EDITORIAL: Surely, it’s a little bewildering that in the midst of all the talk about Pakistan’s textile sector being flush with export orders and finally operating at 100 percent available production capacity textile group exports suddenly shrank 6.75 percent month-on-month (m-o-m) and 3.12 percent year-on-year (y-o-y) in February 2021. The mystery only deepens when you consider that this decline followed a 10.79 percent y-o-y jump in January 2021. One very obvious reason for this change of trend is the resurgence of Covid-19 and return to lockdowns in many parts of Europe, Pakistan’s prime textile export market mainly because of the Generalised System of Preferences (GSP) Plus facility.
And even though textile producers had only just boasted that most companies were pretty much over-booked till June this year, they might now have to brace themselves for more bad news down the road as well. For not only could a lot more of the available orders also be cancelled, now there’s really no telling what might happen after June, especially in light of warnings of a possible third wave of the coronavirus originating from central Europe and spreading to the periphery even as the vaccines are being rolled out.
Yet no matter how badly everybody has been caught off guard by the virus once again, it still explains only half our problem. According to the Pakistan Bureau of Statistics (PBS), the squeeze in February was led by a decline in value-added exports. And since the government was informed in advance about the many bottlenecks in the supply of yarn, which is used in the production of value-added goods that fetch the best prices among textile exports, its own decision-making paralysis is also a big part of the problem. As recently as a fortnight ago, the commerce ministry was pushing the government to green-light duty-free import of yarn from Central Asian Republics (CARs) through Afghanistan because the usual fallback market, India, was out of the question for the time being. Yet no decision has been taken so far.
And it doesn’t inspire much confidence that the PM’s adviser on commerce, Razzak Dawood, didn’t have the answer when the press asked him about the February numbers and that he needed “some time to comment on it.” If the issue has really been discussed threadbare, as he so clearly put it, then why hasn’t the government realised the urgency of the matter so far and why does a final decision continue to evade us even after the damage has started? Once it addresses these issues and then goes on to finalise the much-awaited textile policy sometime later, then it will have to go on and solve problems like the usual delay in announcing the cotton support price that sometimes forces farmers to opt for other crops, the shocking decline in cotton cultivation area that has pushed us from net exporters to desperate importers, and of course the complete absence of a coherent policy to deal with a sector that feeds the country’s premier export industry.
The downtrend is now expected to continue at least till the end of the fiscal year. That upsets not just expectations but also revenue projections, on which the whole International Monetary Fund (IMF) reform programme and bailout facility stand. Even if the pandemic has delivered a painful punch to the textile sector at a very sensitive time, the government’s own lack of focus has also played no small part in the whole affair. It almost beggars belief that something so important has been allowed to languish so far down the priority list at a time when the government tries to make as much noise as possible all the time about the need to shore up national reserves. But that is precisely what happens to popular rhetoric when the ruling party spends more time in political feuds than honouring its promises.
Perhaps the one silver lining on this otherwise pretty dark cloud is that the pandemic has forced a similar situation on most producers and exporters, which means there is still time to solve some of our more urgent problems like where to get our yarn from to forestall the value-added sector collapse. But unless the government finds the political will to bolster the textile sector, it will never graduate to its true earning potential.
Copyright Business Recorder, 2021
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