing a culture of self-dependency and economic contribution instead of laziness and reliance on others for livelihood,” the JGATE chairman said.

Noting that intangible benefits are equally important to salaries, he underlined the need to educate people on various skills, upgrade their understanding of productivity and the level of economic participation, while, at the same time, widening the scope of responsibility.

“Behind the textile industry are numerous back linkages that support this activity, such as hanger and button making, which are part of the chain of clusters,” he said by way of illustrating the scope of the industry.

Khourma dismissed as “totally untrue” the notion that garment manufacturing in Jordan is not viable and unfeasible, based on the assumption that most production input is imported, most labourers are foreign workers and most profits from sales are repatriated by owners/investors.

“A thorough, independent study conducted by an academic party (TAFT University) concluded that textile industries generate 36.7 per cent more value for the Jordanian economy,” he said, pointing out that the sector pays JD120 million a year to the state treasury in various fees and taxes.

Among about 20 international brand names, the association’s head mentioned are Wal-Mart, Target and Kohl — top buyers of Jordanian garments.

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