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Pakistan Pleas for Government Aid to Boost Textile Sector

Pakistan’s textile organizations are seeking the government’s assistance to boost what they believe is a flagging sector.

The country’s textile exports dipped 16 percent in March (year-over-year) despite the boon the European Union’s granted GSP Plus status was supposed to bring—namely because the nation’s energy crisis impacted productivity and factories struggled to meet foreign buyers’ demands. Exports for the fiscal year to date are down 30 percent.

The All Pakistan Textile Mills Association (APTMA) said the government should take ownership of the textile industry. “The textile industry has become unviable because of the heavily subsidized textile industries in the competing countries of the region,” said APTMA chairman SM Tanveer, according to Pakistan’s Business Recorder.

Apart from declining exports, APTMA leaders cited concerns about losing the domestic market and capacity closures.

“This situation has arisen out of high cost, energy shortages, old technology, absence of zero rating, shortage of raw materials, marketing disadvantages, absence of institutional support and policy-implementation divide,” the Business Recorder reported APTMA group leader Gohar Ejaz as saying.

A shortage of energy in the country meant massive loadshedding for energy producing facilities, distribution companies and factories, which at times spanned 16-20 hours a day, and kept workers from working. The duration of gas loadshedding was increased by two hours and now the Punjab textile industry is getting gas for just six hours a day.

The Pakistan Yarn Merchants Association (PYMA) has implored the government to take emergent measures to boost the nation’s exports.

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A PYMA company chairman said distribution companies could overcome the energy shortfall with proper strategy and planning by taking stock of actual demand area wise, industry wise and market wise. Longer daylight hours now that the season has changed could also be used advantageously.

The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has called for awarding special status to the export oriented value-added textile industry. “No tax-no refund’ formula should be applied on value-added textile chain, including it in zero-rated regime in order to get rid of liquidity crunch,” central chairman Ijaz Khokhar said in a statement.

In March, Pakistan’s cotton exports also went down 29 percent in value terms and 13 percent in quantity. Cotton cloth exports were down 14.5% in value terms and 37.6% in quantity. Garment exports slipped 5.2% in value and 12.6% in quality, according to the Business Recorder.

A further export decline could be on its way, according to Tanveer. “Already Pakistan’s growth has been stagnant to 22 percent against 160 percent of Bangladesh during 2008-2013,” he said.

The laundry list of factors hampering the sector’s growth, Tanveer said, include gas supply suspensions, power-cuts, disinvestment in machinery, weak implementation of textile policies, dwindling export incentives and unrealistic rupee appreciation. Economists estimate that the rupee is overvalued 5 percent against the U.S. dollar and 18 percent against the euro.