Local lobby fears Chinese entrance in textile sector

Says China will have edge over domestic players due to various reasons

LAHORE: Pakistan seems to have placed a lot of faith in the ‘game-changing’ China-Pakistan Economic Corridor (CPEC), but the local business community still has some concerns.

Stakeholders of the country’s textile sector are anticipating a further decline, fearing that if Chinese companies started relocating their textile units in different tax-free industrial zones in Pakistan, they would go out of business.

“Whenever China enters any country it damages the domestic market - it’s a fact,” said Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Senior Vice President Jawad Choudhry while talking to a group of journalists.

“Our industry is currently facing a declining trend due to the high cost of doing business and productivity, whereas China plays with price by increasing its production,” he added.

Industry experts believe that if China locates its textile units to Pakistan they will have an edge over the existing players due to the benefits, such as tax-free zones, under CPEC. An additional benefit for them would be the energy prices as they are setting up their own power plants to feed their industries in Pakistan.

“We expect the government to share CPEC cost and benefit ratio with the local industry so we can plan for our future investments,” said PRGMEA Central Chairman Ijaz Khokhar, adding that CPEC business wing should be established to safeguard the existing local industries as well as international investors.

Khokhar said that Pakistani government should bind Chinese investors to establish new industries as a Joint Venture with local stakeholders with 49:51 equity ratios.

“It is not possible for existing local players to relocate their industries in tax free zones in the current scenario.”

Published in The Express Tribune, January 8^th, 2017.

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