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Environmental challenges: Exporters and the government?

The government’s responsibility is to construct dams and reservoirs to prevent floods, provide energy to the export-oriented industry at regionally competitive rates, drive research into better cotton seed, and encourage value addition at all levels – argues CEO Gohar Textiles, Pakistan’s leading exporter of home textiles, in discussion with Editors GVS.

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Editors Global Village Space wanted to talk to the CEO of a major vertically integrated textile unit to understand how the recent floods affected the cotton sourcing of exporters from Pakistan. This is how we ended up in a discussion with Mr. Gohar Mustafa, CEO Gohar Textiles, one of the few completely integrated textile units in Pakistan. But the discussion expanded. Gohar knew much about his industry and was passionate about its future that the conversation, like the river in floods, spilled beyond cotton and environmental hazards into the overall competitiveness of Pakistani Industry, its myriad challenges, role, and failure of governments over the past quarter century.

Gohar explained that his vertically integrated textile unit, which employs around 7,000 workers in its manufacturing base in Faisalabad, started to conceive its final product from the stage of procuring cotton staples. Vertical integration means that raw cotton from the earth fields of Pakistan is turned into yarn, and yarn becomes fabric, and the fabric is used for value-added products. Gohar Textiles specializes in home textiles, i.e., bed sheets, curtains, pillow covers, and similar items. During our conversation, we discovered that his design facilities exist across the UK, the US, Australia, and Europe. Surprised, we asked why design teams are spread in many parts of the world. We learned that the final product’s design must synchronize with the taste and needs of the communities that are end users and buyers of the products.

Read more: Dealing with the cotton needs of Pakistan’s textile industry

Faisalabad, the leading textile center of the country, once called Lyallpur, was, in the 1960s, also referred to as the “Manchester of Pakistan.” Then Pakistan’s economy grew at 7-8 percent, reminding many of the 19th-century rise of Lancashire in North of England as the engine of the industrial revolution. Once the main employer in those areas, textiles collapsed, and after the second world war, aerospace and technology were the main employers. Faisalabad has also passed through many phases; it faced massive layoffs in 2018, but after the 2019 pandemic, it took off again. Gohar Mustafa is hopeful that with the right mix of policy, research, and entrepreneurship, this “Manchester of Pakistan” can still regain its lost glory and significantly contribute to the Pakistani economy through exports.

Energy subsidy: Not a favor to the Industry?

What ails Pakistani exports? Expensive energy. This is a simple and perhaps comprehensive answer. Like most textile exporters, Gohar points out that Pakistani governments blundered at some point in forgetting the energy cost factor. Pakistan produces energy at much higher rates than its regional competitors like India, Bangladesh, Sri Lanka, Turkey, and Vietnam. Much talked about subsidy in electricity tariff – as started by the previous Imran Khan government under the scheme of RCET – he argues is thus no favoritism to exporters. Regionally competitive energy tariffs (RCET) should be understood only as a government act to alleviate the effects of its own mismanagement.

Bad politics on building dams

Recent floods have destroyed the cotton crop, necessitating the import of cotton from international markets and increasing the cost of inputs of final products. Had Pakistan developed a series of dams, these would have acted as storage sites preventing or mitigating the massive damage caused to crops, animals, and human communities. And dams would have provided the economical energy Pakistani exporters need to compete with their regional rivals. Gohar believed that geological studies have pointed out several places across Pakistan where the run of the river dams could have been erected. During the current monsoon season, the Indian economy was, by and large, protected from the kind of disaster Pakistan suffered because of the large number of dams available to regulate floods. The fact that we could not develop these dams – reservoirs and run of the river both – only exemplifies the policy failure of successive Pakistani governments.

Read more: Current RCET policy can lead to shutdown of textile industry: PIDE

Failure of agricultural research

But our policy failures extend beyond issues of expensive energy and lack of dams, argued Mr. Gohar. Pakistan failed to invest in agricultural research. Though there is a large agricultural university in Faisalabad, it has contributed little to the improvement of cotton seeds in Pakistan. The result is that Pakistan’s cotton staple is not more than 27 mm in length and the cotton yarn count (that measures its refinement) of more than 40 is difficult to achieve. Indian Punjab, which was once an integral part of Pakistani Punjab in all aspects today, boasts of a longer cotton staple that easily yields a cotton count of 60 or above – thanks to the continuous research Indian governments encouraged. Egyptian and Brazilian cotton achieves counts of 100 or above.

But Mr. Gohar’s punch line comes later when he laments that Bangladesh, which does not even have cotton, has developed an ability to generate $5-6 from every meter of yarn. In case of Pakistan getting $2-3/ meter is the best deal. Bangladesh has achieved that by investing in its labor markets – and has become the region’s most efficient stitching center. Mr. Gohar believes that its the government’s responsibility to encourage and facilitate value addition at every level – from the cotton seed to the final made-up product. But merely talking at government seminars or press conferences may not help. The solution lies in constructing dams and reservoirs to prevent floods, utilizing hydroelectric and wind resources to provide energy to export-oriented Industries at regionally competitive rates, and driving research into better cotton seed. This may be a good start.

Gohar Mustafa represents the third generation of textile manufacturers in Faisalabad. He is an active member of the Pakistan Textile Exporters Association (PTEA). This open-ended discussion was conducted via telephone and is based on the impressions drawn by the editors of GVS; any errors or factual mistakes are the responsibility of the Editors.

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