The textile sector’s woes

AN IMF report has said that the increased input cost in Pakistan’s textile and cloth (T&C) sector, ie the increase in minimum wages, interest rates and energy prices during 2005-06, may have blunted the sector’s competitiveness in the international market. Pakistan’s textile and cloth (T&C) exporters maintain that their foreign competitors are benefiting not only from liberal export subsidies extended to them by their governments, but also from the protection granted against input cost increases.
The report maintains that the prospects of a strong growth in Pakistan’s T&C exports will remain favourable if productivity gains were sustained and the value-added content of exports was increased. Despite the fact that Pakistan’s textile industry has the benefit of modern technology and easy access to home-grown premium quality cotton, it has failed to realise its full growth potential. The report further says that the policies fashioned by the government should help enhance the industry’s responsiveness to market signals through improvements in the overall business climate, increased efficiency of the production process and improved product quality.
However, across-the-board export subsidy schemes run counter to this objective, as these tend to delay allocation of resources to the most competitive sub-sectors in the T&C industry. According to the IMF assessment, Pakistan’s T&C export base is relatively concentrated in low value-added products which account for 45 percent of its exports, while the exports of readymade garments account for only 15 percent.
It saddens us to say that this indeed is the truth. Our textile industry remains mired in the lower end of the chain where firstly we are yarn spinners, a business that is driven by trading in raw cotton, the cheaper you buy the cotton the higher the return. Secondly, the home apparel and garments that we make and export are order driven by the big retailers of the developed countries, their designs complete with cut and finishing details come from the buyers.
As pointed out by the IMF, a major factor that has made doing business in Pakistan comparatively an unattractive proposition for many investors is high utility rates charged here. A study has revealed that while gas rates for captive power plants and general industries in Bangladesh, for instance, stand at $1.90 and $2.65 respectively, a unified rate of $4.02 is being charged for both the categories in Pakistan.
It today holds only a little over 2 percent of the world’s market as against 11 percent it had held between 1962 and 1970. By 1972 Pakistan commanded a share of about 3.5 percent of the world textile market, which fell to 1.5 percent in just four years. It rose again to 2.5 percent in 1983 and has since stabilised at around 2 percent. Analysts believe that negative productivity in the textile and garment sector is mainly a result of fragmentation of the industry. However, the government claims that things have improved a lot, and cites the export target of 10.6 billion dollars it has set for 2007 as a proof.
The pre-eminence of textile industry in Pakistan’s economy lies in its contribution to exports, employment, foreign exchange earnings, investment and the value-added which make it the single largest manufacturing sector in the country. It contributes around 8.5 percent to GDP, employs 38 percent of the country’s total manufacturing labour force, and contributes between 60 and 70 percent to the total merchandise exports. In view of the pivotal position it occupies in Pakistan’s economy, the textile sector should be given all possible incentives, including a drastic reduction in input costs, to enhance its competitiveness in international market.

What peace process?

PRIME Minister Tony Blair of Britain has returned to the Middle East at a time when the region is going through yet another difficult phase in its troubled history. Apparently, Blair’s visit is part of his so-called mission to ‘revive the peace process’ in the Middle East, as unveiled at a White House Press conference last week with President George W Bush. Blair might have offered to go to the Middle East to rescue his embattled friend and ally in Washington.
The pressure on the US president to change the course in Iraq and the Middle East has grown immensely after the no-nonsense bipartisan report presented by James Baker and Lee Hamilton. In addition to recommending some serious changes in Iraq, the wise men of the Iraq Study Group pointed out that the Palestine question was the key to resolving all issues in the Middle East including Iraq and Lebanon.
We couldn’t agree more with these conclusions. Palestine remains the key to peace and stability in the greater Middle East and the Muslim world. The global movers and shakers would ignore this fundamental reality at an incalculable price for the region and the world. While the Bush administration and the neocons have turned the world upside down in their so-called war on terror, they have paid little or no attention to the underlying causes that have been driving young people into the welcoming arms of the extremist groups such as Al Qaeda. Israel’s subjugation and persecution of Palestinian people continues to agitate the Arabs and Muslims everywhere. The financial blockade of the Palestinian Territories over the past eleven months has driven the besieged and impoverished people to the brink. More alarmingly, they are dangerously divided and fighting among themselves for the first time in their long history under the occupation, thanks to the clever machinations and manipulations of the Jewish state and its powerful friends.
And now you have Tony Blair coming along to pontificate to the Palestinians to ‘revive the peace process’ with the Israelis. What peace process, Mr Blair? There’s no peace process whatsoever in the Middle East. There hasn’t been one for the past many years. And how incongruous Blair sounds lecturing on ‘peace’ to a people who have nothing to feed their hungry children! If the US and Europe are indeed keen to revive the peace process and Palestine-Israel dialogue, they must first persuade Israel to lift the economic and political siege of the Palestinian Territories. There can be no lasting peace in the Middle East as long as Western double standards vis-à-vis the Palestine-Israel conflict are not dropped.

—Khaleej Times