APTMA poised to invest $7b in garment manufacturing

Demands favourable policy measures including consistent energy prices

Shahram Haq March 09, 2018
APTMA to invest in garment manufacturing PHOTO: AFP

LAHORE: The All Pakistan Textile Mills Association (Aptma) has announced that its members are ready to establish 1,000 garment manufacturing plants with a total investment of $7 billion to resolve the crisis the industry has been embroiled in for years.

These garment plants will be established near major textile producing cities like Lahore, Sheikhupura, Faisalabad, Kasur, Multan, Sialkot, Rawalpindi, Karachi and Peshawar. The proposed 1,000 plants will install half a million stitching machines, which will boost annual production to three billion pieces.

According to a proposal presented by Aptma to the government departments concerned, Pakistan’s textile industry has witnessed dwindling investments over the last decade as prospective investors are reluctant to make new investment decisions due to high cost of doing business. As a result, the industry has lost technological advantage over its competitors.

“New investments dropped to Rs0.56 billion in 2016-17 compared to Rs1 billion in 2005-06,” it said.

The proposal further said currently around 35% of the textile industry’s production capacity was impaired which caused loss of approximately $4.14 billion worth of potential exports.

Once the proposal enters the implementation phase, the sector will need an additional 10.3 million bales of raw cotton, 345 million kg of manmade fibre, 1.983 billion kg of additional yarn and an additional 7.928 billion square metres of processed fibre. Cotton-producing area and cotton production, however, have declined 30% and 38% respectively in Punjab since 2011.

Within the textile sector, readymade garments have shown an impressive growth over the years despite the overall poor performance of the textile sector. According to the Pakistan Bureau of Statistics, exports of readymade garments registered 5.55% year-on-year growth against the overall flat growth of the textile sector which stood at $12.45 billion in 2016-17.

In return for the investment, Aptma members demanded corrective and conducive policy measures from the departments concerned.

“The government was only able to implement 15% of the Textile Policy 2009-14 and only 5% of the framework for 2014-19 along with PM’s export-led growth package of Rs180 billion,” the association pointed out in the proposal.

It also sought a long-term policy which included consistent energy prices across the country and removal of Rs3.50 per kilowatt-hour surcharge on electricity tariff along with extending the duty drawback scheme for five years and drawbacks to be increased every year by 1% for garments (up to 12%) and made-ups (up to 10%) against realisation of export proceeds.

Aptma also suggested that foreign brands should be encouraged to establish buying houses in commercial enclaves in major cities with rent-free space and if the brand fetched a minimum of $100 million of exports per annum, the rent-free space should be extended for another two years.

“The government should allow LTFF (long-term financing facility) to indirect exports, Islamic financing and building of infrastructure for garment plants,” the proposal stated.

Published in The Express Tribune, March 9th, 2018.

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Rustam | 3 years ago | Reply @Ts: Entrepreneurs go where the circumstances are favorable. They work for profit. They are not social organizations. Therefore, who is supposed to take your desired initiative?
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