187 mills shut down in Punjab
Economic nationalists have asked for the revitalisation of the struggling textile sector where the rapid closure of approximately 187 textile mills mainly in Punjab bristles with serious socio-economic repercussions for all stakeholders.
Talking to The Express Tribune, they said first Faisalabad and secondly Karachi ooze huge potential in textile industries but they are being annihilated due to a lack of a sagacious economic policy and planning.
To fix the debacle of the textile sector, there must be a host of quick initiatives such as establishing textile development banks, textile tax courts, and model textile centres for research and development (R&D) while ensuring a sustainable supply chain.
All Pakistan Textile Mills Association (APTMA) Southern Zone Chairman Naveed Ahmed said "Unaffordable energy costs of factories are making every work uncompetitive. Pakistan's consumption revolves around 14,000 megawatts, while plants having a capacity of 45,000 megawatts have been set up and another 10,000 megawatts are in the pipeline.
Industries are being supplied electricity at rates between Rs38 to Rs40 per kilowatt-hour (kWh) or per unit. Industries can be run at Rs26 per unit. Let me ask why the industrial units have to foot the bill for line losses and capacity charges while there is no power theft in industrial zones.
What's more, commercial establishments including shops, supermarkets, emporiums and are being charged at around Rs60 per unit."
He said industrial workers are being rendered unemployed by shutting down units and this runaway unemployment will bring about a major challenge.
Prominent Economist and Strategist Dr Mehmood Ul Hassan Khan said the textile industry in Faisalabad is in dire need of a meaningful policy response, financial package and incentives from the federal and Punjab governments because it contributes over 60% to the country's exports and 8.5% to its GDP.
He said "The rapid closure of around 187 textile mills mainly in Punjab has serious socio-economic repercussions for the governments, private sector, and businessmen resultantly, increasing ratios of unemployment, poverty, inflation, decline in exports and increase in trade deficit hurting badly the national economy. Both the governments should take all possible holistic and comprehensive structural reforms and measures replacing outdated machinery, reducing high energy costs, promoting cotton into man-made fibres and effective financial assistance."
He suggested that both governments must initiate measures to stop low-quality cotton production, cotton production fluctuations and import duties, obsolete production methods, modernising the machinery and adopting advanced technologies such as automated looms and computer-aided design (CAD) systems. Governments' incentives including low-interest loans and subsidies for machinery upgrades should be provided to encourage the adoption of modern technologies. Last but not least, special attention should be given to changing labour-intensive production, and unskilled labour force, energy and infrastructure issues may also be resolved as soon as possible.
He said the selling of textile units turning into real estate businesses and housing societies must be curtailed and banned.
The policymakers must study the textile policies of India, Vietnam, China and even Bangladesh giving targeted banking and financial incentives through soft monetary and fiscal policies and low interest rates on loaning, easy and smooth supplies of energies/utilities through industrial solarisation, promotion of green industrialisation, exemptions in import duties, upgradation of machinery and cycles of production through automation, digitalisation, artificial intelligence, robotic production through consistent economic policies.
"Moreover, the formation of "Textile Development Bank" for special financial loans and financial supervision, "Textile Supply Chains" for sustainable supplies, "Textiles' Tax Courts" for immediate resolution relating to taxes, rebates and custom duties and last but not least, "Model Textile Centers" for research and development (R&D), innovations, and diversification must be encouraged for the revival of textiles in the country.
At the regional level, mutual investment ventures with regional countries like Uzbekistan, Kazakhstan, Azerbaijan and Bangladesh in the country should also be explored through rigorous economic policy, protecting the best interests of the Faisalabad textile industry," Khan said.
He said the policymakers must seek help from China under China-Pakistan Economic Corridor (CPEC) Phase 2.0 to build joint ventures in the textiles, garments, and fashion industry and the formation of "Pak-China Textile and Garment City" in Faisalabad would be a giant step in the right direction. The government must give incentives to overseas Pakistanis to invest in the textile sector of Faisalabad through a people-private-partnership with the state's guarantee.