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Economies shine due to constant check on pulse - PRGMEA
Apr '09
We, the stakeholders of Pakistan's textile industry, are amazed by the inactivity shown in the policymaking process. We have been told several times that the eagerly awaited textile policy is now ready but it will now be announced some time in June, as it is being given “final touches”.

We have been pointing out that textiles exporters were facing difficulties for a couple of years now and textile exports were showing a downward trend even before July 2008. Now a recent news article emphasize that about 700,000 jobs have been lost and more than 300 textile units have been closed over the past two years.

News also point out that some local industrialists are shifting their units to China due to numerous tax incentives and superior access to the world markets.

It is very appropriate to point out here that China has increased rebates on exports of textile products several times since August 2008 due to global financial crisis. The Chinese government is also providing free land for creating factory premises and there is no condition of paying income tax by the investors.

Now as global recession is starting to bottom out and the major retailers rebuild their stocks, China's textile exports surged 82 percent in March from February, according to China's National Development and Reform Commission.

Beijing has also stockpiled huge inventory of domestic cotton and have benefitted due to low prices of cotton in the international market. Experts also point out that 83 percent of China's huge trade surplus since 2001 is entirely contributed by its textile industry.

India, on the other hand, have also announced several incentive packages including increased subsidies, interest rate cuts, moratorium on re-payment of term loans and several other incentives. It is now looking to explore alternative markets like Japan, South Africa and Latin America to counter demand contraction in key export markets like the US and Europe.

The situation for Pakistan's textile industry is very unique indeed. On one hand we are hit by job cuts and mill closures because of lack of export orders and on the other the price of raw cotton has jumped by about 33 percent since December 2008 thus making the upstream value added sectors totally uncompetitive.

Governments' inaction to the current situation can be gauged from the fact that pending R&D claims from June 2008 have still not been fully settled despite repeated assurances from the authorities.

It is indeed very inspiring to see countries several times our size acting in tandem with market conditions and macro-managing their economies effectively while our policymakers take years to give final touches to their policies.

We must realize that economies shine not because of their sheer size; they shine because of a constant check on their pulse and by policymakers' quick economic management decisions.


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