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Pakistan: Textile Mills Shutter as Business Becomes Unviable

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Conditions in Pakistan’s ailing textile industry are hovering dangerously close to fatal as rising costs of doing business have rendered continuing work unfeasible for many mills.

And those mills are starting to shutter—voluntarily—which will leave millions of workers jobless.

Pakistan’s textile sector has struggled in recent years facing energy shortage and affordability issues, raw material shortages, substandard labor conditions and problems provide necessary financing for manufacturers to accommodate those business costs.

The country’s All Pakistan Textile Miss Association (APTMA) said it has decided to shut down the textile industry as incurring the losses of operating mills only partially because of the energy availability is no longer feasible.

APTMA chairman S.M. Tanveer said the mills decided on their own to halt operations and that the cost of doing business in the textile industry there has “hit through the roof.” And the burden of incidental taxes, provincial taxes, inefficiencies and punitive withholding tax have only exacerbated conditions, he added in a statement.

“The business of textile industry has become unviable in Pakistan,” Tanveer said.

APTMA appealed to Pakistan’s government earlier this month to lower the import duty on polyester fiber to zero from its present 6 percent so the country could diversify its currently cotton-based sector and so it could have a chance to produce the export-led textile and keep domestic consumption affordable. No reports of progress on that request have yet been revealed.

Last week, the National Electric Power Regulatory Authority’s (NEPRA) announced a 1.86 rupee ($0.02) reduction per kWh to the electricity tariff, but according to Tanveer, the government’s imposed surcharge of 3.60 rupees ($0.04) per unit lessens the positive impact of the recent tariff reduction.

Tanveer explained that Pakistan is paying as much as 45 percent more in electricity tariffs than its regional competitors.

Textile mills in Khyber Pakhtunkha, Lahore, Faisalabad, Multan and Karachi have decided to cease operations and lay off millions of workers, APTMA said, because they have little left to offer their international buyers in the face of regional competition.

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