Textile exporters eye new opportunities amidst Bangladesh crisis

The Pakistan government has expressed a willingness to support textile exporters as much as possible within the constraints of the IMF framework, aiming to help them boost exports by capitalizing on the increased demand from the West due to displaced orders from Bangladesh.

In a message to Khurram Mukhtar, Chief Patron of the Pakistan Textile Exporters Association (Peta) and CEO of Sadaqat Ltd, Minister of State for Finance Ali Pervaiz conveyed that Prime Minister Shehbaz Sharif has instructed his team to prioritize facilitating textile exporters. The directive includes addressing liquidity challenges and providing assurances to tackle other issues related to high business costs and taxation.

Mukhtar expressed confidence that significant progress on the concerns raised by exporters would be made in the coming days and weeks. He believes this will enable textile millers to capitalize on their idle capacity and meet delivery deadlines for Western partners.

“Our energy, tax, and investment policies must be aligned with our export strategy. Our primary goal should be to achieve a trade surplus, which will create a solid foundation for seizing global opportunities,” he remarked.

Earlier, Gohar Eijaz, a former federal minister, mentioned to this scribe that Pakistan could potentially boost its textile exports by up to an additional $5 billion if it acts swiftly to capitalize on the ‘narrow window of opportunity’ created by the crisis in a key sourcing destination of major Western brands.

Textile industry leaders, after meetings in the relevant ministries, shared that they presented a list of nine key concerns. These included clearing pending refunds, rationalizing energy tariffs by eliminating cross-subsidies such as those benefiting the fertilizer sector, ensuring easier access to bank credit, reducing the interest rate to 14 percent, reinstating the Export Finance Scheme (EFS), lowering the advance tax rate, making the 0.25 per cent Export Development Surcharge (EDS) payable only after the collected funds are utilized for their intended purpose, abolishing the tariff charged by the Sindh government on temporary imports for export value addition, and eliminating the 0.2 percent stamp duty charged by the Punjab government on export-related bills of exchange.

“While the media, politicians, and public are preoccupied with issues like flooding, high electricity tariffs, slow internet, and the arrest of the former ISI chief, the business class is focused on a different concern — tracking where apparel orders displaced from troubled Bangladesh are landing. They are actively scrambling to secure a sizeable share of these redirected textile orders,” a former chairman of the All Pakistan Textile Mills Association (APTMA) asserted.

Bangladesh has risen to become a global textile leader, ranking as the second-largest exporter of ready-made garments with over $45 billion in exports last year, behind only China and surpassing regional competitors like India and Pakistan. However, two months of violent unrest and the government’s recent actions have dramatically altered the landscape. Interim leader Muhammad Yunus has pledged to restore order, creating a special force to protect factories after some were set ablaze by angry mobs. Despite these efforts, most observers predict a bleak short-term outlook, with a significant downturn in key economic indicators. The ongoing uncertainty over policy direction further hampers the recovery of business confidence and the revival of economic activities.

Commenting on the Bangladesh situation and its fallout on the market, M Abdul Aleem shared his view, “The situation in Bangladesh is evolving, and we hope that the political and economic uncertainty will settle in favour of its people. While it’s not appropriate to comment on how our counterparts in Bangladesh are handling these challenges, it’s crucial for us to reflect on what we can learn from the Bangladesh crisis. With over 60 per cent of Pakistan’s population being young and connected to global information, there is immense potential to harness their knowledge and skills. Giving them a voice in policy and providing meaningful opportunities could be crucial for driving sustainable growth and resilience. Currently, Pakistan’s economy operates well below its potential due to a historical lack of focus on robust economic strategies. Meanwhile, some regional countries have surged ahead by capitalizing on similar opportunities.”

The Pakistani business community has long been impressed by the rapid progress in Bangladesh, often citing it as the most business-friendly country in South Asia. Some Pakistani investors even set up textile units there. However, when inquiries were made about the status of these Pakistani private sector-owned factories in Bangladesh amidst the current unrest, no one was willing to comment. Business leaders in Karachi suggested that Punjab-based groups ventured there, while some key figures in Punjab hinted that investors from Karachi had ties and moved some investment to Bangladesh.

A source revealed that the venture failed due to the former PM Sheikh Hasina government’s inclination toward India. “We felt unwelcome there. It’s impossible to thrive in a hostile environment. Shortly after establishing our plant, we wrapped up and returned to Pakistan, which despite its many problems, is still our own,” shared a businessman.

Attempts to reach businessmen in Bangladesh were unsuccessful. Those who answered were apprehensive and flatly declined to comment.