ADDRESSING WOES OF TEXTILE INDUSTRY

COMPLETE BAN ON EXPORT OF RAW COTTON, YARN, AND UN-PROCESSED CLOTH IS A NEED OF THE DAY.

SHABBIR H. KAZMI
(feedback@pgeconomist.com)

Feb 21 - 27, 2011

Lately, addressing members of All Pakistan Textile Mills Association (APTMA) at the annual dinner, President Asif Ali Zardari called for declaring 2011 Textile Year. Highlighting the importance of textiles and clothing sector in the economic development of Pakistan, he said setting up of garment cities in Karachi, Lahore, and Faisalabad clearly indicates the importance government accords to the sector.

In a letter sent to the President, Central Chairman Pakistan Hosiery Manufacturers and Exporters Association, Saleem Parekh, Chairman Pakistan Apparel Forum, Javed Bilwani and Chairman Value Added Textile Forum, Rana Mushtaq demanded early resolution of the problems facing the sector. They also sought a meeting with the President to apprise him about the sector's roadmap to achieve the objectives as laid down in the Textile Policy.

They are of the view that textile exports from Pakistan can be doubled if the government follows the recommendation made by the value added sector. They also have termed Textile Policy of the government revolutionary and demanded its immediate implementation. Apparel sector has also appreciated President Zardari's announcement to declare 2011 as Textile Year. Apparel sector's representatives hope declaration of 2011 as Textile Year can usher growth of textile and clothing industry and enhance textile exports from Pakistan.

Since all the sector leaders have consensus on strengthening textiles and clothing industry and enhancing its exports it is necessary to clear certain perceptions that have often led to giving spinners the status of 'real textile industry' and manufacturers of value-added products 'ancillary units'. The fact is contrary because around the world value-adding units are given the status of textile and clothing industry.

The value-added sector comprises of over 50,000 manufacturing units whereas APTMA represents 360 members mostly in the spinning business. Share of value added sector is over 80 per cent as compared to APTMA's share of less than 20 per cent in Pakistan's total textile exports. On top of this, value added textile sector employs 18 million workers whereas spinning sector employs less than 0.3 million workers.

Providing details is in no way aimed at undermining the role of spinners but certainly to highlight the importance of value adding units to help the government in coming up with a policy decision regarding imposition on complete ban on the export of raw cotton, yarn and unprocessed cloth. According to the cardinal principal 'value adding sector has the preemptive right on locally produced raw materials'. Countries buying cotton, yarn and unprocessed cloth ultimately becomes Pakistan's competitor in the global markets.

The government should also complete the work on textile cities. Making clusters will help in ensuring uninterrupted supply of electricity and gas at affordable cost. Textile and clothing industry is a continuous process industry and any disruption in electricity and gas supply can lead to millions of rupees losses, failure in meeting orders and above all allowing competitors to snatch Pakistan's share in the global markets.

Reportedly, Standing Committee of National Assembly on Textile has recommended allowing export of cotton and yarn after fulfilling the requirement of domestic industry. The Committee has also directed Secretary Ministry of Textile to submit report regarding availability of cotton and yarn to the domestic textile industry.

Floods damaged the Chinese and Pakistani cotton crops this year. According to Ministry of Food and Agriculture, approximately 0.596 million hectares area was inundated by the recent floods out of total area of 3.2 million hectares. The Ministry estimates loss in cotton production at 2.6 million bales and production for the season will be around 11.4 million bales. Therefore, it is necessary to warn the government that any imprudent decision might cause serious problems for the largest foreign exchange earning sector of the economy.

It may be said that during first half of the current financial year, Pakistan has achieved significant increase in export of textile and clothing. However, it is a fact that this increase has come mainly because of hike in cotton prices around the globe including Pakistan. The country still faces a significant shortfall in cotton availability, the biggest evidence being Pakistan importing substantial quantity of cotton from India.

The closure of textile units particularly in and around Faisalabad due to load shedding of electricity and gas may give an impression that cotton and yarn supply exceeds demand and therefore it would be prudent to export the surplus and earn foreign exchange.

It is necessary to warn the government that the myopic view could have serious implications for the textiles and clothing industry of Pakistan.

It is also necessary to say that government should ensure uninterrupted supply of gas and electricity at affordable cost to industrial units rather than saying that since the supply of cotton and yarn exceeds demand export of these basic raw materials should be allowed. This irrational decision would have adverse impact on Pakistan's economy resulting in loss of jobs, lower GDP, and exports and above all allow Pakistan's traditional competitors to grab shares in the global markets.

Experts have been suggesting complete ban on export of raw cotton, yarn and even un-processed cloth to achieve higher value addition. Certain quarters don't like such curbs but the bitter pill has to be swallowed in the largest interest of Pakistan. Curbs on export of cotton and yarn may hurt the interest of a few but will certainly help the country in maximizing return on each kilogram of cotton produced in the country.

Experts have been saying that cotton production can be doubled in Pakistan without bringing additional area under cotton cultivation.

The data released by Pakistan Cotton Ginners Association (PCGA) has provided a pleasing surprise especially for the residents of Sindh. Sanghar has emerged the largest cotton-producing district of Pakistan. Cotton producers of the area deserve appreciation by the government as well as textile and clothing industry of Pakistan.

Reportedly, till January 31 this year arrival of phutti at ginning factories was equivalent to 1.569 million bales. This translates into 14 per cent of total cotton produced in the country and 42 per cent of the silver fiber produced in Sindh province. Sanghar has achieved this milestone by beating Rahim Yar Khan District, which enjoyed the status of largest cotton producing district till recently. This fall can be attributed to reduction in area under cotton cultivation to 0.6 million acres from 0.8 million acres mainly due to switchover of farmers to cultivation of sugarcane from cotton. This transition has been made due to construction of sugar mills in the Rahim Yar Khan as well as adjoining districts.

It may be said that farmers have a right to cultivate whatever they like. However, the decisive role has to be played by the government to protect the interest of all the stakeholders. Since cotton and sugarcane are the competing crops, the attitude of spinners and sugar mills encourages the farmers to cultivate what seems better profit yielding.