DR. KAMAL MONNOO Often these days, I am confronted with a sense of growing cynicism on the word 'structural reforms, where many think that it has simply become a buzzword without really defining what precisely it refers to. Fair enough, because the underlying scope of 'structure indeed is very broad based and needs to be explained in context of institutional management. To put it plainly, when one talks of structural reforms, these entail providing a framework where decision making becomes objective, professional, merit-based, non-political, sustainable, practical (near-term), visionary (long-term), non-ad hoc and targeted towards achieving the goals, as laid down by the apex body (government, corporation, group, organisation, firm, etc). So, the next question then is that how does it imply in terms of improving governance in Pakistan? In trying to answer this, I have today selected an example that compares the functioning mechanism and subsequent performance of respective Textile Ministries/Governments of Pakistan and Bangladesh - textiles as we know are now crucial to both these countries and need to play a pivotal role if the dream of an export-led growth is to be achieved by these densely populated Muslim nations of South Asia. The year 2010-11 is proving to be a unique year for cotton, because not only in terms of prices and return on harvest it has been declared the best performer of 2010, but also the world is going through an unprecedented cotton demand cycle, which presents a huge opportunity for countries like Pakistan and Bangladesh to increase their national exports and to reap profits from the resultant foreign exchange revenue inflows, employment generation, and investment and growth. However, to optimise this opportunity the Textile Ministry has an important role to play in order to ensure that in a scenario where supply of cotton is constrained, prudent policy measures are taken that enable optimum value addition of the national produce. Sadly, no such proactive steps were taken by our ministry. In spite of a short crop, our cotton is being exported, no ceiling on yarn exports have been worked out to facilitate stability in domestic yarn supplies, and no real efforts have been made to timely source cotton supplies from other international stations. Bangladesh in contrast, where they depend entirely on imported cotton, the government we saw was quick to move to minimise the effects of increasing global cotton prices and its shortages. The Bangladeshi government started booking and importing cotton as early as April 2010 from Africa, India and Uzbekistan to help maintain smooth supplies to its spinners and in turn yarn supplies to its weaving and knitwear exporters. Even the governments of India and China stopped their cotton exports to avoid choking of their home spinning and ancillary industries Like in Pakistan, the Bangladeshi textile sector is also the largest export-oriented manufacturing sector of the country, employing 1.80 million people, most of whom are women (not the case in Pakistan though). With no real cotton crop of its own, it has already crossed $13 billion in textile exports that are growing at a healthy annual pace of 30 percent. Pakistan, on the other hand, is amongst the top five cotton producers of the world and ironically has not only fallen behind Bangladeshs exports in value terms, but more alarmingly also in terms of growth and value of each kilogram exported (a measure used to ascertain a countrys productivity and value addition capabilities). The Bangladeshi government actively supports its textile industry. It recently supplied a bailout package to 270 closed production facilities in order to restore their productivity. A training programme for 40,000 workers and officials is conducted every year and the state through the ministry provides merit-based cash incentives to the small and medium-sized exporters of up to 5-10 percent on their total value of exports. The Bangladeshi banks, which are still predominantly state- controlled, follow the classical pattern of using their resources to support industry, promote growth and investment, and employment generation and to then use the returns to reward its savers. The textile exporters and spinners are allowed finance of up to 90 percent of the pledge value determined on prevalent market rates. Whereas, in Pakistan we are facing a culture in which banks are not willing to finance more than 50 percent of the commoditys market value (thus putting an unnecessary strain on industrial working capital requirements), and instead diverting their liquidity towards governmental borrowing, in the process sadly crowding out the private sector. (Alarmingly, the states borrowing at 64 percent of GDP has now crossed the legislated upper limit of 60.) Stimulating any meaningful domestic investment in recent years in the countrys textile sector has been yet another failure of our ministry. In contrast in Bangladesh, ably supported by the government through a mixture of measures ranging from attractive finance, revenue incentives and tax breaks, the pace of textile machinery investments stands as the highest in the world. The German Engineering Federation (VDMA) and The Textile Machinery Association report that in 2009 to 2010, machinery exports to Bangladesh rose at a healthy rate of 10 percent. The surge in its purchases due in large part to significant increases in expansion and modernisation investments made by its mills, represent a 181 percent increase in import of modern weaving machines - Bangladesh added 5,273 machines in one year as compared to 2,073 machines by China, being the second on the list. Needless to say that such investments have a compounded positive effect that in turn generates a global interest for investing in Bangladesh. Just in the last six months, notable Foreign Direct Investment (FDI) relating to textiles in Bangladesh being: 1 Germany-based Amann Group - a producer of high quality sewing and embroidery threads - collaborating with Bangladeshs Standard group to set up a modern thread manufacturing plant employing 35,000 people, 2 Japan-based zipper manufacturer YKK Corp announcing a $30 million expansion, and 3 India-based Arvind Ltd - denim and shirting manufacturers - joining hands with Bangladeshs Nitol Niloy to set up a plant near Dhaka employing 15,000 people - no such luck for Pakistan Unlike our Textile Ministry, the Bangladeshi government strives very hard by adopting a visionary approach based on expanding its textile industrys global outreach. One of its main objectives is to lessen its dependence on the US and the EU markets. Through direct support and government-sponsored marketing endeavours the Bangladeshi exports (in 2009-10) are now growing significantly to new markets: Turkey 28 percent, Japan 134 percent, Australia 84 percent, South Africa 5 percent, China and Hong Kong 41 percent and Brazil 15 percent. Other markets where Bangladeshi exports increased include Saudi Arabia, South Korea, India, New Zealand and Taiwan. All this has been made possible by providing a private-public partnered management structure to Bangladeshi textiles where decision making is done based on national interests, rather than under the influence of powerful ruling feudal, pressure groups, lobbyists or politically influential players. Numerous textile associations play their due role by the weightage assigned on the value of export revenue they command. The government after taking input from all stakeholders then takes its decisions through a dedicated policymaking board (comprising of competent, well reputed and experienced private sector professionals and bureaucrats), which determines solely on long-term development goals of the industry and on maximising Bangladeshs social and revenue returns The writer is an entrepreneur and a political economist. Email: kamalmannoo@hotmail.com.