And our comparative advantage
Unfortunately, it is not just that the government is sitting idle while the textile industry crashes. It is, rather, that the government’s own actions are harming our traditional comparative advantage, to the point that more than 70 textile mills have shut down in Punjab, with another 100 ready to follow suit unless, of course, the government does something about it. And Finance Minister Ishaq Dar is mistaken if he thinks his usual glass-half-full approach will wash this one clean. He tried to put his usual spin on the matter, of course – creating the impression that textile industry demands had been met – but Aptma was quick to rubbish such claims. They are serious, and rightly so.
Perhaps the wider implications of this textile industry paralysis have escaped the government. The trend since PML-N came to power has seen much of this business either move out of the country or shut down. And since gas suspension and continued commercial non-viability threaten to strengthen this trend, export earnings – already miniscule – will further deteriorate. That means the deficit will widen, not the least because tax collection is not something to write home about either. And that, as always, means more IMF problems. It will also add to unemployment, already high, which is never without a long-term social spillover.
In such circumstances the government should, at least, consider lending Aptma a more sympathetic ear. That they need gas is self evident. Unless this problem is solved no industry will work. There is already a chronic electricity crisis that the government, despite tall promises, has been unable to get a handle on. Urgent measures are also needed to reduce the cost of doing business. Presently, the sector, hardly operating, is simply priced out of the market. Yet the government has not budged on the surcharge on the power tariff or proposed controls on imported yarn and fabrics. And, six months after the budget, there is still no trade policy. It seems revenue, exports, jobs and earnings are just not a high priority for authorities. The way things are going, official action, and inaction, is destroying the textile sector and eating up our comparative advantage.