State Bank governor advises textile sector to raise production

KARACHI (January 07 2004): State Bank Governor Dr Ishrat Hussain has advised the textile manufacturers and exporters to raise productivity and reduce wastage to compete in the free trade era.

Addressing the 'certificate distribution ceremony' at Pakistan Hosiery Manufacturers Association (PHMA) on Monday evening he said that instead of demanding subsidies and concessions from the government the industrialists should stand on their feet.

“Gone are the days of subsidies, which would now be a trade offence under the WTO regime,” he added.

Responding to the points made by PHMA chairman Imran Ali Sabir about high cost of electricity the SBP Governor said that due to the draught situation Wapda had to buy costly electricity from independent power producers (IPPs) but with the improvement in water flow, the rates would gradually come down.

However, the cost of electricity is not more than 3 to 4 percent of the total cost, he added.

Referring to the complaints about high rates of cotton and yarn he said that in the days of cheaper cotton and yarn, exporters made huge profits and did not utter a word. “The present high cotton rates are not for you only but prevail internationally,” he remarked.

Elaborating the steps taken to support the textile value-added sector the Governor said that cotton yarn had been excluded from the purview of export refinance scheme and entire refinance is not consumed by the value-added sector.

He recalled that in 1990 export of cotton and grey cloth constituted 70 percent of the total exports.

The phenomenon is now reversed and export of yarn and cotton make up only 30 percent of the exports.

The export of yarn is now stagnated at only $1 billion. Cotton is now exported only after meeting the domestic needs.

About steps taken by the government to reduce cost of production of exporters Ishrat said that the cost of financing had been reduced from 21 percent to five percent. The refinance rates have come down to 3 percent from earlier 13 percent.

“Is this not enough to make you happy ?” he asked. ” If not, it is because you have become accustomed to asking,” he told the exporters' lot who had invited him to seek further subsidies and concessions for export.

The SPB Governor said he felt that the cost of production could only be reduced by doubling productivity through increased performance by employing skilled and educated workers on market-based salaries.

Citing the SBP example, he said that the Bank has employed about 200 to 300 highly qualified persons on higher salaries who are employing their knowledge to solve day to day problems.

The Governor presented a four-point formula as remedy for textile sector frequently complaining of high cost: increase productivity; pay good wages to workers; reduce wastage; and improve efficiency. The doubling of productivity would automatically reduce the cost, he added.

Citing example of China, Dr. Ishrat said that the secret of Chinese success in textiles lies in skilled and disciplined workers and in the fact that not a single pound of cotton is wasted. Bangladesh exports $4.5 billion textiles although it does not grow a single boll of cotton.

Listing the 'plus points' of the textile sector Ishrat said that $4 billion investment had gone into balancing, modernisation and replenishment of the sector.

This has resulted in availability of better quality and long staple yarn and contamination-free cotton. In addition to this, exporters are free to import and export any variety and volume of cotton and yarn.

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