Textile mill owners on Thursday criticised the government's reluctant approach to accommodate the industry, saying they were fighting for their survival in an unfriendly business environment. They said that they were spending more time on lobbying the government than looking after their businesses, adding that as a result of non-responsive utility agencies and banks, the domestic industrial growth had been compromised.
President Zardari, they said, had been a beacon of hope for the industry for the past two years. However, he "is now busy with political issues more than the economic ones". Therefore, utility departments and banks "are engaged in arm-twisting the industry, leading to closure of many mills in the recent past". An absence of uniform growth strategy had created deep rifts in the textile industry as well, they said.
According to them, the mill owners in the Sindh zone were not ready to share energy resources with the Punjab zone. "A bitterness is quickly developing between the two zones at a time when election is around the corner".
Citing examples of regional competitors such as Bangladesh, China and India, textile mill owners said that India spent Rs 35 billion on restructuring with a focus on cotton spinning mills, extending a moratorium for two years on bank loans. They said that India had also offered five-year working capital facility on account of price volatility in global markets and slowdown in Europe.
In Bangladesh, they said, the government had increased Cash Support Fund from 5 percent to 10 percent. And in China, they said, the duty drawback rates had been been increased to facilitate the textile industry. In Pakistan, it seemed the government was acting against the industry. "It failed to provide uninterrupted energy supply to textile industry, where energy is 40 percent of the conversion cost." "The banks have tightened the noose on the textile industry. It seems that the SBP has no control over banking spread, ranging between six to seven percent against two percent in India. The Credit Control Advisory committee has become ineffective, as the government uses 90 percent of the credit. The industry non-performing loans, on the other hand, have crossed 50 percent of the total loans."
The textile circles were of the view that the federal government should avoid strengthening the impression that it was acting against the Punjab-based textile industry. Instead, they said, the Ministries of Finance and Textile Industry and the SBP should act on war footing to steer the industry out of crisis. They said the SBP should immediately restructure industry loans for two years. The federal government, they said, should ensure energy security of the industry.