I have been left completely amazed by two recent statements on the Pakistan Textile Industry by our very senior economic decision makers: First one by a recently retired bureaucrat who during his illustrious career served in the top posts of both the Ministries of Commerce and Industry - He explained to a gathering at a wedding reception that since he is no longer carrying anyones brief, he can openly say that the entire textile industry of Pakistan and its sponsors are a burden on the economy, it should rather be shut down and how during his days in office he used to advise his respective Ministers that they need to avoid meeting the Textile Entrepreneurs, since they are always looking for subsidies, cash grants, waivers, support or relief. In fact, his advice to his Masters at the time being to meet and listen to them only if absolutely necessary and that too preferably with a precondition that if the Ministry accommodates them in any way they in-turn need to undertake not to show their faces again for the next ten years. Second one by none other than our illustrious Finance Minister on a private television channel registering his disgust that while the Pak Textile Sector generated annual trade volumes of around Rupees 150 billion their contribution in shape of corporate income tax was merely Rupees 5 billion per annum. On the first, my only comment being that such a statement just goes down to show the complete lack of understanding (nothing unusual) by a top bureaucrat of the countrys largest manufacturing sector and in reality it just shows the resilience of our textile sector by being where it is today despite having to deal with people like him in the top echelons of power. As for the second, while one can understand a general perception on the prevalent low ratios of direct tax revenues in the country, it is nevertheless rather discomforting to note such a statement being made by someone who surely should have a better understanding on how different sectors are driven by different parameters and why in practical terms each sector needs to be viewed in light of its specific business model, gross margins, related industry norms, global operating standards, related operational constraints and comparative cost of doing business vis-a-vis supply and demand driven price caps on sales When viewing the performance of Textiles, as a sector, from a States perspective and more importantly in defining States own aspirations from this sector, it is imperative that we also take the following factors into account: a) The global history of how Textile as an Industry has evolved over time in other countries and b) The way its core purpose is defined, even today, by other global economies, which support a large textile base. History tells has that developing economies have consciously and successfully used this industry as a stepping stone for achieving their long-term development goals. From UK to the US, European economic powers like France, Germany, Italy, Asian Tigers such as Indonesia, Hong Kong, Malaysia, Thailand and Japan, and now modern day India and China have viewed it as a key industry that provides by far the best capital to employment ratio and why, if necessary, any support measures to keep this large employer solvent tend to be far less expensive/affordable than the alternative, where not only will the State end up spending more on helping the unemployed as a result, but will also have to deal with the darker effects of unemployment per say, which as we know by their sheer nature tend to be extremely counterproductive on the society. The primary role thus of the textile industry, in effect, becomes that of an employment provider and since such a role happens to be more of a global norm than a country specific trend, it means that in-turn within the industry competition gets to be very stiff and operating margins extremely low. For us this implies that given the structure of the Pakistani textile industry that mostly caters in price terms to a low per kilogram unit price (our exports in dollar per kilogram terms are amongst the cheapest in the world), we cannot compete in the international market unless we learn to work with low gross margins in the range of 12 to 15%. Now try working it backwards and you will see that in fact the industry at Rupees 5 billion is in fact contributing very well with its direct tax pay outs However, more importantly, in order to realize the true magnitude of its contribution to the Pak economy and to ascertain that how it happens to be the main engine driving our economy, one needs to also look at its contribution in terms of, a) Large scale employment it supports, b) its total share in the overall national manufacturing capacity, c) its significance in driving the state owned utilities, d) Its strength to drive the other industrial sectors in the economy, and e) last but not least its importance as the main contributor (nearly 70%) to the national exports. Ironically, while we complain and try and run down the contribution of this sector and its entrepreneurs the other countries recognize, laud and genuinely support their home industry. For example, in Indonesia also the textile industry is their largest export earner among non oil/gas industries of the country. Being the fourth most populous country in the world after only China, India, the US, and ahead of Brazil, Indonesia has an estimated population of 232 million, and it relies heavily on the textile sector to provide them employment (The textile sector in Indonesia employs a direct labor force of 3 million workers responsible in-turn for 15 million household members). No wonder, to keep the industry competitive in times of present recession, the Industry Minister MS Hidayat, promptly in January 2009 announced a subsidized and an uninterrupted supply of Gas and Electricity to the industry till such time that the Government feels the global recession is truly over. Even relatively smaller economies like Bangladesh gave a recession related stimulus package to its textile industry. Commerce Minister Faruk Khan set aside Taka 50 billion in the national budget to provide direct relief to stave off the effects of a global economic meltdown on Bangladeshi textile exports. China has been no exception either. The Chinese government continues to place high importance on the textile sector and the employment associated with it, thereby taking measures to ensure it remains profitable. In April 2009, the State Council in Beijing approved the Adjustment and Revitalization of its textile industry calling on the industry to stabilize and open up export markets. The plan anticipates textile production will continue to grow from 2009 to 2013. It plans to provide subsidized machinery replacement to the industry to help it save energy, water, dyes and chemicals, financially support mergers to help the industry revitalize and in the short term increase export rebate rates to help the industry cope with the rising costs of production. India has not been far behind in supporting it home textile industry, which directly employs a labor force of more than 50 million people, The government announced a series of measures ranging from low cost finance, tax breaks and interest free loans on modernization, increased rebate rates, help in energy management, marketing facilitation, encouragement of mergers and acquisitions and providing of improved infrastructure to help the Indian textile industry overcome this difficult period. No wonder they are already seeing a turnaround where Indian textile exports have grown by nearly 8% in the last six months The above gives a pretty good idea on how global textile giants in general and regional big boys in particular nurture cum support their home textile industry. If Pakistani textiles have to compete and grow, the Pakistani government also needs to play its due part. Now no one here is advocating giving subsidies or cash grants, but simply recognition of its services, revenue contribution and a pat on the back would be a good start