R&D PRIVATIZATION VITAL FOR SUSTAINABLE ECONOMIC GROWTH

In fact, Research and Development currently has the monopoly of public sector where most of the funds are being consumed in salaries.

By AMANULLAH BASHAR
Mar 13 - 19, 2006

The Research and Development (R&D), which is of fundamental significance for knowledge-based sustainable economic growth, is surprisingly non-existent in the private sector of Pakistan.

In fact, the R&D currently has the monopoly of the public sector where most of the funds allocated for the purpose are being consumed for salaries of the staff associated with the government owned research institutions, especially in the agriculture.

Consequently, despite having rich agriculture lands supported by the largest canal network, the farm community failed to enhance per acre yield of the major crops like cotton, wheat and rice. On the other hand, neighboring India and China have much better produce when compared to our crops.

Due to lack of participation of the private sector in R&D, our cash crops especially rice and cotton are not supported with new varieties of seeds, while the fake or substandard brands of pesticides are proving counter productive instead of lending a supporting hand to the growers.

Sikandar Hayat Khan Bosan, Federal Minister for Food, Agriculture, and Livestock, disclosed that some multinational and other big pesticide companies are selling smuggled pesticides from China under the garb of their labels.

This crucial point was raised by Nisar Dossa, a leading textile industrialist at a meeting organized by All Pakistan Textile Mills Association (APTMA) which was presided over by Sikandar Hayat Khan Bosan, Federal Minister for Food, Agriculture, and Livestock.

Most of the negotiations revolved around business ethics, size of the cotton crop and availability of the commodity at a reasonable price. However, Nisar Dossa, touched the sensitive issue and urged upon the government either to allow private sector to get involved in R&D activities or the existing R&D facilities be privatized.

He asserted that unless the private sector was brought in research domain it would be hard to optimize plenty of natural resources available in the country. Dossa, critical over the estate of affairs in the government-owned research institutes, remarked with confidence that it looks funny that the entire amount allocated for research purposes is utilized for the salaries of the staff in those institutions. A galaxy of the leading textile industrialists, however, did not bother to pay heed to this important issue instead they were more interested in incentives and subsidies with a claim of contributing the largest share in the economy in the form of exports besides generating employment at a massive scale.

It was surprising to note that even the agriculture minister who was in absolute agreement that our research and development work needs reforms at a massive scale, some leading industrialists were not prepared even to listen discussion on R&D, giving an impression that they were happy with what they have achieved so far.

The agriculture minister, however, urged the textile industry to be flexible with the growers by appreciating their hard earned results of cotton harvesting with a view of getting sustainable growth in cotton production.

Sikandar Hayat Khan, while citing the example of the industry's attitude with the growers, said that last year when the growers produced 14.6 million bales they got Rs185 million as compared to Rs174 million paid to them when the crop size reduced to 13 million bales this year.

This indicates that when supply is adequate the mills take advantage of the sufficient supply. Such cartel like behavior discourages the growers.

He gave another example, which led to the present sugar crisis in the country.

We produced a bumper sugarcane crop in 2002-03 when the support price was fixed at Rs40 a mound, but taking advantage of the sufficient crop the millers did not pay more than Rs25-32 for a maund which naturally discouraged the farmers who reduced the area under cultivation by 11 percent for the cane crop next year resulting in a reduced crop of 13 percent.

Another point, which came under discussion, was the dormant research and development in our agriculture sector, which has a monopoly of the public sector.

Leading industrialists present in the meeting called upon the minister to allow the private sector in the research sector so that quality seeds and new varieties of cotton and other major crops could be produced in Pakistan.

They said that it was the research efforts, which helped India and China to produce much higher per acre yield as compared to poor performance in Pakistan. The funds allocated for research are mostly consumed in salaries of the staff appointed for the research purposes.

Speaking on the occasion, Chairman APTMA (Southern Zone) Mushtaq A. Vohra observed that textile industry plays a leading role in the economy and contributes 8.5 percent of GDP. The textiles have the credit to fetch 59 percent of our total export earnings, which has earlier been reduced from 64 percent. The textile industry consist of 46 percent of total manufacturing while it generates 38 percent of the workforce in the manufacturing sector. He observed that textile industry developed a stage where it is able to compete globally. The present structure of the industry shows that Pakistan has strong base in the production or basic textile including yarn and fabrics. During last five years over $5 billion have been invested in the textile industry.

Following is the break up of the investment:

1 Spinning and fibre sector 46 percent
2 Weaving 42 percent,
3 Textile processing 12 percent
4 Knitwear and Garments 5 percent
5 Made-ups 8 percent
6 Synthetics 5 percent

Signifying the growth momentum in the textile industry Vohra said that over 2 million spindles are in the pipeline, which will require at least 2.5 million additional cotton bales. During last five years from 1999 to 2005, the spinning capacity has enlarged by 18 percent resulting increase in the consumption of cotton by 71 percent and man-made fibre by 21 percent. As against this during the same period, production of cotton in the country has improved from 9.7 million bales to 14.3 million bales that is 47 percent growth but this increase in cotton production has nose dived to 12.3 million bales that is 14 percent decline in the current year's crop.

The agriculture minister, however, did not agree, saying that the size of the cotton crop according to latest assessment was estimated at 13 million bales. Vohra observed that demand for locally produced yarn and fabric is rising for value added products. Export of value added textiles are declining. After the post quota regime, the exports should have increased by 33-35 percent, whereas the textile exports have increased only about 23 percent. In the indigenous production of cotton, Pakistan ranks fourth in the list of 70 cotton growing countries, gaining an obvious edge over the competitors.

Today the spinning industry consumes nearly 14 plus million bales of cotton and 500,000 tons of polyester staple fibre. APTMA projects that by 2007, the industry would need at least 15 million bales of cotton for consumption by the local spinning industry. The government is therefore urged to ensure availability of cotton to the industry at internationally viable prices and develop such varieties of seed cotton that are resistant to diseases and enhance per acre cotton yield. As would be noticed the industry's requirement is increasing with each passing year but indigenous production of cotton is lagging behind. After phasing out of the quota regime the access to international market has increased for Pakistani products. Textile industry is delicately poised to take advantage of the opportunities that have become available in the post-2004 era.

Cotton required by the industry by 2015 was estimated at 20 million bales. It was also suggested that mechanical cotton harvesting be introduced to achieve cleaner cotton. Quality of cotton could also be improved through modern ginning system. Instead of focusing on contamination-free cotton, the post harvesting stages need preventive measures for producing quality cotton.

APTMA feels that the government should devise policies under which subsidy is directly accounted to the farmers instead of ginners or TCP and spinners are not forced to subsidize the cost on this account.

He, however, said that coordinated efforts are not being made in the research and development as 90 percent of the funds are used for disbursement of salaries. What is left for carrying out research is a question to ponder upon!