Today, a role reversal of sorts has taken place with global lenders calling the tune in Islamabad, and Pakistan’s public debt standing at a staggering $10.6 trillion. While Bangladesh has better power supply and lower tariffs, Pakistan is witnessing a load shedding of up to 20- hour and heavy doses of tariff hikes to give confidence to the lenders that their money is safe in Pakistan.

Profit margins in Bangladesh tend to be around 30% higher particularly for textile exporters than in Pakistan. Another attraction is tariff – free access to European Union and US markets. Other add-ons from Sheikh Hasina government are uninterrupted and reliable power at 35 per cent cheaper than in Pakistan and tax-free status for the first ten years.

So, no surprise that many manufacturers in Pakistan’s textile hub, Faisalabad, are voting with their feet, as Imran Khan’s dispatch in The Express Tribune says, and they are moving their manufacturing base to Bangladesh.

Tauseef Enterprises of Pakistan has already invested Rs300 million in setting up a textile factory in Bangladesh. Other leading Pak lights like K&M Textile and Cosy International are following its lead. Some companies are simply opening additional manufacturing units in Bangladesh as an insurance against unpredictability at home.

For them the added attraction is relatively low cost of doing business in Bangladesh. ‘Labour costs in Bangladesh are cheaper and the workers tend to be more efficient’, points out a Pakistani business manager, who is worried that international buyers are increasingly ‘reluctant to place orders with firms located in Pakistan’. Today’s global business is guided by ‘just-in-time’ model and it means there is aversion to business risks.

Bangladesh is still a LDC – least developed country. It is an agriculture based economy and faces the vagaries of monsoon year- after- year. Yet, the country’s leadership did commendably well to build a viable industrial base virtually from a scratch, particularly in the textile sector. This is the reason why international buying houses have set up their base there forcing not only many Pakistani manufacturers but also Indian manufacturers to travel to Dhaka to grab orders.

A mass exodus of Pakistan’s textile manufacturing from Faisalabad to Dhaka is a prospect Islamabad should be worried about. Such a migration, guided purely by economic factors, will ruin the lives of millions of people dependent on the textiles sector directly or indirectly for their livelihood.

Textile industry contributes more than 60 percent to Pakistan’s total exports valued at around US $5.2 billion and made the country the 8th largest textile exporter in Asia. It accounts for almost 46 percent of the total industrial out and provides direct employment to 38 percent of the work force in the country, which is estimated to be 15 million. For the GDP, its contribution is 8.5 percent.  Pakistan today has 396 textile mills out of which 315 are spinning, 44 weaving and 37 composite units. These spinning mills have production facilities of texturing, mercerizing and dyeing of yarns; weaving mills have sizeable number of air-jet looms, and the composite mills have manufacturing facilities from spinning to finished textile products under one roof. The total installed capacity is 9,661,366 spindles, 61,608 rotors, 10,452 Shuttleless/Airjet Looms and 1897 conventional looms. The product line ranges from spun and open-end yarn, to grey, printed dyed fabrics and bed linen.

Apart from power what hinders industrial growth in Pakistan, finances are also a problem. The interest rates have seen a rise of more than 150 percent in the past three- four years and are way ahead of interest rate regime in Bangladesh and even India. The sector also suffers from severe technological obsolescence, insufficient R&D, falling cotton crop, and an unclear path forward, says Abida Mukhtar, a consultant based in Lahore.

The situation can be salvaged if the government of Pakistan formulates a comprehensive textile policy. For this the government of President Asif Ali Zardari must get its priorities right.