According to the Governor State Bank of Pakistan, Dr Shamshad Akhtar the textile sector should focus on value-addition if they want any government facilitation as the priority of the government is promoting value-added textile products. This was mentioned during a meeting with the leaders of the textile industry at the office of All Pakistan Textile Mills Association, APTMA.  Aptma Chairman Shafqat Elahi Sheikh, Punjab zone Chairman Samir Saigol and other members were present on the occasion.

She further said the inflation target of 6.5 percent for the current financial year could not be attained  unless the monetary policy is tightened further indicating further increase in the interest rates.

Dr. Ishrat reiterated that the government cannot divert the facilitation of Rs 30 billion meant for textile value-added products to spinners since the spinning produce of Pakistan is used by China and India for their benefit.

The high cost of production, particularly input costs of gas and electricity were mentioned by the APTMA members as the key factors affecting the competitiveness of Pakistan in the global market.  Dr. Ishrat’s answer to that was that the macro-economic situation could not be changed overnight.  Since Pakistan has made commitments with international donors on prices of gas and electricity these rates cannot be reversed immediately but would be reduced with the passage of time.

She mentioned that we should not be concerned about the Indian industry and the the incentives and subsidies availed by them, but should focus on how to improve the conditions in Pakistan. She said that if our spinners are operating at high capacity, then they are  not selling in the international markets resulting in high inventory.

She pointed out that production of fabrics have decreased by 39 percent; garments (16 percent) and synthetic (31.7 percent); hence the export of yarn showed an upward trend.  On the other hand the share of Pakistani garment industry in the international market was surprisingly low at 1.2 percent as compared to other Asian countries, like India and China.

The SBP governor asked Aptma to provide comprehensive data on textile industry to the government for their better understanding of this vital sector. She said as per her understanding there is an over-investment in this sector in the shape of debts.  in five years, debt among textile companies has doubled. In the 161 sample textile companies, it was noticed that there was excessive borrowing between Rs 31 billion and Rs 65 billion, but in terms of income it did not reflect in their balance sheets.She said they have extended export refinancing to the tune of Rs 174 billion by June 30 and R&D worth Rs 6 billion.

 Textile mills according to Dr Ishrat , have high overheads, administrative expenses and sales cost factors reducing the profitability. This sector faced the greater impact in the WTO regime both in domestic and international markets. There is a dire need to draft a collective strategy about the textile sector, which should reflect ‘where we are standing and where the world is moving’.  In the pre-quota environment Pakistani textile producers only availed of ready markets, but did not tap other markets. That is why after the removal of quota system, Pakistani millers faced hardship and started to lose their market share.

 She said the government is considering to bring down the inflation from 8.5 to 6.5 percent.  Once that target is achieved, prices would start coming down, which would also lead to reduction in interest rates that would be helpful in resolving problems of the textile sector. She reiterated that the real interest rate was among the lowest in the emerging economies of the world.  The SBP governor assured Aptma of her full support in resolving their problems. At the same time the industry should take concrete measures to improve their productivity and marketing strategies to improve their share in the global market.