In Faisalabad, more than a hundred factories have shut down recently because of rising energy costs and high interest rates. This includes Sitara Textile Mills, one of the city’s major textile producers. Many other textile mills have also reduced their production by up to 40%. Recently, one part of Sitara Textile closed, leading to 900 workers losing their jobs.
Chaudhry Salamat Ali, leader of the Pakistan Hosiery Manufacturers and Exporters Association, said that these factory closures have left between 150,000 and 200,000 workers without jobs in Faisalabad. He warned that if the government doesn’t cut electricity and gas prices and lower interest rates to a single digit, more mills could shut down.
Ali also mentioned that most factories are no longer taking new export orders and are only finishing the ones they already have. He expects more factory closures in the coming month.
Pakistan Textile Exporters Association Head Calls for Government Action to Boost Exports Amid Global Shifts
Khurram Mukhtar, head of the Pakistan Textile Exporters Association, noted that global conditions are good for increasing exports. Many American and European brands are moving away from China, and issues in Bangladesh could help boost Pakistan’s exports. However, Mukhtar stressed that to take advantage of this, the government needs to lower energy costs and reduce interest rates to at least 14%.
Mukhtar also pointed out that the industry is struggling with higher taxes and delays in refund payments. He said that while Pakistan’s exports totaled $1.2 billion last month, they could have reached $2 billion. He emphasized that Pakistan has the necessary materials and production capacity but needs improvements in its business environment for better economic stability and job creation.
Mukhtar encouraged industrialists to stay hopeful, as the government is working on lowering energy costs. He asked for faster action and a clear plan to address the industry’s issues. He also criticized the recent budget decision to increase the advance tax on exporters to 2%, while the tax for domestic textile businesses remains at 1%. He called for a suspension of the extra 0.25% export development surcharge and the reinstatement of a tax exemption scheme for exporters on local purchases.
