The textile industry has been a major source of foreign exchange earnings for Pakistan. The industry was appeased by successive governments through various concessions such as grants and tax-breaks with the presumption that this would help sustain and boost exports in a sustained manner.

However, this did not happen to be the case since concessions were not correlated with any technological parameters, such as improving productivity through the latest machinery and manufacturing techniques.

While the time was good, our textile industry ploughed its profits into real estate and stocks, and failed to modernise its plants and manufacturing processes. The competitiveness of Pakistan’s textile industry has generally been based on local availability of high-quality cotton and experienced, cost-competitive labour. Thus, there was a notion that the textile industry would remain competitive.

However, with time, old machinery and processes created inefficiencies in the industry affecting its competitiveness. Furthermore, nobody imagined countries such as Sri Lanka and Bangladesh would jump into the competition with better technology and improved productivity, and beat us at our own game.

Recently, Pakistan was awarded GSP Plus status which raised hopes that it would help increase our exports. However, that too proved to be wishful thinking.

Presently, instead of admitting their mistakes and putting their house in order, the industry is blaming the high cost of production for reduced competitiveness and stagnated exports at the international level.

Pakistan’s textile industry has also generally been targeting low value-added markets in Europe and North America, failing to move into better-value added products, which could have meant more revenues for the country.

To make the textile industry competitive again, certain steps need to be taken. First, general inefficiencies in operations need to be identified and rooted out. This might include using more efficient electric motors, wires, better-designed and routed piping, and better insulation of hot and cold pipes. Such improvements would help reduce operating costs.

Better building design and a conducive work environment contributes to productivity. Government may provide incentives to firms which remove their operational inefficiencies.

Second, productivity needs to be improved through modernisation. This means acquiring latest equipment from abroad, which requires monetary resources and trained human resource to operate it. To this end, the government would have to enter into a public-private partnership with the textile industry.

An example was setting up the Sports Industries Development Centre (SIDC) at Sialkot with the support of federal government that provided Rs.436 million to execute the project to manufacture latest footballs.

Third, industry needs to identify at macro level, higher value-added products which it can manufacture in a competitive manner at international level. Industry representatives should sit with government and identify the resources and capabilities required in producing higher value-added products. These resources and capabilities may be locally generated or imported through public-private partnership.

Fourth, and most importantly, continuous government support is required but in a holistic manner which incorporates measuring performance at industry and firm level. Level playing field should be provided which provides equal opportunities. Similarly, monetary assistance should be given to tackle manufacturing inefficiencies and for the production of better value-added products.

In sum, a concerted effort is required to make our textile industry competitive again. A roadmap may be drawn against performance parameters which need to be achieved.

Various steps discussed above may be part of such a roadmap and a permanent public-private board may be set up to oversee the implementation and correction of such roadmap over time. Similar steps may be followed in other export-oriented clusters of Pakistan.

ahsanwala@yahoo.com

Published in Dawn, The Business and Finance Weekly, January 29th,2018

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