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Thursday March 28, 2024

Issues in the industry

By our correspondents
July 28, 2017

This refers to the editorial, ‘Textile problems’ (Jul 24). The general perception that the textile industry is enjoying limitless supply of power is extremely inaccurate. The government’s ‘promises of no power outage’ have not been turned into reality. The declining trend of investment in the sector is only because of the energy crisis. In addition, the price of electricity, which is 30 percent of the industry’s conversion cost, is 50 percent higher than the price offered to our competitors. The benefit of the dip in oil prices has not been passed on to the industry which has been bearing the burden of system inefficiencies, theft and the like. Under these circumstances, new investments in Pakistan’s textile industry remain an imprudent proposition. Contrary to the popular belief that the industry exploits labour, the industry surpasses international standards as far as social compliance and sustainability issues are concerned and follows best practices in relevant fields.

Aptma has been asking the government for the extension of long-term finance facility to indirect export as the entire fragmented industry is involved in and contributes to textile exports. The relevant authorities are completely oblivious to the fact that competing countries have incentivised investment as well as production and exports in various forms. In Pakistan, the situation is the opposite. Although policies are announced time after time, they are not implemented completely. The initial textile policy 2009-14 was partially implemented. Similarly, with regard to the 2014-19 textile package, no notification has been issued. Recently, the export-led growth package was announced with much fanfare, but the government hasn’t disbursed or allocated funds to date. To top it all, the textile industry has been deprived of its legitimate tax. Export refunds to the tune of nearly Rs200 billion have not been given back for nearly two years. One of fundamental reasons why the textile sector has not been able to expand export is the FBR’s short-sighted policy of withholding refunds. It may be pointed out that Pakistan’s textile industry is inherently resilient and has, against all odds, been able to not only survive, but contribute to the country’s economic well-being and sustenance. It is most unfortunate that as a result of a lopsided policy and the absence of implementing tools, a vital economic and industrial asset is being harmed. An urgent implementation of government policies, timely disbursement of rebates, removal of surcharges on electricity tariff and bringing RLNG tariff in line with the world if not at par with domestic gas are the solutions through which the government can ensure a vibrant and growing export market. It may be noted that these steps can only be taken by the government.

Shahid Sattar (Islamabad)