KARACHI, May 7: The leadership of the textile industry has taken strong exception to SBP governor Dr Shamshad Akhter’s recent statement in which she allegedly criticised the industry for being inefficient, and stated that it should die by allowing inefficient units to merge with the efficient ones.

Speaking to newsmen here on Monday, Pakistan Bedwear Exporters Association’s chairman Shabir Ahmed and Pakistan Readymade Garments Manufacturers and Exporters Association (South Zone) chairman Abdur Rahman said such comments do not befit the highest office of the State Bank.

On the contrary, they said it was because of wrong policies of the government that the textile industry has suffered.

Sudden hike in the rate of interest, frequent power breakdowns, and other bottlenecks are making the cost of production higher, they said.

The PBEA chairman informed that bedwear exports had touched a historic $2 billion last year; therefore, there was no reason to label the industry for being inefficient.

However, during current year exports have suffered and may not even cross $1.8 billion against the target of $2.3 billion.

“This situation is presently being witnessed in the entire textile industry, including towels, garments, hosiery.”

The question is why such a reversal has taken place, Shabir Ahmed asked.

As a matter of fact, he stated, tight monetary policy of the SBP in order to control inflation and a host of other factors have caused a negative impact on exports.

Abdur Rahman said high interest rate has increased the risk of default as financial cost of the industry has suddenly increased many-fold, thereby challenging its viability and profitability.

“Therefore, it can be also be stated that higher interest rates may have also contributed to higher inflation as prices of manufactured goods have also increased.”

The high banking spread, presently reaped by scheduled banks at the cost of their depositors who are not getting their due return on their investments, is one of the major factors that savings are being discouraged in the country, he said.

The State Bank reported on May 2 that the spread between average lending and deposit rates of all banks stood at 737 basis points at end-March 2007, which means that average lending rate was 11.29 per cent and average deposit rate 3.92 per cent, he pointed out.

The textile industry, he said, is the largest job provider up to 38 per cent, having a nine per cent share in the GDP and 63 per cent share in total exports.

“If the industry has to be closed, what will happen with the workforce presently engaged in the textile industry. Are there any more job opportunities”? he questioned.

They leaders said that the textile industry was being termed inefficient without looking into its causes and facts.

As a matter of fact, they maintained the problems of textile industry have direct relationship with ineffective and arbitrary manner the government departments provide electricity, gas and other services.

Unlike other industries, they said a textile unit requires 24-hour power as its system could not become functional immediately once a unit stops functioning for one reason or the other, and many steps have to be taken before restarting the operations. This causes great hardship and also makes the industry inefficient, they added.