Dawn: Monday, 04 May, 2009
WE, the stakeholders of Pakistans textile industry, are amazed by the inactivity shown in the policymaking process. We have been told several times that the eagerly-awaited textile policy is now ready but it will be announced some time in June, as it is being given ‘final touches’.
We have been pointing out that textiles exporters were facing difficulties for a couple of years now, and textile exports were showing a downward trend even before July 2008.
Now a recent news report emphasises that about 700,000 jobs have been lost and more than 300 textile units have been closed over the past two years. The report also pointed out that some local industrialists are shifting their units to China due to numerous tax incentives and superior access to world markets.
It may be pointed out here that China has increased rebates on exports of textile products several times since August 2008 due to the global financial crisis. The Chinese government is also providing free land for creating factory premises and there is no condition of paying income tax by the investors.
Now as global recession is starting to bottom out and major retailers rebuild their stocks, China’s textile exports surged 82 per cent in March from February, according to Chinas National Development and Reform Commission.
Beijing has also stockpiled a huge inventory of domestic cotton and has benefited from low prices of cotton in the international market. Experts also point out that 83 per cent of Chinas huge trade surplus since 2001 is entirely contributed by its textile industry.
India, on the other hand, has also announced several incentive packages, including increased subsidies, interest rate cuts, moratorium on repayment of term loans and several other incentives. It is now looking for exploring alternative markets like Japan, South Africa and Latin America to counter demand contraction in key export markets like the US and Europe.
The situation for Pakistans textile industry is very unique indeed. On the one hand, we are hit by job cuts and mill closures because of lack of export orders and, on the other hand, the price of raw cotton has jumped by about 33 per cent since December 2008, thus making the upstream value-added sectors totally uncompetitive.
The government inaction in the current situation can be gauged from the fact that the pending research and development claims, since June 2008, have still not been fully settled despite repeated assurances from the authorities.
It is indeed very inspiring to see countries several times our size acting in tandem with market conditions and macro-managing their economies effectively while our policymakers take years to give final touches to their policies.
We must realise that economies shine not because of their sheer size; they shine because of a constant check on their pulse and by policymakers’ quick economic management decisions.
Tuesday, April 28, 2009
Monday, April 20, 2009
Duty-free access for textiles
DAWN, Karachi Thursday, 09 Apr, 2009
I WOULD like to draw readers’ attention to the Obama administration’s proposed duty-free access in the US for Pakistans textile goods, which is a sheer mockery of the administration’s claim to help Pakistan.
According to media reports, President Obama last week said, while unveiling ‘New Strategy for Afghanistan and Pakistan’ (March 27), he would strongly support duty-free access for Pakistani textiles and apparel produced in certain areas bordering Afghanistan.
Under the new trade preference, duty-free access would be granted to textiles and apparel made in certain parts of the tribal areas and the NWFP.
In addition, a series of products would be excluded from the duty-free benefits, including cotton knit shirts and cotton trousers (which are the main products being exported to the US from Pakistan).
The House version of the bill also includes a complex system for verifying that textile and apparel plants in Reconstruction Opportunity Zone (ROZs) that must actually comply with core labour standards.
Several obvious conclusions can be drawn from the above. First, no such industry exists on the border areas of Pakistan and Afghanistan and under the current situation no entrepreneur would even be interested in setting up a unit even near to the proposed ROZ’s.
Second, the labour available in those areas is either unskilled or does not have any know-how of textile or garment manufacturing. Third, the products to be granted duty-free access include items which are either not being made in Pakistan or their share is negligible.
Third, the bill proposes a ‘labour official’ to be named by the Pakistan government for “developing and maintaining a registry of textile or apparel -exporting enterprises” and coordinating a monitoring programme which would be actually conducted by the ILO (International Labour Organisation).
Our textile industry is very sceptical of such a policy, while the US importers are already warning that such a policy would be rather ineffective and expect widespread malpractice from Pakistani exporters.
We strongly urge our government to take up this matter with the US administration, otherwise Mr Obama’s dream to turn suicide bombers into ‘stitching machine operators’ will not be realised, at least for this generation.
I WOULD like to draw readers’ attention to the Obama administration’s proposed duty-free access in the US for Pakistans textile goods, which is a sheer mockery of the administration’s claim to help Pakistan.
According to media reports, President Obama last week said, while unveiling ‘New Strategy for Afghanistan and Pakistan’ (March 27), he would strongly support duty-free access for Pakistani textiles and apparel produced in certain areas bordering Afghanistan.
Under the new trade preference, duty-free access would be granted to textiles and apparel made in certain parts of the tribal areas and the NWFP.
In addition, a series of products would be excluded from the duty-free benefits, including cotton knit shirts and cotton trousers (which are the main products being exported to the US from Pakistan).
The House version of the bill also includes a complex system for verifying that textile and apparel plants in Reconstruction Opportunity Zone (ROZs) that must actually comply with core labour standards.
Several obvious conclusions can be drawn from the above. First, no such industry exists on the border areas of Pakistan and Afghanistan and under the current situation no entrepreneur would even be interested in setting up a unit even near to the proposed ROZ’s.
Second, the labour available in those areas is either unskilled or does not have any know-how of textile or garment manufacturing. Third, the products to be granted duty-free access include items which are either not being made in Pakistan or their share is negligible.
Third, the bill proposes a ‘labour official’ to be named by the Pakistan government for “developing and maintaining a registry of textile or apparel -exporting enterprises” and coordinating a monitoring programme which would be actually conducted by the ILO (International Labour Organisation).
Our textile industry is very sceptical of such a policy, while the US importers are already warning that such a policy would be rather ineffective and expect widespread malpractice from Pakistani exporters.
