APTMA commissioned a study conducted by Pakistan Institute of Development Economics to study the results of Regionally Competitive Energy Tariffs being provided to the Textile Industry by the Government back in late 2018. Pakistan Textile Industry has performed extraordinarily in past 3 years. Approximately $5 Billion of investment in machinery & expansion plan for capacity enhancement has been made to sustain the ongoing Export-Led Growth momentum. More than 100 new Textile units being set up across Pakistan creating millions of new jobs. This has resulted in an increase of $500 Million in exports each month in Fiscal Year 2022.
The economic significance of the textile sector in Pakistan is undeniable. The sector contributes around 60% of the total export earnings and provides employment opportunities for around 40% of the total labor force. Although, substantial export earnings of Pakistan are based on textile products; though, its share in the international textile exports is considerably low. The sector has so far managed to endure but remained somewhat stagnant due to high manufacturing expenses, recurrent power shortages, high energy costs, and flawed government strategies. Yet, the textile sector outperformed during the pandemic and recorded a 37% of exports to $1.686 Billion in February 2022, MoM basis.
In the textile sector, energy cost is the leading component in terms of conversion cost. Among all the factors that make the textile sector of Pakistan regionally un-competitive, energy tariff is at the core. The recent outshining performance of the textile sector can partially be attributed to the Regionally Competitive Energy Tariff (RCET) policy that the government has adopted, since late 2018. Under the RCET policy, the government offers a regionally competitive RLNG/Gas tariff at the rate of $ 6.5/mmbtu and fixed electricity tariffs at 7.5 cents/kWh for export-oriented units of the zero-rated sectors.
Providing uninterrupted energy supply to the industry is fundamental to revive Pakistan’s exports sector. According to the World Bank report, Pakistan is missing out on $50 Billion worth of exports. Pakistan Textile industry requires a level playing field to fulfil its commitment of increasing the exports up to $50 Billion by 2025. Consistent energy policy & unhindered supply of energy at RCET – Gas/RLNG at $6.5/MMBtu & Electricity at 7.5 cent/kWh.
The confidence reposed in the Textile Sector was translated into Pakistan Exports’ growth rate at record high in South Asia during November 2021. Textile Exports doubling in 5yrs – Reached $12.5 billion in 71yrs, 1947-2018. Achieving $21 billion in FY22 & targeting $25-26 billion in FY23. Exceptional performance showcasing the effective policies of the Government & the fruits of Regionally Competitive Energy Tariffs.
All Pakistan Textile Mills Association worked closely with the Ministry of Commerce, Textile Division & Ministry of Energy to device a consolidated policy to address major concerns of the Textile Industry. Present boom in exports has encouraged the policy makers to work on the line that can double the present export growth rate, having significant implications on the economy and trade deficit of Pakistan.
APTMA as the premier Association takes immense pride in achieving industrial goals benefiting the entire nation. The Policy will support the entire Textile Value Chain enabling textile products to be regionally competitive, resulting in enhanced exports for several years to come and contributing to sustainable export-led economic growth. The Policy encompasses continuous implementation of viable energy tariffs, export/investment strategy including export sustainability, implementation of Special Economic Zones (SEZ), discounted finance packages ensuring liquidity and credit availability for SMEs, and reduction in Turnover Tax. The achievement of this unprecedented milestone is completely attributed to the relentless efforts and dedication of APTMA. As a facilitating body APTMA has always been proactive in addressing the most pressing issues threatening the viability of our businesses in a timely manner
Textiles and apparel sector occupies a pivotal position in Pakistan’s economy having most intensive backward and forward linkages compared to any other sector. Linking agriculture through industry to exports is a distinction which is unique perhaps to this sector. Pakistan’s textiles and apparel sector encompasses distinctive and self-reliant value-added production chain that is developed by its own industrial resources starting from Cotton to Ginning, Spinning, Weaving, Knitting, Processing, Finishing to Apparel and Home Textiles.
Pakistan is the fifth largest Cotton producing country; however, this comparative advantage could not transform Pakistan to become one of the major textiles and apparel exporting country in the international market. Textile Policy aims to fully utilize potential of home-grown Cotton augmented by Manmade Fibers/Filaments to boost value-added exports and become one of the major players in global textiles and apparel supply chain.
