Garments exports likely to fetch $50bn if govt continues support

ISLAMABAD: Garment sector has urged the government to continue with its various subsidies to support its plans to invest up to $7 billion for generating over 700,000 jobs and fetching $20 billion in exports, with a target to achieve $50 billion in exports by 2026.

All Pakistan Textile Mills Association (APTMA) Patron-in-chief Dr Gohar Ejaz has chalked out a plan that envisages achieving a target of $50 billion in exports by financial year 2026 via the new investments and installation of new garment plants.

However, to attain the $50 billion target in the next four years, the government has been urged to continue with adequate supply of energy at regionally competitive tariffs, and ensure availability of working capital.

Ejaz also urged the government to continue TERF (Temporary Economic Refinance Facility) like facility for Rs500 billion ($2 billion) to facilitate investment with a debt equity ratio of 80:20 that must include building and infrastructure, as 50 percent of the cost of garment factories was on these items.

And to this effect, 500 new entrepreneurs require working capital and TERF-like facility too.

“The textile industry has already committed to establishing 1,000 garment plants. And each plant will consist of 500 stitching machines at an investment of $7 million and will be able to produce garments for exports of $20 million per annum, while generating employment for 700 workers,” he said.

The vision of “Road to $50 billion Exports” prepared by Dr Gohar Ejaz unfolds that the total investment would be jacked up to $7 billion generating annual exports of $20 billion and providing employment to well over 700,000 workers. Under the vision, 1,000 garments plants would be established near major textile producing cities like Lahore, Sheikhupura, Faisalabad, Kasur, Multan, Sialkot, Rawalpindi, Karachi, and Peshawar.

So far, the textile industry has invested $5 billion owing to which an additional capacity of $500 million per month has been added due to the TERF scheme through 100 new projects.

The current capacity is not fully utilised due to energy supply and quality constraints for the last 6 months at approximately $300 million per month. However, existing capacity can add $800 million per month and $10 billion per annum to exports.

The State Bank of Pakistan half-year report 2021-22 showed that exports of readymade garments grew by 23.1 percent in H1FY22, compared to 5.5 percent growth in the same period last year.

It said that the development was consistent with the expansions underway in the textile sector, with the industry looking to achieve its $21 billion export target for FY22.