Textile sector expansion plan under way: $3-5bn investment likely
By Our Staff Reporter
ISLAMABAD, Aug 27: Pakistan hopes to remain one of the three major cotton players in the international market along with India and China as an additional investment of $3-5 billion is being made in the textile sector besides arranging import of cotton from Uzbekistan.
Finance Minister Shaukat Aziz told a news briefing here on Wednesday that an agreement to import cotton from Uzbekistan would be signed shortly.
He said that textile industry in Pakistan required an investment of $3-5 billion in next three years for brining in new machinery. The industry has already made an investment of around $1.2 billion in the Greenfield project (very new units), he said.
He said that Afghan government has given positive indications to set up industrial units in Afghanistan near Torkham and Chaman from where the products would be exported to the US, as the two countries (US-Afghanistan) have free trade agreement (FTA).
He said that to meet the demand of textile industry the government is contacting the US, Germany, Japan, Italy, Belgium, China and Switzerland to offer concessional financing for local producers to import machinery. Some of the countries have export credit agencies, which are being contacted to offer credit facilities to Pakistani producers.
Textile industry has increased its exports by 40 per cent during last 4 years and value-added textile have grown by 56 per cent. With 15 million cotton bales the local industry can achieve exports worth $13 billion, he said.
The demand of the cotton for local textile industry would grow to 12 million bales while local production is 11 million bales, which is a good news for cotton growers, he said.
He, however, said the textile industry faced challenges of social compliance and contamination free cotton. Cotton bags would be used to avoid polythene and jute impurities in the cotton.
Responding to a question, he said that Central Board of Revenue (CBR) would bring three million taxpayers in the tax net from the current number of about 1.7-2.2 million taxpayers. A tracker system is being employed for this purpose. The experiment of new medium taxpayer unit (MTU) in Lahore after large taxpayer unit at Karachi was very successful.
New taxpayer units would also be established at Rawalpindi, Peshawar, Quetta and Karachi. Moreover, in Lahore taxpayers would be increased from 10,000 to 100,000 in MTU.
Responding to another question, the minister said Pakistan would borrow $300-500 million through bonds, to be used to repay expensive debt of $1 billion of the IMF, World Bank and the Asian Development Bank,
Textile sector Expansion but the time-frame and exact amount to be borrowed would be decided by end-September.
He said that ten major firms of international financial market had contacted Pakistan to act as lead managers for the bond issue. The government is analyzing their offers. Some of these companies include ABN Amro Bank, Deutsche Bank, United Bank for Switzerland, Barclay’s Financial House, Soloman Barney’s Smith and JP Morgan.
He said Pakistan was leaving IMF programme and was opting to get financing form international financial market, for which issuance of these bonds was the first step.
Pakistan planned to repay $100 million to IMF, $400 million to Asian development Bank and $500 million to the World Bank. He said Pakistan was further planning to finance its infrastructure and growth projects by borrowing through bond flotation in international financial market.
