Raving incompetence

LAHORE: Trade profile of some major textile exporting countries is very interesting. Textile exports account for nine percent of the total in China, 12 percent in India, 25 percent in Vietnam, 60 percent in Pakistan and 80 percent in Bangladesh.

Another point worth noting is that lowest textile exports in value are from Pakistan averaging $12.5 billion annually; it is followed by Bangladesh with $33 billion, India and Vietnam with $39 billion and China with around $150 billion.

Interestingly, Pakistan’s textile exports are 3 to 12 times lower than the textile exports of all above countries. Yet another fact is that the total exports of Pakistan, including textiles are 1.5 to 6 times less than only textile exports of these countries.

These facts speak volumes about the incompetence of all our economic planners (the incumbents are pursuing the same policies). They did not take cue from other regional economies that made sure their policies delivered.

We might have lived comfortably had the textile centric policy delivered. However, it was bound to fail as the policies favoured vested interests and created monopolies.

A look at the spinning industry that is the most capital-intensive textile sector reveals that it is dominated by one clan and they are closely interrelated. The policies ensured hefty profits on the strength of government subsidies until even the subsidies could not cover their inefficiencies.

This has resulted in closure of 130 spinning mills in last one decade. It is more than 25 percent of the spinning industry.

We add the lowest value to our textile products among all regional economies. This is the reason that countries like Bangladesh and Vietnam consume the same quantity of fibre as we do, but their textile exports are four times higher.

On top of that we failed to add new export sectors and even in textile we confined ourselves to a few products both in basic textiles and apparel. With limited portfolio of textile products, we also restricted ourselves to a few markets, while our adversaries spread their markets around the world.

We are basically in the American and European markets, while the rest of the regional textile players export their products to many Asian and African economies. Bangladesh in fact has even penetrated into huge the Chinese market, where numerous global brands sell apparel stitched in Bangladesh.

Another difference between the regional textile players except Bangladesh and Pakistan is that textile exports make up a small percentage of their exports.

Chinese export machines, automobiles, electronics, home appliances, and information technology. India too has a diverse export portfolio, with pharmaceutical fetching $20.7 billion, IT getting $99 billion, auto-parts generating $15 billion, and textile exports getting the country $39 billion in foreign exchange.

Vietnam exports electronics, light machinery, technology and also entered textile trade at the start of this century.

The problem with textile and clothing is that it is the first industrial sector that is hit in any global recession. Consumers delay buying clothing as they can manage with older apparel.

Their first preference is food, education, health and shelter. This is the reason that countries heavily dependent on textile exports suffer more economically in global recession than countries that have lower share of textiles in exports.

This is the reason that Bangladesh has been hit worst during the recession caused by COVID-19 as its textile exports suffered badly.

People wonder as to why our textile exports performed well than other regional textile exporters. The reason is simple. All other textile exporters of the region are in fashion apparel that has not revived as yet.

Pakistan does not export fashion textiles but is in low value daily use clothing like denim products and polo shirts where the demand has picked up. It is worth noting that the local sales of yarn have increased appreciably while exports have declined.

It may be news for some that the export price of yarn is lower than its domestic price. It is because the foreign fashion apparel makers are not importing yarn as yet while local stitching units are sitting on good orders.

It is however unfortunate that we have not paid attention to some of the most promising export sectors outside textiles. In pharmaceuticals for instance we had a better base than India, but our pharmaceutical exports are only $200 million compared with India’s $20.7 billion.

Even Bangladesh that is a relative new comer in this field exports $3 billion pharmaceuticals annually. Similarly, despite making global standard auto-parts we could never exceed export of $200 million, while India exports auto-parts worth $15 billion. There are many other sectors like halal meat and software where we are operating much below our potential.