December 24, 2006	Sunday	Zilhaj 02, 1427

KARACHI: Despite the fact that the government has been introducing reforms to implement liberalisation and deregulation with the objective of streamlining and simplifying systems by removing bureaucratic snags but the textile sector feels that it has been pushed deeper into quagmire as the system is still too cumbersome.

Being the largest industrial sector of the country, the textile industry has highest weightage be it exports, employment or share to GDP. It used to deal with three ministries but from last year a separate textile ministry had been set up adding another step in the system.

In the past we used to deal with 15 windows belonging to MoC, MoF and Minfal but after the establishment of textile ministry five more windows have opened up, lamented a textile tycoon.

As per liberal government policy, cotton could be freely imported from any country of the world. However, when it comes for importing cotton from India the industry has to undergo tremendous problems and run from one ministry to another.

Cotton consignments from India through Wagha border were required to be sprayed with insecticide before clearance by the Minfal, but importing the same cotton through sea did not subject to this condition.

The textile industry says imports through Wagha border cost Rs18,000 in truck freight whereas it cost Rs60,000 per container when imported by sea through Karachi port.

It alleges that this is being done to discourage import of cotton from India in order to protect the interest of growers. When essential commodities like onion, ginger etc., could be imported from India through Wagha, why not cotton.

The government’s claim of liberalisation of the economy is totally false because hurdles and obstacles are being created by vested interest even after a policy decision taken by the government to allow free import of cotton, the industry observes.

Similarly, when it comes to deregulation it is worst than ever as the textile industry has to approach half a dozen ministries and departments, including State Bank of Pakistan and individuals to get their issues resolved related to cotton or finance.

Some solutions may have been found by these ministries for the problems confronting the textile industry but so far the core issue of high cost of inputs remains unresolved. Every time the industry was asked to approach another ministry and even the Central Board of Revenue (CBR) offered a patent answer go by the rules and regulations. After failing to get any sensible answer or solution the industry approached the SBP but here even harsh treatment was meted out to it.

In the first place the industry is normally abused of not maintaining proper accounts and secondly it is told by the SBP governor that you had been ‘playing wolf.’

However, the industry is of a firm believe that now the wolf has come as exports have started declining across-the-board and our economic planners continue to give such sermons which only suit text books.

Things still hang in balance as the industry has been asked to wait till December 31, 2006 when Tariq Saigol committee submits its suggestions for short-term remedies. As in the past, the industry believes, things will keep moving in the same manner till the next budget when the government will come up with some measures but not before it ensures its success on macroeconomic indicators at the cost of industry and exports.

The textile industry mostly has upgraded its technologies and capacities by taking bank loans when interest rates were as low as four per cent which now have gone up to 14 per cent. However, when the issue was taken up with the economic managers they offered a very funny theory claiming interest rates were still very low.

Another funny situation the industry is presently confronting with is diverse theories being applied by the scheduled banks and the State Bank. The former are reluctant to extent any loans to the industry on the plea that the textile sector is suffering losses and the later claims that the industry is making profits.

The industry also complains about defective monitoring of credit and its repayment system being run under the name of Credit Information Bureau (CIB). Due to any reason if the industry does not pay an instalment the CIB report it to the SBP and thereafter no bank is authorised to give loan to that unit. But a strong argument is being forwarded by the industry that in many cases there are minor disputes which results in stoppage of instalments but the SBP says it a cautious note to the banking circles.

It is also being claimed by the industry that presently around 99.9 per cent of the industrial units’ names are appearing in the CIB and as per existing rules they are not eligible to get more loans from any bank.