The proposed new Textile Policy (NTP) of Pakistan will help increase the output of textile products, improve global competitiveness andgenerate employment in the industry. The new policy targets a 40 percentincrease in exports and meet the growing domestic demand. It will helpcreate 3.5 million new jobs.
The first important step is to increase domestic cotton production which puts Pakistan in an advantageous position because of its reasonable price. Other measures include - improvement in value addition, increase in the number andvariety of value-added products, enhancement of productivity of manpower,stepping up efficiency of its existing plants and equipment, and extensive useof the imported machinery.
Five new model garment factories will be established. Atextile park will be set up to serve as a special economic zone for tax free production and export. A weaving city will be established.
Other highlights include- formation of Pakistan TextileResearch and Compliance Organization, audit for processing industry for anefficient and economic use of costly chemicals, setting of a state-of-arttextile laboratory at National Textile University Faisalabad, horizontal andvertical integration to balance textile value chain, a specialized garmenttraining institute for women, one-window facility for providing requiredinfrastructure and standardization of machinery and equipment.
The financing facilities include subsidized credit and refinancefacilities provided by SPB through the commercial banks, Export FinanceFacility (EFF) for textiles. The SBP has allowed swapping of costly long termbank credit, obtained previously by the industry, with cheaper Long TermFinance for Export Oriented Projects (LTF-EOP) for machinery and equipment. Theindustry is now allowed to undertake External Commercial Borrowing (ECB) forplants and machinery.
Pakistan plans to raise its overall exports to $ 40-45 billion by 2013, byexpanding industrial, agricultural and services sectors, including textiles. "Thegovernment is focusing on skill development, and on reducing the cost of doingbusiness to achieve this export target, the Prime Minister said. The PrimeMinister said that it is important to build brands, working on the existingstrengths and create competitive advantage internationally."
The proposed policy envisages building a new culture, whichwould expedite the process of improvement in all the segments of the textilesector. The skills gap in all the entities of the textile sector as well as theconcerned government organizations have to be filled by professionals to copewith the challenges and the changing environments of international marketing.
The proposed Textile Industry Development Policy 2007 is expected to offer fourtax incentives to attract foreign direct investment (FDI) in upcoming textileand garment cities in Karachi, Lahore and Faisalabad. Ministry has proposed that all import of textile machinery and raw material should be duty-free to facilitateimport of the latest textile machinery, which would prove to be a big incentivefor the textile sector to enhance its production capacity. At present, tax authorities are charging a minimum of five percent custom duty on the import of machinery.The proposed incentives include a general sales tax exemption on utilities tothose investing in upcoming textile and garment cities. The government hasalready allowed general sales tax at zero rating on electricity and gasconsumed in the production process of the textile sector.
Pakistan textile industry contributes 66 percent to the countrys export, 40percent to employment and 8.5 percent of GDP. The exports of textile products have increased by 5.27 percent at $10.757 billion in 2006-07. The government has fixeda growth target of 12 percent for textile exports for the current fiscal year2007-08.
Source: AEPC newsletter
Comments