It was shocking to read in daily Business Recorder dated 14 June 2008 that the Federal Government has finally abolished the research and development (R&D) support programme for textile sector. This decision is merely based on the following reasons.
1. Rupee depreciation against US dollar as the dollar has reached Rs 68-69 as compared to Rs 61-62 a few months ago and exporters will be the main beneficiaries of the rupee depreciation.
2. Dr Shamshad Akhtar, Governor of State Bank of Pakistan, has informed the Economic Co-ordination Committee (ECC) that Pakistan textile exports dipped by 3.14% in nine months to US $7.765 billion from US $8.017 billion for the same period of last year. Such a huge drop in textile exports resulted in serious repercussion on balance of payments as this textile sector traditionally contributes 67% to total exports.
3. The textile sector is an inefficient sector of the economy of Pakistan. The above decision to abolish R&D support to textile sector has been made considering the following ground realities:
1. Instead of saying that the textile sector is an inefficient sector of the economy of Pakistan, the Government should come forward to protect it as textile contributes over 67% to Pakistan's annual export income. It provides livelihood to about 1.5 million farming families and provide jobs to almost 50% of the labour force in the country. Textile introduces Pakistan in USA, EU and Asia and brings major portion of foreign exchange in Pakistan.
2. In true sense, Pakistan textile industry will need an annual investment of around US $1.5 billion for BMR and expansion over the next three years to meet the challenges of the post-WTO regime.
3. It is easy to say that the textile owners are making huge profit but the fact is different. Take an example of textile garment where the commitment to dispatch the goods to foreign buyers in a target time and meeting requirements of quality are the success or failure of any textile garment unit. If the target time is not met, the goods will have to be dispatched by air which would cost almost double the export price and people will be shocked to know that many textile owners have done this just to save textile industry and to retain Pakistan's good image abroad.
Further there is a requirement of foreign buyers that the textile garment will have to maintain international standards of quality, environment etc and their compliance are being monitored by them. It is not easy to run textile industry.
4. Yes, apparently Pakistan textile exports dipped by 3.14% in nine months to US $7.765 billion from US $8.017 billion for the same period of last year. Government should thank and appreciate textile sector as they have maintained export figures under the current scenario of uncertainties and tough WTO regime. Had textile sector not received R&D support from the Government, export might crashed down drastically.
5. Yes, rupee depreciated, even touched around Rs 71 per US dollar, but now it is around Rs 66 per US dollar and may come down also. So it is not the criteria for compensating exporters against R&D support. Further, why one side is being considered, why you are forgetting that textile sector is also in need to import raw materials, chemicals, packing materials and trimming materials, machineries and equipment etc, as per the requirements of foreign buyers.
6. If textile sector is enjoying with R&D money then why 40% garment units closed down as reported in daily Business Recorder dated 13 January 2008. Please note that only patriotic textile industrialists are still facing challenges, so please do not under estimate them and let them do business and retain their investment. Based on the above cited facts and figures, the Government should re-visit their decision and renew R&D support to the textile sector.
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