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Growth is an illusion for textile millers

Updated April 16, 2018


The hostility of big business to democracy in Pakistan seems to have diluted but the textile millers of Punjab do not conceal their deep rooted antagonism towards the democratic experiment in general and the PML-N government in particular.

“Whatever its virtues globally, in Pakistan, democracy has failed to deliver. In nine plus years since General Musharraf’s exit the total debt has doubled from $42 billion to $85bn and the twin deficits have ballooned to unsustainable levels, thanks to the government’s botched priorities”, said Gohar Eijaz, an articulate leader of the textile lobby.

“How can the government proclamations’ of progress convince me when I had to lock down my plant and fire thousands of workers?” asked a second generation businessman who closed down his textile spinning mill in Faisalabad last year owing to viability reasons.

Many leaders of the textile sector told long tragic tales of suffering, culminating in lock outs and finally scrapping of textile plants, in a meeting with Dawn.

At the All Pakistan Textile Mills Association (Aptma) Punjab office in Lahore last week there was tension in the air as Secretary General Anis ul Haq shared data and past presentations highlighting the significance of the textile sector and problems threatening its future.

‘How can the government proclamations of progress convince me when I had to lock down my plant and fire thousands of workers?’ asked a second generation businessman

Gohar Eijaz dismissed the perception of economic progress. He believed that through face lifting and building roads/bridges in Punjab the PML-N has created ‘an illusion of growth’ in the country.

“All through the past decade the environment has been hostile for textile in Punjab. This shattered confidence. Several dozen plants have closed down and I foresee many others crumbling under the weight of rising costs soon”, commented another disgruntled businessman.

He told Dawn that many textile millers want to pull out but for bank involvement. “Exit is easier for those who invested from their own pocket”, he asserted.

Commenting on the possibility of the sector’s revival this group of businessmen reacted sharply. “We lost our overseas buyers and credibility. It would be impossible. We are paying through our nose for the government’s follies. There is nothing we can do to save the situation when the game is rigged against us”, a businessman who moved to Punjab from Karachi in the early 1990s commented.

Dr Hafiz Pasha, an economist and former finance minister, believes that the economy indeed has worsened significantly under the PML-N government. In his recently launched book ‘Growth and Inequality in Pakistan’ he cited several factors and identified slippages that drew this conclusion.

Some relevant portions from the book are: “Driven by a stagnant tax-to-GDP ratio, mounting public enterprise losses and persistent subsidies for the power sector, the overall fiscal deficit has increased to an average of 5.8pc of GDP over the last five years.

“The overall public debt which was brought down to 57pc of the GDP in 2007-08 has again shot up to over 67pc by 2016-17 … consumer inflation moderated … in part due to a change in base year of CPI from 2000-01 to 2007-08 with under reporting of inflation in house rent, electricity and gas price.

“Stagnancy in exports and unsustainable imports due to an increasingly overvalued exchange rate put Pakistan current account in stress….Overall; the economy has shown little dynamism since 2007-08”.

Without overtly advocating reversion to direct rule, the textile millers of Punjab pulled out historic growth data to prove that stability and industrial expansion has been greater under, dictatorial rule.

In contrast, the Pakistan Business Council, advocacy platform of big business, threw its weight behind the PML-N government on tax reforms and the amnesty scheme. Following in its footsteps the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) and several chambers also announced their support.

“Politics is not our business but we have come to realise that an elected government with a broad support base is inherently better equipped and more invested in removing road blocks to higher sustainable growth in Pakistan, than a dictatorship”, a big boy of business in Karachi commented.

“I don’t mean to say politicians are perfect. Often they are self indulgent, resent meritocracy, mismanage and misgovern. They take no interest in institution building.

“Yes, the PML-N hierarchy is arrogant and inaccessible but it has made a difference as far as the economy goes. Despite all that is wrong Pakistan is blipping on the world’s investment map of after a long time. This is no mean achievement”, he argued.

Commenting on the change of hearts in corporate Pakistan, a tycoon in Lahore had a different take. “It is not a matter of choice for corporate Pakistan. The fact is that the deeper establishment has dumped the civilian elite. In transformational phases in the past we were always approached.

“Can you believe I do not recognise the Core Commander of Lahore? He did not bother to call on me. This time round no one has been contacted by Rawalpindi for any kind of input. My class is feeling left out and hence is soft on politicians”, he regretted.

Another top banker who has expanded into other sectors defended the ruling party. “How can anyone deny that under PML-N rule the country has been propelled out of stagnation and slowly but surely is on an upward growth trajectory. The GDP growth rate has almost doubled from over 3pc to about 6pc. Yes manufacturing is nowhere close to its potential but the investment sentiments are positive”, a corporate head contended.

Published in Dawn, The Business and Finance Weekly, April 16th, 2018