Rs 333 billion have allocated for this purpose
By AMANULLAH BASHAR
May 08 - 21, 2000
The textile industry in Pakistan is poised to achieve $4.8 billion
exports at the end of June this fiscal.
This was stated by Mohsin Aziz, Chairman of All Pakistan Textile Mills
Association at his recent visit to Karachi Press Club with an objective to seek media
cooperation in building up image of the textile industry. The target of $9 billion for the
current fiscal set by the government in the budget is however well in sight this year. He
said that the textile industry, which contributes over 65 per cent of the total exports,
has the potential to multiply foreign exchange earnings provided it is supported by the
firm government policies. Mohsin Aziz accompanied by leading textile industrialists said
that the industry could not cross the barrier of $5 billion mainly because of frequent
changes in the policies. He said that consistency in policies is a pre-requisite for
economic growth in Pakistan. He cited the example of investment outflow from Korea
diverted to other regional countries instead of Pakistan due to inconsistent policies plus
bureaucratic hurdles which proved counter productive for achieving investment targets in
Meanwhile the government in order to help the textile industry to
overcome its financial constraints has decided to allow working capital and BMR
requirements to the textile industry at a mark up rate of 14 per cent. Instructions in
this regard have already been conveyed to the banks to extend all possible cooperation to
the textile industry. Earlier the industry was getting this facility at 15-17 per cent.
According to APTMA Chairman, the textile industry needs about $400
million for BMR. Import of over $300 million textile machinery has already been made. The
industry was in need of BMR for the last three to four years but due to financial
constraints and huge defaults, the banks were reluctant to provide capital to the textile
industry. It is generally felt that stagnation in the textile industry due to lack of BMR
the modernization process has been stalled.
Realizing the present state of the industry, the present team of the
economic managers have chalked out a plan to allocate an amount of Rs333 billion so that
the textile sector could be equipped with hi-tech with the sole purpose to make it
competitive in the world market. The financial aspects of this textile plan is already
under discussion between the Ministry of Commerce and the State Bank of Pakistan
Razak Dawood, the minister for commerce has indicated that under the
draft proposal named 'textile vision 2005' the country would have to spend billions of
dollars to upgrade and expand its textile industry which was the only way of increasing
export earnings in a short period of time.
The government is also working on a textile policy to provide a road
map to the textile industry to achieve the desired goal of $13.8 billion exports.
According to Commerce Minister Razak Dawood, in order to enable the textile sector to hit
a target of $13.8 billion a year, export policy will be implemented in three phases i.e.
low road, middle road and the high road. This textile policy is being evolved in the face
of the challenges ahead of phasing out of textile quotas by year 2004 under WTO rules.
The textile policy suggests to open market allowing innovative and
dynamic and free flow of ideas through global integration and open competitiveness. The
minister also indicated that after the textile policy is announced, the quota distribution
policy would also be framed for long term period, which can be for year 2001-2003. The
quota distribution system will be redesigned in such a way to prepare the industry for the
year 2004 and will be fully equipped to exploit the opportunities created by the MFA phase
out. It is however doubtful that textile quota would be totally eliminated by 2004 under
WTO rules. It is generally believed that in case of free global trade China will be
controlling the US textile market and the US would not like monopoly of the market by any
country. Hence the textile quota is likely to prevail, said an exporter. The textile quota
provides a sort of protection even to substandard quality textile products. Removal of
quota will mean that only the fittest will survive with quality competitive products.
The Commerce Minister who recently visited APTMA office sounded a note
of warning for APTMA members that in order to face the challenges ahead with phasing out
of textile quotas given under MFA, the textile industry would have to change its concept
of easy going by producing course and medium count yarn. The commerce minister cited the
example of China which is at top of the textile exporting countries with a prestigious
exports figure of $39 billion while India which is 5th in rank exporting textiles worth $9
billion, while Pakistan comes to 8 with an exports of around $5 billion.
One of the major step the government is considering to take to enhance
value addition in the textile products is to do away with the export financing on yarn and
gray cloth. The value-added products like bed-wear and ready-made garments would however
continue to enjoy this facility.