The measures undertaken in previous Textiles Policies (2009-14 and 2014-19) addressed immediate looming issues such as reducing the cost of doing business. However, long term structural measures like sustainability of investment were highlighted in policies but could not be addressed in real manner. Therefore, these facilitation measures just led to sustain exports but could not cause rapid growth in textiles and apparel exports.
Textiles and Apparel Policy 2020-25 is a holistic approach to tackle issues confronting the textiles and apparel sector amid COVID-19 that has resulted in supply chain disruptions and affected global prices of commodities and trade adversely, and address withdrawal of SRO-1125 and cost of doing business related matters. Furthermore, the policy would attract domestic and foreign investments in textiles and apparel supply-chain and development of value-added sectors, with prime focus on SMEs.
Ultimate goal of Textile & Apparel Policy is to provide conducive business environment, consistent, predictable and foreseeable measures and level playing field for the domestic and export-oriented textiles and apparel value-chain. The 2022 industrial policy’s overarching objective is to incentivize investment in industry, acknowledging the fact that industrial growth is critical for sustainable economic prosperity due to its role in generating jobs, achieving higher exports, and meeting goals/targets.
APTMA believes that export-led economic growth is the only viable and sustainable solution to steer the country towards a bright future. We urge long-term textile policy and continuation of Regionally Competitive Energy Tariffs (RCET) and supply of gas/RLNG for a continued investment and enhancement of production and export capacity.
Pakistan must target higher economic growth by prioritizing value-addition, particularly in the highly productive textile sector, where regionally competitive energy is the primary path towards real progress. During periods where regionally competitive energy tariffs were given by the government, the export- oriented industries proved the critical role of these tariffs, by immediately showing an upward trend in production, reaching full capacity, as well as creating new jobs, new investment and leading to all mills becoming operational.
Approximately, 62 percent of total exports are the engine for the export growth policy for our country. Enhanced exports are the only tool to break the begging bowl and achieve real economic and political sovereignty. The Textile Exports only for the month of February 2022 have increased by 37% to $1.686 Billion as compared to last year’s February 2021 to $ 1.234 Billion. $12.61 Billion exports in first 8 months of FY22 compared to corresponding year 8MFY21 to $ 10 Billion, a substantial increase of 26%.
Recently, Prime Minister Imran Khan lauded the export growth achieved over the past 2 years, particularly through textiles which are the country’s top export. It is important to highlight that this unprecedented growth is the result of concerted efforts and investments, which must be continued in light of the visible progress made by the economy through industrial development. Government has also announced a five-year tax exemption for overseas investors to bolster investment in Pakistan.
In the past 3 years expansion and investment plans of about $5 billion took place under LTFF & TERF schemes that is creating millions of new jobs in an environment where the figures of unemployment are a major concern. Hence, job creation needs to be enhanced at a rate that can match the yearly increases in unemployment, and the private sector provides us with the only viable means to achieve this. In this regard, export-oriented sectors are highly labor intensive – particularly the textile sector – and create jobs at every tier of the economy.
The export growth achieved so far in Pakistan has been in spite of a wide array of issues in energy. Power supply, reliability, quality, pricing and gas availability are at the core of Pakistan’s bid to accelerate economic development, yet concerns abound. Due to the intense competition among regional countries, even a minor cost difference in relative terms has an exponential impact on competitiveness in the international market. Our regional competitors are offering a stable and consistent supply of electricity and gas/RLNG at much lower rates than Pakistan.
Building the economy necessitates identifying gaps, devising effective policies and working towards consistent improvement despite daunting challenges. The textile industry has invested $5 billion in new plants, machinery & equipment, and more capacity is being added, the results of which can be seen in increased production and exports. And with consistent policy and efficiency to provide a congenial environment for sustainable exports momentum, Pakistan Textile Industry can definitely achieve its marked targets for FY2023.
