Policy making at a snail’s pace

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.