We strongly urge our government to take up this matter with the US administration, otherwise Mr Obama’s dream to turn suicide bombers into ‘stitching machine operators’ will not be realised, at least for this generation.
Misconceptions about Pakistan’s textile industry
I would like to highlight several misconceptions on Pakistan’s textile industry through this letter. Many times I come across well educated gentlemen who point out that textile industry is always asking for concessions and is a burden on our economy. This view is totally incorrect. Our textile industry is a major foreign revenue earner, largest employment generator and the highest tax payer segment in our economy. It is the only manufacturing sector that makes the country proud by introducing its products to leading companies all around the world.
It is true indeed that the industry does asks for certain concessions from time to time but the fact of the matter is that textiles is a labor intensive sector and wherever in the world there is textile industry it is always always protected directly or indirectly because its employment generating nature. The idea behind free trade is to concentrate industries where they have natural advantage thus making products economical for all but unfortunately our successive governments have been going against this theory and have tried and failed repeatedly to make other industries parallel to textiles. Although it is very important for Pakistan to diversity its product base but to do this on the cost of an industry which has a natural advantage makes no sense.
I am sure that all stakeholders would agree with me when I say that textile industry is ready to play its role in the economic uplift of the country in this dire time of need. All we want is to get GSP+ facility from EU and a proper FTA with USA for our products. If these two treaties are penned properly, we are more than sure that our textile exports would double to touch US$ 20 billion in next 4-5 years thus eliminating the need of begging for financial aid from anyone or putting any burden on our economy.
All we want from our government is to provide a level playing field vis-à-vis our global competitors and if this is provided we are sure that the textile industry will lead Pakistan out of these dark times.
It is true indeed that the industry does asks for certain concessions from time to time but the fact of the matter is that textiles is a labor intensive sector and wherever in the world there is textile industry it is always always protected directly or indirectly because its employment generating nature. The idea behind free trade is to concentrate industries where they have natural advantage thus making products economical for all but unfortunately our successive governments have been going against this theory and have tried and failed repeatedly to make other industries parallel to textiles. Although it is very important for Pakistan to diversity its product base but to do this on the cost of an industry which has a natural advantage makes no sense.
I am sure that all stakeholders would agree with me when I say that textile industry is ready to play its role in the economic uplift of the country in this dire time of need. All we want is to get GSP+ facility from EU and a proper FTA with USA for our products. If these two treaties are penned properly, we are more than sure that our textile exports would double to touch US$ 20 billion in next 4-5 years thus eliminating the need of begging for financial aid from anyone or putting any burden on our economy.
All we want from our government is to provide a level playing field vis-à-vis our global competitors and if this is provided we are sure that the textile industry will lead Pakistan out of these dark times.
Taliban Exploit Class Rifts to Gain Ground in Pakistan
I could not agree more with Jane Perlez and Pir Zubair Shah’s article published on April 16, 2009, as I had came to the same conclusion after reading the complete text of ‘Nizam-e-Adl regulation 2009’ which seems like a well thought-off scheme by the Taliban to hit a soft spot on public’s imagination i.e., to provide swift justice to masses. Pakistan’s civil society in general and the judiciary in particular should take notice that the onus of this regulation is on a simple fact that justice has been delayed too long. I sincerely hope that Pakistan’s judiciary should read between the lines of this regulation and realize that there is a strong need for judicial reforms otherwise the Taliban’s scheme of playing to the masses will definitely take hold once public realizes that the Qazi courts are disposing cases much faster than our conventional judicial system.
The politicians, especially the provincial government of NWFP, who came to power on a secular vote, are first to be blamed for this. All the major political parties, except one, have been completely myopic as they have no idea that they have signed their own execution order. The PPP led government is only paying lip service by giving the message to the west that “if we go, you go”, while trying to get support from the ignorant masses for what it has done. The main opposition party, PML-N has their own agenda which, in my humble opinion, would be unknown even to them. The army has been stretched to its limits because of tension with India and the ongoing fighting in FATA. Impression is given from the media that general public is content with the fact that peace will come to their doors through this deal. The ‘silent middle class’ remains confused and silent as ever. Only a few are speaking out against this and they may also be deemed ‘infidels’ by these militants.
While the west, especially Americans are constantly urging us to “do more”, yet they are unwilling to open their market for a country which has barely a total of US$ 20 billion in exports.
As a thinking Muslim, I do not agree with Taliban’s philosophy. I am not prepared to be taught Islam by some illiterate militant and fearing the worst for my children, I have decided to take up the only weapon I know how to use; my pen or rather my keyboard !
The politicians, especially the provincial government of NWFP, who came to power on a secular vote, are first to be blamed for this. All the major political parties, except one, have been completely myopic as they have no idea that they have signed their own execution order. The PPP led government is only paying lip service by giving the message to the west that “if we go, you go”, while trying to get support from the ignorant masses for what it has done. The main opposition party, PML-N has their own agenda which, in my humble opinion, would be unknown even to them. The army has been stretched to its limits because of tension with India and the ongoing fighting in FATA. Impression is given from the media that general public is content with the fact that peace will come to their doors through this deal. The ‘silent middle class’ remains confused and silent as ever. Only a few are speaking out against this and they may also be deemed ‘infidels’ by these militants.
While the west, especially Americans are constantly urging us to “do more”, yet they are unwilling to open their market for a country which has barely a total of US$ 20 billion in exports.
As a thinking Muslim, I do not agree with Taliban’s philosophy. I am not prepared to be taught Islam by some illiterate militant and fearing the worst for my children, I have decided to take up the only weapon I know how to use; my pen or rather my keyboard !
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