Textile problems

This year, Pakistan faced its highest ever trade deficit of $35.6 billion despite low oil prices throughout the year. When Budget 2017-18 was announced, the finance minister had said that the government was going to launch a special package for the five biggest export sectors to revive exports. A strategy focused on no taxation would always be a limited one. Now, the All Pakistan Textile Mills Association has given its own position on the government’s strategy. Noting that Pakistan has lost 23 percent of its share in global textile exports, Aptma has issued a report claiming that the Pakistani textile industry has some of the highest costs in the region, which is preventing it from becoming competitive. The result has been a 44 percent decline in investment, with most textile industries operating at under 35 percent of their capacity. At least 150 industrial units have shut down over the same year, which has reduced the labour force employed in textiles by 30 percent. In terms of technology, Aptma claims that Pakistan has lost 15 percent of its technological advantage.

If the facts are accepted, the question becomes: who is responsible? Aptma seems to want to put the blame on the government, but this is not such a simple task. The failure to upgrade technologies cannot be blamed on the government. It is simply a product of most textile mill owners deciding to pocket the high profits they were able to reap without putting it back into improving technologies and competitiveness. Moreover, the failure to develop their own brands and remain reliant on foreign benefactors has meant that value addition to textile products is happening elsewhere in the globe. The failure of industries like textile to conform to basic labour standards is a well-known fact – and the question of why an industry cannot be competitive in a situation where it continues to exploit labour is a startling one. Moreover, Aptma must itself be blamed for not showing enough initiative. For example, why can it not show an improvement in exports despite the government’s conditional decision to agree to its demand of zero taxation on exports as well as promise of no power outages in the industrial sector? Pakistan is the only country in the South Asia region to show shrinking agricultural exports. Surely, there is more to the picture that is being told. Free trade agreements have played a part in making the textile industry open to more competition from the market, but international trade could never be sustained on a quota system for an export-oriented industry. The government can do more; but the textile industry must also practise some introspection.