Textiles: time to cross the bridge

Addressing the members of the All Pakistan Textile Mills Association (Aptma) in Karachi the other day, Dr Shamshad Akhtar, Governor, State Bank of Pakistan, urged the industry to seriously attend to consolidation of the sector as corporates alone can endure international and regional competitive pressures. With this end in view, she rightly counselled them to focus on achieving economies of scale.
Besides, maybe sensing that the proposal may be misconstrued as being detrimental to the interests of the smaller units, she elaborated upon it maintaining, to the contrary, that mergers and acquisitions did not necessarily mean huddling together of small and large units just for the sake of it. This has reference to her assertion that small-sized enterprises could also benefit by contributing to large-scale export units.
Many and varied, though, the mounting woes of the textile sector as a whole happen to be, they do not appear to stem from one or two problems alone, but to a plethora of them with more and more troubles unfolding at every stage of the industry's circuitous uphill journey. This is not to say that there were no bright interregnums in between. Yet all segments of the industry now seem to be sinking together.
As such the idea the SBP Governor floated can be seen revolving round the concept of the weaker in certain aspects drawing strength from the others' achievements, obviously from the approach of enlightened self-interest. Moreover, mergers and acquisitions now becoming a world-wide phenomenon, basically emanate from the compulsion of circumstances arising in the ongoing process of globalisation, more so from the added thrust of increasing pressure of competition under the WTO regime.
In so far as the Pakistani textile industry is concerned, having once earned a distinction because of its spread and gains, it now, carries a heavy load of unremitting blunders of sorts, right from its very beginning and gradual development as the nation's pride industry in a way.
It will be recalled that it was the country's early planners' unambiguous stress on industrialisation from scratch that soon witnessed a scramble for textile mills, driven by the understandable urge for import-substitution.
Basically there was nothing wrong about putting the abundantly produced cotton in an overwhelmingly agricultural economy to industrial use inside the country rather than exporting it at dirt cheap prices and importing finished products at exorbitant costs in return. It certainly sounded logical but in so far as economic development is concerned, it is not all about logic.
As against this, development activity calls for a clear concept of its essential prerequisites along with the capability of putting them in place. Since no such exercise was undertaken prior to the hastily launched adventure of industrialisation, small wonder grim consequences of the lapse on this count affected the gamut of industrial activity, the textile sector suffering the most because of it.
Viewed from this angle our textile industry will appear to have been developed in a conceptual vacuum. Seemingly, the strategy was inspired by India's industrial scene, marked by textile mills here and there, but as ill luck would have it the galaxy of Indian textiles was evidently misconstrued as being owed only to availability of the silver fibre in abundance as the raw material.
Virtually with no industry worth the name existing in Pakistan, it was a grave error on our part to push ahead all the way from the erratic approach of ad-hoc handling of the entire development process. All that goes with it, including consolidation of this vital sector, seems to have gone unnoticed by successive governments as well as maturing entrepreneurs, the latter probably due to their enchantment with props and incentives.
However, despite its inherent weaknesses, even during the best of times it opted to relegate its crying needs to the background, hoping to cross the bridge when coming to it.
Now that the long accumulated problems have started telling upon its health, as evident from a glaring lack of its competitiveness in the international market, it will appear to have now reached the long elusive bridge. It will be in the fitness of things for it to try to cross it, preferably, by heeding the SBP Governor's timely advice.