FATE OF PAK-IRAN TEXTILE MILLS IN BALOCHISTAN?

SYED FAZL-E-HAIDER, QUETTA
Aug 27 - Sep 02, 2007

The industrialization process was put on track in Balochistan during 1980s when Pak-Iran textile mills at Quetta (Bolan) and Lasbela (Uthal) were established. The two Pak-Iran textile mills laid the industrial foundation in the least developed province. The textile mills were closed due to the wrong policies of corrupt and inefficient managers. The mills showed losses just because of the corruption and involvement of vested interests and ultimately were closed down. Thousands of people from this province lost jobs. Thus industrialization was plagued when it was at its infancy in Balochistan.

The textile mills with all its machinery, physical infrastructure and industrial land were established to initiate industrial process, create thousands of jobs and combat backwardness in this province. In the three working shifts in one mill, roughly 21,000 persons can get jobs. The mills could be run on ' no profit no loss basis'. There are a host of departments in public sector, which are constantly showing losses but are being run by the government in the public interests. Though these departments are burden on national economy, yet public service justification is deemed logical. The government could borrow loans from the domestic or foreign donor agencies to revive and put the two mills on the track of productivity.

The mills could not be categorized as sick units. They were closed mainly to serve the vested interests and keep the province backward. Iran had offered to buy the products of the two mills with payment in advance. The imported machinery installed at the two mills worth millions of rupees was of no avail. The irony of fate with many enterprises like the Pak-Iran textile mills in public sector has been that they continued as monopolies, which prevented comparative performance.

Lasbela Textile Mills has recently been privatized. The Privatization Commission (PC) had received the highest bid of Rs156 million for the sale of assets, plant, machinery and equipment of Lasbela textile mill. PC Board has made recommendations for its approval to the Cabinet Committee on Privatization (CCoP). The PC had reportedly received 43 Expression of Interest (EoIs) for the transaction out of which only 16 parties reached to the bidding point. The top three bidders entered in the second round of open bidding and improved their bids with minimum increment of Rs1m. The final round received the highest bid of Rs156 million from Mr. Rais Ahmed of Karachi. Unique Trading Company followed with Rs155 million and Abdul Sattar Noor Mohammad & Co offered Rs150 million respectively.

Lasbela textile mill was originally a project of Iran Pakistan Industries (Pvt) Limited (IPI) situated at Uthal, District Lasbela, Balochistan. The machinery is part of fully integrated units of 50,000 spindles and 1,100 looms with complete dyeing and finishing facilities. The plant was set up in 1976 and it started production in January 1980 but was closed down in 1983. The closure of textile mill at Uthal amply reveals a shocking story of injustice done to the people of this most backward province. It reveals how callously the public exchequer was plundered: how petty personal interests did over-ride national interests and how the politico- bureaucratic allies did harmonize their anti-people agenda here.

Realistically speaking, industrialization in private sector has no scope in Balochistan. The industrialists in the past got all the incentives from the government including tax holiday, soft loans, exemption from custom duty etc. but as soon as the incentives were abolished, they took away every thing including machinery declaring the industries sick. It is ironical that industrial units got sick making the owners healthier financially. The example of sick units in Lasbela district may be cited in this regard. When the federal government refused to extend the tax holiday and other incentives, they simply closed down their factories. Resultantly, the shifting of the Industrial base from Uthal to Hub near Karachi plagued industrialization and served the vested interests only.

The industrialization in private sector in Balochistan would largely serve the interests of influential business tycoons rather benefiting the people of this province. This is because of the fact that the province is not so economically developed where the private sector could play an important role to boost industrialization. In other words, privatization policy would go against the interests of local masses.

Some people are of the view that privatization of Lasbela textile mill would serve the interests of textile mafia. The mill was established with the financial assistance from government of Iran in public sector. The officials of Ministry of Production and Pakistan Industrial Development Corporation (PIDC) ruthlessly plundered the mill sabotaging the industrialization process in the province. The closed mill's assets worth millions of rupees had also attracted the textile tycoons of Faisalabad and they developed links with former top notches of PC. Resultantly, few years ago, some moves were made by PC to auction the machinery of the closed textile mills. The textile tycoons had planned to buy the textile machinery at nominal price by paying some amount to the corrupt functionaries of PC. They however could not succeed in materializing their plans.

According to some independent economists, Industrialization has scope only in public sector at least in Balochistan. There was a dire need to learn from the previous experience and adopt diagnosis-to-prognosis approach for industrial development in public sector. The government should establish industrial units and run them for at least 10 years making it profitable. Then local investors must be invited to buy them to sustain and accelerate the process of industrialization in the province.

Balochistan is currently producing finest quality of cotton. This was the right time to re-open closed textile mills sharing the boon of textile boom with the province. The vested interests were involved in closing down the two Pak-Iran textile mills in Balochistan. Those who built empires of corruption at the cost of the legitimate interests of this backward province must be held accountable and punished, but what was the guilt of thousands of workers and professionals from this province who lost their jobs after closure of Bolan and Lasbela textile mills?