Pakistan’s textile industry is pinning high hopes on the country’s newly sworn-in government of Prime Minister Imran Khan for the revival of the textile sector – relying on it to fix the financial damage the industry has suffered through dwindling exports.
In its manifesto, Khan’s victorious party Pakistan Tehreek-e-Insaf (PTI), raised the hopes of the business community – notably exporters – that Pakistan’s economy would be put back on track by reviving the textile sector, which contributes around 60% to the country’s total exports.
In its governing blueprint, the PIT promised to resolve Pakistan’s chronic energy problems and encourage value-added exports such as the garment sector, besides introducing cascading tariffs on raw materials and finished goods to move production towards these more expensive products.
According to Ali Pervez Malik, chairman of the All Pakistan Textile Mills Association (APTMA) Punjab zone, there are two key issues that need to be addressed in the short-term: firstly, the high cost of energy; and, secondly, introducing a zero-rated regime for textile exports.
“If the government fails to do such things in its first 100 days, the industry would continue suffering with exports treading the downhill course,” he says.
Payment of ‘stuck up’ funds with the Federal Board of Revenue (FBR) is another issue which needs government’s immediate attention, to guarantee liquidity for the exporting sector, he adds. Exporters have had to pay advance tax, which they are repaid at a later stage. When the FBR – the revenue collecting agency – delays refunds, exporters face cashflow issues which have a knock-on effect to the business cycle.
According to Anis ul Haq, secretary general of APTMA, the government must attach top priority to ensuring viability of the industry by resolving long-standing energy-related issues, and by bringing new investment into the sector as well as guaranteeing availability of raw materials – particularly cotton and polyester. He proposed putting in place a fast-track refund payment mechanism to release the tied-up amounts to exporters. The government could do all this immediately by issuing executive orders, he suggests.
Haq says: “If the government succeeds in doing all this, we may add US$4-5bn of exports in a short span of time – within a year – gradually increasing export volumes to US$35bn from the existing US$13bn, in five years.”
He claims: “This is all do-able and we can easily achieve this goal provided the government – unlike past regimes – fulfils its promises made in its manifesto, restores the viability of the industry and provides an enabling environment to the stakeholders.”
Talking about the long-term policies, Malik suggests the government should formulate an aggressive policy to encourage investment in the textile sector.
“We need to increase investment rates to 30% of GDP from the existing 15%,” he says. “By taking such steps, the government can increase exports by US$3-4bn in one year.”
According to Haq, the government should also work to depoliticise the institutions such as FBR and the Trade Development Authority of Pakistan.
“There should be the right person for the right job in such important institutions,” he says, claiming that recent governments have appointed heads of institutions like the FBR and Trade Development Authority of Pakistan on a political basis. APTMA says this practice is detrimental to its industry and the government should seek to appoint only professionally capable people to lead such organisations.
He calls for the renegotiation of the free trade agreements with China and other countries to incorporate proposals from Pakistani exporters.
Commenting on the government’s election pledge to create 10 million new jobs, strengthening international trade, revitalising the textile sector and boosting exports, the APTMA chief says: “Only time will tell, to what extent the government comes up to their expectations in the first 100 days.”
