Pakistan to approve new textile policy to increase exports to $21 billion

A Pakistan textile labourer fixes broken threads at a power loom in Karachi, on January 25, 2019, the financial capital and the largest industrial city of Pakistan. (AFP)

• Economic Coordination Committee to finalize five-year policy this week with incentives worth over $5.6 billion
• Textiles seeing “unprecedented” revival as international orders diverted to Pakistan after it lifted its comprehensive lockdown in May

KARACHI: Pakistan’s top economic decision-making body, the Economic Coordination Committee (ECC), is expected to approve a new five-year textile policy this week, with incentives worth more than Rs900 billion ($5.6 billion) for the industry and an aim to increase exports to $21 billion in five years, officials have said.
Textiles make up more than half of Pakistan’s exports, but have lost ground to South Asian neighbors in recent years, hurt by chronic energy shortages and underinvestment in machinery.
But this year, after Pakistan lifted its comprehensive coronavirus lockdown in May while other countries in the neighborhood kept their economies closed, international textile orders have been diverted to Pakistan, leading to a nine-year record in exports. The South Asian nation has now drafted a new policy to augment the gains, officials say.
“The textile policy has already been approved by the prime minister, which will be presented in the ECC next week,” Aliya Hamza Malik, parliamentary secretary for commerce, told Arab News. “After ECC approval, the policy would be a pubic document,” she added, saying the government of the ruling Pakistan Tehreek-e-Insaf (PTI) party had granted Rs900 billion ($5.6 billion) in incentives to the textile sector in the new policy, the country’s third.
The textile industry, which comprises 46 percent of the total manufacturing sector and provides employment to around 25 million Pakistanis, contributes 8.5 percent to the GDP, according to the Pakistan Board of Investment. It also contributes 60 percent to overall exports and is one of the major earners of foreign exchange for Pakistan.
Despite a global economic slowdown due to COVID-19, Pakistan’s textile sector reached $6 billion exports in the first five months of current fiscal year (July-November 2020), which is 62 percent of total exports (worth $9.7 billion) and almost 5 percent higher compared to the same period last year, official data shows.
“Incentives and export facilitations have played a big role in making Pakistan a competitive exporting country,” Malik said.
The new measures aim to increase textile exports from $12.86 billion to $21 billion in the next five years, with a major focus on value addition, a draft of the policy seen by Arab News said. The document said electricity would be provided to the industry at the rate of US cents 7.5/kWh, RLNG at $6.5/MMBtu and system gas at Rs 786/MMBtu under the new policy.
The last two textile policies, for 2009-14 and 2014-19, had aimed to up exports to $25 billion and $26 billion respectively but the targets were not achieved. The third policy was approved in March this year but still awaits official announcement. 
“Approval of the new policy will give clarity to entrepreneurs and the industry to attract further investment,” said Khurram Mukhtar, patron-in-chief of the Pakistan Textile Exporters Association (PTEA). “Pakistan needs minimum investment of $7 billion to enhance production capacity in the next 5 years and double our textile exports.”
He added: “Currently investment of more than Rs100 billion ($623 million) is in the pipeline in spinning, weaving, finishing, knitting and garments. Many companies are enhancing their capacities.”
Made in Pakistan textiles, woven and knitted apparel, socks and towels are currently being supplied to major brands around the world, including Puma , Nike, Ralph Lauren, Dorma, Warner Bros, Next, M&S , Bed Bath & Beyond, Macy’s, Zara , Mango, Levies and Hugo Boss.