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Some 20 textile units of Pakistan have finally decided to shift their production units to Bangladesh, which has offered a tax-free investment opportunity to the Pakistani textile industry.
It will cut the production cost, which the Pakistani textile industry owners say is almost half of that of Pakistan, according to a Pakistani media report.
"A tax free-investment has attracted some of the prominent textile industrialists, who now plan to shift their production units to Bangladesh," said the Pak Tribune in its online edition Tuesday.
Representatives of different textile associations of Pakistan claimed that about 20 units of bed linen, readymade garments and knitwear had finalised plans to shift to Bangladesh and it could take a month or two to set up or acquire any of the already running units in Bangladesh.
However, the situation has pushed the authorities of the government of Pakistan to offer incentives to over $8 billion-export industry, otherwise it could trigger capital flight from the country.
Sources 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 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 a textile mills owner.
The Bangladesh government offered a tax-free investment environment to the Pakistani textile industry as the developing Asian country is eyeing $1 billion foreign investment within a year.
The Bangladesh offer did not go unheard as a 10-member delegation of leading bed clothes manufacturers and exporters visited Bangladesh in early November 2005 and held a series of meetings at the Bangladesh Board of Investment, the ministry of commerce and the ministry of industries.
The bead clothes exporters witnessed a sharp decline in orders from European countries after the European Union (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.
Pakistan, which entered the World Trade Organisation (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.
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