APTMA’s initiative in reviving the cotton crop is a pro-poor strategy that will not only uplift the country’s economic outlook in the coming years but will also serve our future generations. Once the lifeline of our farmers, the cotton crop has seen its worst in recent years. APTMA has thus formed a Cotton Task Force as a strategic alliance with the Punjab government to revamp and revive the production and yield of cotton crops in Pakistan. APTMA have already made strides by getting in touch with embassies of many countries including the USA, China, Turkey, Brazil, Uzbekistan, Turkmenistan, and Brazil to seek and opt for their seed development technologies, establish affiliations with their top scientific research institutions and enhance bilateral trade. Addressing this critical issue, APTMA is putting together a Cotton Secretariat spearheaded by our Patron-In-Chief, Dr Gohar Ejaz, along with a dedicated team of researchers and seasoned consultants to sustainably steer the sector in the right direction. Now APTMA also participate in and contribute to the monthly Cotton Crop Assessment Meetings. Being the largest association, APTMA ensures that its presence is not only valued but has a material impact.
APTMA’s initiative in reviving the cotton crop is a pro-poor strategy that will not only uplift the country’s economic outlook in the coming years but will also serve our future generations. Once the lifeline of our farmers, the cotton crop has seen its worst in recent years. APTMA has thus formed a Cotton Task Force as a strategic alliance with the Punjab government to revamp and revive
the production and yield of cotton crops in Pakistan. APTMA have already made strides by getting in touch with embassies of many countries including the USA, China, Turkey, Brazil, Uzbekistan, Turkmenistan, and Brazil to seek and opt for their seed development technologies, establish affiliations with their top scientific research institutions and enhance bilateral trade. Addressing this critical issue, APTMA is putting together a Cotton Secretariat spearheaded by our Patron-In-Chief, Dr Gohar Ejaz, along with a dedicated team of researchers and seasoned consultants to sustainably steer the sector in the right direction. Now APTMA also participate in and contribute to the monthly Cotton Crop Assessment Meetings. Being the largest association, APTMA ensures that its presence is not only valued but has a material impact.
Following the roadmap for innovative practices, APTMA has benefited from the persistent guidance and the direction laid out by Dr Gohar Ejaz, starting an initiative to revive cotton in Pakistan. APTMA Cotton Foundation (ACF) is a flagship project of APTMA, a model farming concept that will revolutionize cotton production. This will involve developing and testing various methodologies to improve crop productivity and enhance yield. The farm will also have an onsite biotechnology laboratory for seed and soil testing and developing technologically advanced seeds. ACF will also support farmers in providing technical trainings and equip them with knowledge on international best practices to cultivate high-quality cotton.
Dr Gohar Ejaz, Patron-In-Chief, APTMA is the pioneer of ACF project with a goal to revive cotton crop by introducing innovative technologies in seed variety development, certified approval systems for seed production, educating the farmers, launching training programs and proposing policy recommendations to government.
ACF will revolutionize cotton farming at domestic level with outstanding future implications – help alleviate poverty for many, furnish domestic cotton demand, reduce import bill, and pave way for an export-led economic development of Pakistan.
Moreover, while ensuring inclusivity, APTMA requested a special focus on SMEs and those textile units that are struggling for survival – APTMA liaised with the SBP and the Ministry of Commerce to convince them for launching a separate buyout scheme amounting to USD $300 million, which is under consideration.
Most significantly, APTMA arranged a focused meeting with the Deputy Director of SBP to request an extension in LTFF for indirect exporters – which has been affirmed by DG, SBP.
APTMA has preemptively approached the Ministry to oppose Duty on Yarn as it would prove counterproductive to the industry, and the same has been abolished by the government. APTMA further nudged the Ministry on fronts like Duty Drawbacks on exports to Export Processing Zones, an extension of zero-rating certificates, granting zero-rated facility to consumers of LIEDA and their reimbursement against tariff differential, etc.
There have been numerous occasions where APTMA’s timely intervention worked for the APTMA fare of the industry. A recent instance is when NEPRA tried implementing increased charges on Wheeling and Captive, APTMA’s Principal Office timely intervened and prevented these exorbitant charges that could have cost the industry billions.
Likewise, the decision on GIDC was challenged by APTMA, making a strong case to only obtain a justified amount from consumers, saving the industry billions. On another occasion where NEECA bombarded the industry with efficacy audits of captive power plants, APTMA categorically refuted on logical and legal grounds and has delayed the same.
The core team at Principal Office, with their professional interconnectedness with government and non-government institutions, is working without any vested interest to provide a level playing field to the textile industry