Pakistan’s beleaguered textile and apparel sector is finally getting some support from the government. Dr. Asim Hussein, Advisor to the Prime Minister on Petroleum and Natural Resources announced that the government will be prioritizing uninterrupted gas supplies to the industry, in an attempt to get the export earning sector back on track. The government is preparing a roadmap to revive the country’s textile industries, Hussein told members of the Pakistan Textile Exporters Association (PTEA).
Gas shortages and rolling blackouts have crippled the competitiveness of the sector. Exports are down year-over-year and owners are reportedly unable to meet order deadlines due to the energy shortages. There have been reports of RMG units moving into Bangladesh and other countries.
Hussein promised that textile exporters will experience fewer gas shortages during the coming winter than they did during the previous winter. He explained that the government intends to ease shortages through higher imports of liquefied natural gas (LNG). The government is also pursing the construction of two pipelines to ferry gas from the Middle East to major manufacturing regions, though these projects are expected to take several years.
The government is also intending to reduce the tariff on gas paid by the sector. In an attempt to appease domestic opponents, tariffs on individuals have been lowered in recent years, but the government has increased rates on industry, in order to compensate for the lost revenue. This policy has severely disadvantaged the textile sector – in essence, gas is too expensive and there’s not enough of it. When it is available, gas in Pakistan is 182% more expensive than gas in neighboring Bangladesh.
This is not the first the Pakistani government has pledged to support the textile and garment sector, but with the nation experiencing its first year-over-year export decline in almost a decade, it’s possible that the promises will be taken more seriously than the historical record would indicate. Without additional support, contraction will likely continue, as Pakistan loses out to Bangladesh, Vietnam, and other low-cost sourcing options.