|Friday, 06 July 2012 14:04|
Karachi—Despite being second to none in the world, the textile industry in Pakistan is far behind in export earnings when compared to Bangladesh and India which earned $25 billion & $35 billion respectively due to enabling environment.
Acknowledging the growth potential of the textile industry the State Bank of Pakistan firmly believes in the rehabilitation of the textile sector which is the largest export earner, one of the largest employment provider and the largest investor in the country.
Yaseen Anwar, Governor, State Bank of Pakistan during a meeting with the office bearers and members of All Pakistan Textile Mills Association (APTMA) in Karachi, said that special committee will be formed to look into the problems of the textile industry to make it viable and competitive in the international market.
The textile sector is second to none and even in the present challenging economic scenario achieving export value of around 12.4 Billion US$ is commendable as the price of cotton and cotton products have declined more than the total decrease in value of textile exports as compared to last year. Replying to demand of reduction in the discount rate Governor – State Bank of Pakistan said that we had reduced 200 basis points during the first two quarters of the last fiscal year but due to demanding reserve position and escalating inflationary rate in the last two quarters we were unable to reduce it further. However, as soon as the above situations will improve we will reduce the discount rate further because we are fully aware that the high interest rate is one of the reasons behind drastic decline in domestic as well as foreign direct investment.
Yaseen Anwar assured the meeting that State Bank will issue notification in respect of Technology Up-gradation Fund as soon as advise received from Ministry of Textile Industry.
Mohsin Aziz, Chairman – APTMA in his welcome speech highlighted the challenges being faced by the textile industry of Pakistan. He said that although in the year 2010-11 our exports had reached the new bench mark of $14 billion which we expected to take upto $ 16 billion in 2011-12 but unfortunately we will just be barely crossing $ 12.4 billion which is 11% lower in value terms but in fact 30-32% lower in quantitative term. Whereas our neighboring countries India and Bangladesh have crossed $ 32 and $ 25 billion respectively because of the enabling environment specially designed by their governments for exports oriented industry and providing competitive cost of doing business mainly interest rates and availability of all amenities like water, electricity and gas through out the year at affordable and cheaper rates.
Mohsin Aziz said that our regional competitors are enjoying lower and preferential interest rate provided by their respective governments to support their textile industry but on the contrary in Pakistan discount rate is in the double digit which is an extra burden on the already ailing industry. He said that if SBP and Ministry of Finance do not come up to its rescue by providing preferential and lower interest rate, the industry which was setup after lot of hard work and an achievement of many generations is now on the verge of collapse.
Aziz said that during the year 2003 to 2006 when the interest rates were kept low i.e. in the single digit, inflation interestingly was at its lowest and growth and investment in textile sector was ranging between $600 - $800 Million per annum and in the year 2004-05 when the interest rate was around 7.5% the investment of more than $1.2 billion in textile sector alone was witnessed, these were the years when the trash hold of $5 billion exports remained for many years crossed $10 billion.
Chairman – APTMA further said that total NPLs in June 2009 was Rs. 412 Billion which has risen to Rs. 609 Billion in March 2012, simply means that there is increase in NPL portfolio by 47% in less than three years out of which the total non performing loans share of textile sector is 33%, therefore the government should take some urgent measures like rescheduling and restructuring of outstanding loans, relaxation of Prudential Regulations, bring discount rate in the single digit otherwise portfolio of non performing loans will increase, the industry will doom and the precious assets will be lost and the hard earned export markets will be taken over by our regional competitors where the government alongwith Central Bank are pursuing the policy of incentives and have realized thoroughly difficulties faced by their exporting industries specially textile.
Courtesy: Pak Observer