KARACHI: Worried by the prospect of relocation of textile units to Bangladesh, the ministry concerned of the government of Pakistan held a meeting with major players Saturday.
Plans for shifting production units to Bangladesh by some of the leading industrialists rang alarm bells in government circles, according to a report published in the Daily Times Friday.
A recent announcement by Bangladesh, which offers a tax-free investment opportunity to the Pakistani textile industry, has attracted some of the prominent textile industrialists, who now plan to shift their production units.
However, the situation has pushed the authorities to offer incentives to the over $8.0 billion-export industry, otherwise it could trigger capital flight from the country.
Syed Masood Alam Rizvi, federal textile secretary, convened the meeting.
"The ministry itself called the meeting to know the concerns and worries of the textile industry as we have noticed some aggressive complaints from bedwear manufacturers and exporters," Rizvi told the Daily Times Thursday.
He said major interest of the textile units, planning to operate from Bangladesh, was to get broader market access, as that country did not face tariff barriers from European countries like Pakistan.
"So the issue is not the production cost, it is the market share, which one can get better while exporting textile goods from Bangladesh compared with Pakistan," said Rizvi.
The Bangladesh government last month offered a tax-free investment environment to the Pakistani textile industry as the country is eyeing $1 billion foreign investment within a year.
The Bangladesh offer did not go unheard as a 10-member delegation of leading bedwear manufacturers and exporters visited Bangladesh in early November and held a series of meetings at the Bangladesh Board of Investment, the ministry of commerce and the ministry of industries.
The Pakistan government seems serious about the issue and has come up with a plan to hear the industrialists and decide the textile export strategy in a bid to avoid major damage.
"We would definitely address the textile industry's concerns," said the federal textile secretary.
"The government really wants to know the problems and issues of the country's most progressive industry, and then it would decide the line of action."
He said the government was already negotiating with the European Union authorities on the generalised system of preference and anti-dumping issue, which could give positive results.
The bedwear exporters witnessed a sharp decline in orders from European countries after the EU in March 2004 imposed a 13.1 per cent anti-dumping duty on imports from Pakistan, claiming the cheap Pakistani products were harming the local textile industries.
Later, it announced that it would readdress the issue and conduct a fresh inquiry, but the matter was not resolved as desired by the local industry and exporters.
"Bedwear exporters are seriously considering moving over to Bangladesh," said a senior bedwear exporter, who recently returned from Bangladesh and asked not to be named.
"Actually, the exporters and manufacturers are really disappointed because the way our government handled the issues of anti-dumping duty with the EU and market access with the US."
He said the failed strategy led to non-tariff barriers from the EU, which had not only imposed anti-dumping duty on bedwear exports but had also withdrawn GSP benefits from Pakistan.
Pakistan, which entered the WTO regime in January 2005, is among top five textile goods exporters of the world. On an average the country exports textile products worth more than $8 billion every year.
Bedwear is one of the five items belonging to a billion-dollar club of the textile groups, including yarn, cloth, knitwear and readymade garments.
Another report published in the Pakistan Times said the leading industrialists of Pakistan have expressed their concern over the deterioration in textile sector. They say that industry is working on negative margins and survival of value added textile industry in particular is at stake due to high cost of production, and exporters are relocating business to Bangladesh.
Pakistan and Bangladesh had great specialty in textile and readymade garments respectively. Bangladesh has offered Pakistani industrialists to join hands in increasing exports in apparel from Bangladesh, which was enjoying quota free access to EU and USA. Bangladesh exported apparels last year to the tune of $ 6.0 billion.
Bangladesh suggested that by setting up joint ventures Bangladesh and Pakistan could easily compete with China and India in the WTO free trade area. They can jointly grab share of 30 billion dollars in $ 250 billion global textile trade. According to informed sources on the energy side Bangladesh was in better position than India and Pakistan. It had gas reserves sufficient for 30 years and coal reserves for 200 years. The consumption of gas in its industries had grown by 41 percent and about 500 new industries were coming up every month in Bangladesh.