INVESTMENT IN TEXTILE INDUSTRY

US$3 billion of investment made in textile sector in the last three years.
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From SHAMIM AHMED RIZIV,
Islamabad

Sep 08 - 14 , 2003

The textile industry in Pakistan is to invest three to five billion dollars in the next three years for new plants and balancing and modernization. The Finance Minister, Shaukat Aziz, talking informally to newsmen in Islamabad, said he and the State Bank Governor Dr. Ishrat Hussain had a detailed meeting with the office bearers of All Pakistan Textile Mills Association (APTMA) in Lahore and discussed the post-2005 scenario when quotas would be removed.

He said APTMA representative briefed them about three billion dollars of investment made in textile sector in the last three years which led to increase in textile manufactured items. According to the figures textile exports increased by forty per cent and value-added products by sixty per cent in the last four years. In the next two years, there would be investment of about two billion dollars in new textile units.

The Finance Minister said that APTMA is of the view that Pakistani textile industry is well positioned to meet the challenges of post-2005. Pakistani textile industry modernized faster than India and was anticipating to take textile exports to thirteen billion dollars by 2005-06. The cotton consumption will go up to fifteen million bales as against the estimated domestic production of about eleven million bales. This would encourage our farmers as they would get adequate return for their produce and to cultivate more cotton. He emphasized the need for production of contamination free cotton by using cotton bags for picking purposes.

The Finance Minister said that to match the demand of textile industry the government was contacting the US, Germany, Japan, Italy, Belgium, China and Switzerland to offer concessional financing for local producers to import machinery. Some of the countries have export credit agencies, which were being contacted to offer credit facilities to Pakistani producers.

The challenges for the textile industry were social compliance and contamination free cotton. Cotton bags would be used to avoid any polythene and jute elements. Pakistan, India and China would remain three big players. Pakistan would also sign agreement with Uzbekistan to import cotton in future. He asked the textile millers to come up with their suggestion, in this regard, so that the issue could be taken up with Uzbek authorities. Given his own impression of the developing situation on the cotton front, that use of Uzbek cotton would increase the competitiveness of Pakistan textile industry in international market due to its low cost because of reduction in the cost of freight, evidently from its arrival by the land route.

While textile industry has the vast potential to promote Pakistan's export it is faced with serious challenges ahead under WTO free trade regime 2005. It is heartening that realizing the situation, the government is taking all possible measures to fully harness the potential of this promising sector. Federal Industries and Production Minister Liaquat Ali Jatoi has constituted a task force comprising representatives of textile industry and senior officials of related ministries to facilitate the textile sector on WTO related issues such as labor, social health and environment. The task force has been directed to complete the work for amendment in regulatory framework within a month. The decision to this effect was taken at the eighth meeting of Federal Textile Board held here recently.

The minister said that the industry should prepare itself for the new opportunities and challenges by developing competitiveness and by adopting standards, and becoming compliant to the WTO norms. He extended all out help on behalf of the government to help the industry in reducing cost of production. He said that issues like contamination free cotton, tariff rationalization reduction in mark-up rates and successful negotiations of market access has been supportive to the industry. The budgetary measures and Trade Policy 2003-04 has covered possible areas to support trade and industry, he added.

The meeting reviewed the performance of textile industry and termed it satisfactory. During 2002-03 textile production has shown appreciable growth in almost all the products with 8 per cent increase in yarn, 14 per cent in fabrics and 26 per cent in synthetic fiber. Exports of textile items have increased to $7.17 billion, which count for 65 per cent of the total exports. As a result of shift to value addition, share of garments and made-ups have increased from 47 per cent to 58 per cent in total exports.