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Pakistan: Exports to Flourish Under Soon-to-Be Implemented Textile Policy

Once Pakistan’s new growth-geared textile policy takes effect, likely in early July, the country expects to see exports take off, increasing in value by at least $1 billion in the first year and $2 billion in the second.

Pakistan’s Minister for Textile Industry Abbas Khan Afridi announced the textile policy in May and said the plan is designed in part to raise the nation’s textile exports to the U.S. to $26 billion over the next five years to 2019, a number double that of its current $13 billion in total exports.

In an interview with Pakistan’s The Nation, Afridi said, “Labour cost is increasing in China and the investors have to move for the cheaper labour markets. So it is the golden opportunity for Pakistan to increase its exports and we will do that.”

The country has several plans in place to stimulate the local textile industry, one of which is providing incentives for the value-added sector of the industry.

“We are going to establish business center in Islamabad where different brands (companies) would be able to establish their offices and that will facilitate foreign buyers to come to one place and meet the vendors and place their orders,” Afridi told The Nation.

In another effort to incentivize industry players, the Minister said the government increased the rebate on textile imports from 3 percent to 4 percent, and said he was in favor of eliminating sales tax from the textile industry in order to help stimulate the sector, according to The Nation.

Under Pakistan’s Export Finance Scheme of Textile Ministry, the interest rate on bank loans for the textile sector has also been decreased from 9.5% to 7.5%.

The country’s textile industry had been neglected by previous governments and, as a result, fell behind its regional competitors like Bangladesh, which exports roughly $22 billion worth of garments, Afridi said. To help get the country’s garment industry up to par, the government launched a training scheme for the value-added sector and all available institutions in Punjab and other provinces will be used for the training.

Pakistan has been facing an ongoing energy crisis and Afridi said he was encouraging factory owners to establish power plants that will run on coal and provide uninterrupted power supply. Electricity at these power plants would cost no more than Rs 9 ($0.09) per unit, Afridi told The Nation, and he added that use of these plants could be made possible in the near future.