Textile woes

Textiles are still the backbone of Pakistan’s exports, still the largest of its industries, that much is undeniable, but that it is in crisis, is equally undeniable. A report in the latest issue of this newspaper’s Profit magazine indicates why, The crisis can best be understood by the plain and simple fact that the country is not exporting as many textiles as before, especially to traditional markets in the West. The crisis is not just about the owners’ profits, but the country’s ability to pay for its imports, GDP growth and the creation of jobs for the burgeoning population. That the government can help is a given, but how much more attention it can give is open to debate.

One thing the government cannot do is create demands in the West. The government may help by ensuring that electricity supply is regular and reasonably priced, that tax rebates are made on time and that cotton seed is updated and developed at government institutions. It can even play a major role in making the burgeoning private-sector academia fulfill the industry’s research needs. It can even galvanize its trade attaches in various embassies to seek new markets for textile exports, but it cannot force the Western consumer to buy Pakistani textiles. It also cannot force foreign governments to forego demanding compliance with labour laws and environmental standards, as such demands are made in accordance with the will of the electorate. After all, the customer is always right. However, the government should also remember that apart from looking at industries like software, on which it is already relying, the country needs diversification.

After all, there is little that can be done to push textiles, for it seems that the rapid growth of the past has been replaced by a need to maintain market share, and that is being made difficult by both regulations by importers which act as non-tariff barriers, even as actual tariffs are imposed, particularly by the USA. That is a problem only the importers can handle, and the industry’s home government can only do so much. The bringing down of the costs of various inputs can help to an extent, for the textile made-ups market is intensely competitive and thus price elastic. However, the basic reason is sluggish demand abroad. Pakistan should be aware of China’s example, that low tech exports are not a protection against being kicked in the face by the West.