The textile industry has showed a mixed reaction to the budget speech, with a majority view that it lacks a visionary approach, carries multiple ambiguities and blends the optimism with the pessimism simultaneously. It may be noted that the textile sector has been advocating for immediate financial relief, special treatment on energy (electricity and gas) availability and removal of supply side constraints besides a radical approach on market access issues.
Several pre-budget meetings were held between the government budget planners and All Pakistan Textile Mills Association (Aptma) leadership to develop a consensus on these issues. But the budget speech terribly missed the pre-budget spirit on the issues confronting the textile sector growth since July 2007.
Majority of textile millers, being contacted by the Business Recorder, expressed their wonders over the peanuts offered by the government in the budget. According to them, an end to the central excise duty on viscos was nothing more than a 'formal announcement', as the industry was already enjoying exemption to this effect. It was simply a procedural problem and nothing else, as the industry was supposed to seek written exemption on monthly basis.
Some of the textile circles feared that the federal budget would prove last nail in manufacturing sector's coffin, as the budget lacks a booster for growth of manufacturing sector, guaranteeing job creation over the last four decades.
It may be noted that some 300,000 industrial workers have already lost jobs due to unprecedented load shedding since 2007 onwards. There was a general impression that the government would take radical steps to gear up the manufacturing growth. However, the government has restricted all its steps to declaring the fiscal year 2009-10 as Year of Industrial Revival, they added. One textile miller said the government planners have no idea about the role of textile sector in making and breaking of the national economy. Therefore, the present budget extremely lacks the most urgent steps for stability in textile sector.
Dr Mirza Ikhtiar Baig, Federal Textile Advisor, told Business Recorder that federal budget has focused agriculture and industry against previous government's focus on services sector. According to him, the Corporate Resolution Act (which the state minister on finance said is yet under consideration of the government) would revive the closed units in near future.
Further, he said, the government has announced a clear schedule for 15 Independent Power Producers (IPPs) during 2009-11, which would deal with the issue of load shedding. However, the industrial circles believe that the budget speech is silent on priority exemption to the textile industry until the load shedding phenomenon prevails.
Dr Baig also said that removal of central excise duty on viscos and gradual withdrawal of cross subsidy again suggests that the government has principally agreed to do away with constraints of the industry.
When asked about the financial relief, Dr Baig said it is part of the monetary policy and would be accommodated accordingly in coming July. Dr Baig further added that the government is committed to zero rated exports but acknowledged the fact that the budget speech has failed to explain the procedure to this effect. According to him, the details of the budget would clarify the issue further.
Chairman APTMA Tariq Mahmood said the announcement of fiscal year 2009-10 as the year of industrial revival is a good omen but textile industry demands on reduction in cost of doing business and market access have not been addressed in accordance with the industry aspirations. He said the announcement of Rs 40 billion as industrial support fund does not clarify that what is being earmarked for which sector.
It is also not clear what comes to the scope of Small and Medium Enterprises (SMEs), which is again being focused by the government in the budget. According to him, the budget speech develops optimism by declaring the fiscal year 2009-10 as the year of industrial revival but spreads disappointment simultaneously by missing the measures to bring the textile industry out of woe.
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