All Pakistan Textile Association (Apta) Chairman Adil Mehmood has said Pakistan's stellar growth charge has taken the textile spinning industry as its unfortunate victim.
Banks are reaping the benefits of insanely high spreads, fertiliser companies enjoy feedstock gas rates as low as 36.77 PKR/MMCF and the textile sector excluding the spinning sector all have been provided a helping hand in the form of Research and Development (R&D) support or long-term finance for the Export Oriented Projects(LTF-EOP).
Sadly, spinning has been left behind as a forsaken child. He said this here in the statement that a short primer should suffice. Yarn is the primary product of the textile industry. The production and export of the value-added goods in the textile sector depend upon the supply of yarn.
Without yarn even an idiot can deduce one can make no fabric, no garments and no processing. Now, it is interesting and bewildering to note that those who make polyester, essentially a commodity used to make yarn, are eligible for R&D support.
As I see it, then those who make commodities are adding value while we spinners who make yarn from the polyester then must be destroying value. The perverse logic of this R&D support to polyester manufacturers escapes my mind. He said the race against time for the spinning mills of Pakistan had already started and mills were closing down daily.
"In a few years, it will dawn on us as a nation that the consumer will lead growth without an industrial base and export oriented growth strategy has led us nowhere," he said.
The textile industry was the major contributor to China's big trade surplus. It saw a 129.2 billion dollar trade surplus last year, accounting for 71 percent of the nation's total. In the first quarter of 2007, the textile industry's trade surplus reached 27.28 billion dollar, accounting for nearly 60 percent of the total surplus.
He said that in stark contrast to China, Pakistan's current account deficit has gone up to 7.379 billion dollar during the first eleven months of the current financial year, aggravating further the balance of payments situation of the country. Furthermore, the country's trade deficit has soared to 12.26 billion dollar in the July-May period of 2006-07, which has already surpassed the government's projection of 9.4 billion dollar for the whole year.
He said that the main component of the country's exports, textile products have not grown as much as expected. I will reiterate that as yarn producer's close down the whole chain is being adversely effected making our export situation gradually worse.
Analysts are already forecasting that current account deficit would aggravate further by the end of the current financial year on the back of a record trade deficit for the whole year, which analysts believe could be near the $14 billion mark, he added.
He said that Bloomberg titled "Pakistan aims to raise 15 billion dollar from asset sales in 5 years" seems like our strategy is simple: sell everything. In the same article the ADB points out that the current account deficit was a potential risk to the country's medium-term economic prospects.
To err on the side of caution, should not our economic managers at least think twice before dismissing us spinners outright? Do not the rising trade deficit numbers and falling textile export numbers paint a worrying picture, he concluded?