Textile: divided we fall

Of all the things the country's textile industry suffers from, a lack of integration is one of the most fundamental issues. There is a clear disconnect in the value chain; the different segments take the form of business lobbies that have mutually exclusive and, at times, opposing interests. This divide is most evident between APTMA and the downstream value-added sector.
This column has written on the differences between the spinners and the readymade garments manufacturers (Read: "Good for the goose, bad for the gander," Published on November 11, 2015). At the heart of the issue was the imposition of 10 percent regulatory duty on yarn imports which hurt the cost of production of the value-added sector but helped the yarn manufacturers domestic sales. So how did this work out for everyone?
BR Research spoke to a couple of APTMA veterans, who mentioned that the duty imposed on yarn hasn't had the desired effect and yarn imports have actually increased significantly over November. Reasons speculated for this were quality requirements not being met in light of the damaged cotton crop, and further subsidization by India.
More importantly, however, APTMA maintains that the downstream industry isn't being harmed because the duty is on yarn imports that are used in products sold domestically. For yarn that is imported for export purposes, there is no duty (known as DTRE). While this sounds good on paper, one intuitively feels that it would be near impossible to implement this policy in reality.
BR Research spoke to the Chairman of Pakistan Knitwear and Sweater Exporters Association, who had a lot to say against the "mafia" of the spinners. He expressed his disdain at the political influence wielded by APTMA and their ability to manipulate policies in their favour.
About the DTRE policy, the Chairman confirmed that this policy is "impossible to implement." He added that when placing an order, the buyer designates everything, including which type of yarn is to be used in the finished product - imported or domestic. He said that no country in the world places duties on the import of raw materials, and that the spinners have damaged the textile industry.
The problem is that there is no single body to represent the interests of the whole industry. There will always be certain areas that are common to all - lack of electricity and gas, high cost of doing business, pending disbursement of refunds, lack of incentives, etc. On these, Pakistan's textile industry stands united. But on issues where there are countervailing interests, the decision-making process should take into account all stakeholders.
Take the examples of Sri Lanka and India - two of Pakistan's leading competitors. There are single dynamic textile oversight bodies that contain textile associations from all links in the value chain, and take on board the relevant government departments as well. Platforms such as these give a voice to all stakeholders and result in policy formulations that are conducive to the well-being of everyone. Was that platform supposed to be the Ministry of Textile in our case?