High mark-up rate generates crisis in the industry

Mian Zahid Aslam, Chairman Pakistan Textile Exporters Association (PTEA) has said that the main factor contributing towards crisis in the textile industry is the high mark-up rate on industrial credit.

 He said that the industrialists acquire credit from the banks to import new machinery at an average rate of mark-up on credit ranging around 12%. Due to decrease in exports the industrial units are not working to their full capacity. Consequently repayment of these loans obtained on higher mark-up rates is creating difficulties for the Industry.

With the introduction of new World Trade Order (WTO) and phase out of textile quota regime the textile sector of Pakistan is continuously under pressure. The Textile exports during the fiscal year 2005-2006 of the country decreased by 11%.

Zahid Aslam said that it would be a wrong impression to say that textile sector in Pakistan is unable to compete in the international market. Contrary to this Pakistani textile products have earned good reputation on the basis of their quality workmanship.

Pakistani bed sheet is considered one of the best in quality and as a consequence of this great demand the bed sheets manufacturing factories of Europe and other countries are facing closure.

These countries of Europe, South Africa, Peru, Brazil etc, have imposed an anti-dumping duty on our bed sheets in order to stall the exports of bed sheets from Pakistan.

In fact the Pakistani textile industry had started to prepare itself for WTO five years ahead of its inception.

The Pakistani exporters had started balancing, modernizing and replenishing their textile machinery and upgrading their manufacturing line since the year of 2000.

It was in this context that the textile sector imported US $6 billion machinery during 2000 and 2006 in order to meet the expected increase in demand of goods in the wake of open international market.