A major challenge facing policymakers and bankers is to revive closed units and activate idle capacities in the value-added textile sector, which is projected to be collectively worth Rs150 billion.

“How can a developing country like Pakistan let valuable capital assets go waste like this, even if the private sector owns them,” asked a Karachi-based analyst.

“Lease it; merge it; acquire it; induct professional management; do what you like, but make it operational. It can most certainly be done if banks and the government coordinate and cooperate,” he said.

With the textile policy gathering dust, the textile ministry sapped of powers, the central bank’s regulatory powers weakened and the private sector space tilted to favour a few, much will depend on how quickly the government reorients its policy and practices to work for the larger interest of industry, and on how professionally the private sector conducts its business.

“To blame everything on the government [insufficient energy, delay in sales tax refunds, rupee appreciation] or external factors [slump in export market post-2008] is easy, but not convincing. The skills of textile tycoons with families dominating their businesses come in question when companies fail.”

“The banks have not blacklisted Faisalabad-based groups without a reason. The region’s credit history is far from ideal. Some bankers suspect that loans are taken, not to return them. Why should a bank take such risks when it can get reasonable margins by investing in risk-free Treasury bills,” commented an informed source with an insight into the issue.

While it is important to understand why these high performing units landed in trouble, it is crucial to save some of the most advanced installed textile plants from turning into junk.

In meetings with this writer in Faisalabad — the country’s textile capital — owners of some large sick units argued they have the capacity and the market to double the country’s textile exports in three years, from the current $13bn to $26bn, if they get the working capital to run their plants and a fair deal in the allocation of gas and electricity.

Better known amongst these units were star performers of the past decade, like Chenab, Amtex, Bismillah, Arzo, MSC, Masud Knitwear and Interloop Socks. Innumerable smaller units were also closed or are on the verge of a collapse.

“Other problems contributed, but Chenab Textiles took a major hit when a train load of its consignment was burned to ashes in late 2007 in the chaos following the murder of Benazir Bhutto. This led to a month’s trade suspension during the delivery season in the West. We tried to meet deadlines by airlifting consignments, but the cost and timing worked against the company,” Mian Muhammad Latif told Dawn at the office in a huge complex, complete with international standard display centres, in Faisalabad.

“We spent an extra Rs330 million on shipment, but missed deadlines. Once order cancellations started, the company got in trouble with banks. One thing led to another, and our exports have dipped to hardly a billion rupees today, from Rs14 billion in 2007. We ration whatever little gas we get, and run different machines in rotation to keep them in working order.”

The problems of many bigger sick units compounded, according to the Pakistan Textile Exporter Association, as they were suppliers to high-end textile companies in the West, severely hit by the global recession.

Explaining the ineffectiveness of the textile ministry during the period of stress, an insider told this scribe from Islamabad that the textile policy 2009-14, which addressed these issues, could not be implemented because the cash-strapped government did not release funds to clear the piling liabilities.

The package announced by the Yousuf Raza Gilani-led government in 2010 carried special duty-drawback rates, repayment of earlier research support fund and subsidy on long-term loans etc.

“Look at the record of our correspondence. We have been fighting the textile industry’s case, but with little success. “Expectations were high from the Nawaz-led government, but it seems to be encircled by a small band of people with little interest in revival of sick units or ideal capacities ,” he added.

When the State Bank of Pakistan was approached to explain its role in channeling banking resources to productive sectors it opted to evade the media.

“The SBP’s capacity to play the role of an effective institution has been compromised. It failed to address sectoral and geographical distortions in the lending policies of the banking sector. I told current acting SBP governor Wathra to build capacity, desist endorsing interventions of the finance ministry and ensure the banking sector plays its role in reviving the economy by better allocation of peoples’ savings,” the CEO of a private bank commented.