imposed fine on cement producers on overcharging the consumers and asked them to sell the cement bag at Rs165. The chairman of MCA was removed and fine was never imposed.
Then the Competition Commission of Pakistan found the cement sector operating as a cartel, and fined them Rs6 billion in 2003. The case is still pending in superior courts.
In the same way, the number of sugar mills has remained static at around 70-74 units. The capacity to produce sugar has more than doubled in last 15 years. Pakistani consumers pay very high price of sugar compared with its global price. The millers increased their production capacities on their own will; knowing well the additional capacities could not be exported.
This was their business decision. They ask government to subsidise exports or they will default. They violate laws to increase capacities and now want government to subsidise their exports. They have up till now been obliged by all governments and might well get the subsidy this year as well.
Textile sector made heavy investment in 2003-06 when the interest rates were low. They could have hedged the rate for entire debt period by giving the banks 1-2 percent extra on their low interest loans.
It was their business decision to take the risk. When the interest rates increased from 5-13 percent, the interest of their loans naturally increased accordingly.
The sector representatives asked for interest relief as high interest rates were not factored in their business plan. They claimed that if they default it would be circumstantial default.
They did not realise that in their desire to take maximum benefit from low interest regime they failed to cover their risks.
In the same way they are now demanding subsidy to cover their inefficiencies because they are operating on obsolete technology.
They succeeded in obtaining a subsidy package from the former prime minister. Now that a new PM has come they are demanding more.
They themselves claim that the textile exports have gone up by eight percent in four months because of the PM package, while conveniently ignoring that non-textile exports have increased by over 13 percent during the same period.
Most of the non-textile exports that increased were not included in the PM package and thus received zero subsidies.
The non-textile sectors increased exports on the strength of their better business acumen and efficiencies.