APTMA demands lower interest rates, criticizes energy policy

KARACHI: The All Pakistan Textile Mills Association (APTMA) on Thursday asked the government to drastically reduce interest rates to 6-7 per cent to align with regional economies.

Low rates, per the APTMA, could create a competitive and conducive environment for export-oriented industries to grow, adding that the current high rates are crippling this industry.Addressing a press conference, Chairman of APTMA South Zone Zahid Mazhar said that over 30 per cent of textile mills have closed due to exorbitant energy costs and sky-high interest rates. Many others have curtailed production by up to 50 per cent.

Highlighting the textile sector’s contribution of 60 per cent to total exports and 12 per cent to GDP, Zahid expressed concerns over the declining export figures. Textile exports plummeted from $19.33 billion in FY22 to $16.5 billion in FY23, despite the government’s ambitious target of $60 billion exports in the next three years.

The APTMA chief attributed the escalating production costs to the unfavourable business environment and called for an export-friendly policy framework. He cited Bangladesh as a prime example, where lower production costs have fuelled a surge in textile exports.

The cost of production in Bangladesh is lower than in Pakistan while the cost of production in Pakistan is double than that of the countries in the region, he added.He said that the State Bank of Pakistan has reduced the interest rate twice only by 2.0 per cent. The interest rate is at 19.5 per cent, which is still high. If the policy continues like this, exports cannot increase.

Zahid said that IPPs are the reason why electricity is expensive. The capacity charges of IPPs are now being paid to the tune of Rs2,000 billion. If the capacity to generate electricity is more, the industry should also invest more. The country has a production capacity of 43,000MW of electricity, while only 23,000MW of electricity is being supplied.

Zahid said that the APTMA has requested the government to re-examine its contracts with IPPs. He pointed out that the government is working on an ill-advised and impractical plan of cutting off gas supply to captive power plants by January 2025, adding that the national grid is incapable of meeting the textile sector’s electricity requirements.