Latest news with #ExportFacilitationScheme
Business Recorder
2 days ago
- Business
- Business Recorder
Pakistan's textile mill shuts down leasehold spinning unit amid sector challenges
Arctic Textile Mills Limited, formerly called Khurshid Spinning Mills, has announced the immediate discontinuation of operations at its leasehold spinning unit, citing adverse conditions in Pakistan's spinning sector. The listed company, which manufactures and deals in all types of yarn, disclosed the development in its notice to the Pakistan Stock Exchange (PSX) on Thursday. 'The Board of Directors, in its meeting held on June 19, 2025, has decided to discontinue the use of the leasehold spinning unit with immediate effect. 'This decision was taken in view of prevailing adverse conditions in the spinning sector across Pakistan, characterised by declining demand, increased input costs, and persistent market uncertainty. The operations of the leased spinning unit have become commercially non-viable,' read the statement. The Pakistani textile sector plays a crucial role in the country's economy, contributing significantly to exports and overall GDP. However, the sector is currently facing challenges, including issues with the Export Facilitation Scheme (EFS) and high energy costs. Last week, the government, in its federal budget, imposed an 18% sales tax on imported cotton yarn. Hailing the decision, the All Pakistan Textile Mills Association (APTMA) strongly urged the government to extend the 18% sales tax to all yarns and fabrics, whether cotton or polyester, imported under EFS. Meanwhile, the board of Arctic Textile Mills informed that there will be no material financial impact on the financial position of the company due to the discontinuation of this spinning unit.
Business Recorder
2 days ago
- Business
- Business Recorder
Sustainable path to $100 billion textile exports
The Government of Pakistan appreciates the proactive engagement of textile sector associations in highlighting the challenges faced by the value-added textile export industry. The sector's role in employment generation, foreign exchange earnings, and industrial development is well-recognised, and it remains a central pillar of the government's export strategy. Recent concerns, particularly regarding the Export Facilitation Scheme (EFS), sales tax on cotton yarn, liquidity constraints, and market access barriers, have been raised vocally in national media. The government believes it is important to address these openly and constructively to foster a more sustainable and competitive textile export ecosystem. Breaking the thread: is EFS the reckoning spinning deserves? It has been argued that changes to the EFS have had an adverse effect on small and medium-sized enterprises (SMEs), leading to a loss of competitive edge, and there are calls for the restoration of the original scheme. It is crucial to recognise and safeguard Pakistan's unique advantage in locally produced cotton yarn However, the government's policy decisions regarding the EFS and the sales tax on cotton yarn are aimed at correcting long-standing market distortions and promoting equitable local value addition. The imposition of 18% sales tax on imported cotton yarn is a step towards leveling the playing field. Previously, imported inputs for export under EFS enjoyed a 0% sales tax, while domestic materials for the same purpose were subject to 18%. This created a significant disadvantage for local spinning and weaving sectors, encouraging reliance on imports even when local capacity existed. This measure is intended to foster local manufacturing and strengthen backward linkages across the entire textile value chain, from cotton growers to garment manufacturers. It is crucial to recognise and safeguard Pakistan's unique advantage in locally produced cotton yarn. This local supply chain serves as the lifeblood for countless small and cottage-scale manufacturers. Unlike larger entities, these vital players often cannot 'dream' of importing yarn from other countries, relying heavily on the immediate and accessible supply of even small quantities (e.g., 4 bags) of local cotton or cotton/poly blends to run their knitting machines. This segment is a significant employer and contributor to the value-added sector, and their ability to readily procure raw materials locally is a competitive edge that must be protected and amplified. The government believes these changes, over time, will strengthen the entire domestic ecosystem, benefiting all segments. Concerns regarding the potential misuse of the EFS scheme by certain entities, particularly regarding the import of fine count yarns (60s, 80s, 100s) by some giants, are legitimate. The government is committed to ensuring transparency and accountability. Any reported irregularities in the utilisation of imported raw materials and their correlation with export products will be thoroughly investigated to prevent exploitation of the scheme and ensure that its benefits are genuinely directed towards enhancing value-added exports. Over-reliance on the EU and US markets makes Pakistan's exports vulnerable to external shocks On the taxation front, there is emphasis on reinstating the exporters' final tax regime, stating its withdrawal has increased compliance costs and financial stress, particularly for SMEs. The government is committed to a transparent and equitable tax system. While acknowledging concerns about compliance costs, the move away from the final tax regime is part of a broader strategy to broaden the tax base, enhance revenue mobilisation, and ensure fair contributions across all sectors of the economy. Simplification of procedures to minimise administrative burdens remains a continuous priority for the Federal Board of Revenue (FBR), and the focus is on streamlining processes rather than a return to regimes that may have inadvertently narrowed the tax base. Monitoring industrial production: NA panel rejects FBR's budget proposal Liquidity for exporters is a valid concern, especially regarding delays in rebates under sales tax, customs duties, DLTL, and DDT. The government is actively working to implement automated, time-bound mechanisms for refunds. Substantial progress has already been made in digitisation, but exporters must also play their part in ensuring timely and accurate documentation to support this shift. Internationally, the 29% US tariff on Pakistani garments has rightly been flagged as a limiting factor. However, a broader view reveals that Pakistan's average tariff burden in the US is still lower than that of many competitors, including Vietnam, Bangladesh, Cambodia, and China. Trade negotiations remain ongoing, and the government continues its diplomatic efforts to expand market access, including with the US. Pakistan, US move closer to securing trade deal as tariff talks continue At the same time, Pakistan has already reaped substantial benefits from the EU's GSP+ status, with exports to the bloc doubling since 2014, reaching €8 billion in 2023. But over-reliance on the EU and US markets makes Pakistan's exports vulnerable to external shocks. The global market is shifting rapidly to man-made fibers (MMFs), which now account for over 70% of global fiber consumption The government encourages the industry to actively explore newer markets—East Asia, Africa, and emerging economies—just as competitors like Bangladesh have done with great success. Pakistan eyes East African market with new sea trade corridors Calls have been made for a national branding and marketing campaign for 'Made in Pakistan' garments. The government fully supports this, but such campaigns must be co-owned by the private sector, which has the insights, networks, and incentive to drive global brand building. The Ministry of Commerce welcomes partnerships on this front—through trade show participation, joint marketing funds, and digital campaigns. Warnings about the closure of export units, rising unemployment, and foreign exchange losses are serious. Yet, these are precisely the outcomes the government seeks to prevent—not through short-term relief—but through structural reforms that build long-term competitiveness. These reforms must be seen in the context of a broader industrial modernisation agenda. To reach the $100 billion export target, Pakistan's textile industry must break out of its over-reliance on cotton. The global market is shifting rapidly to man-made fibers (MMFs), which now account for over 70% of global fiber consumption. Pakistan lags far behind—with just 11% MMF share. Bangladesh, by contrast, has diversified aggressively into MMF-based apparel. Future growth lies in embracing these trends, and the government is committed to supporting this shift, including in technical textiles. Furthermore, associations must also turn inward and propose strategies for domestic production of dyes, chemicals, polyester yarn, and accessories. These inputs form a large chunk of Pakistan's textile import bill and are critical for backward integration. Reducing import dependency not only saves foreign exchange but strengthens resilience. Fiscal constraints are real, and every sector must contribute fairly to the national exchequer. Support for export industries remains a priority—but must be consistent with long-term fiscal sustainability and reform. On a final note, I wish to draw attention to an ambitious initiative by the Government of Punjab: the establishment of a fully compliant Garment City on 250 acres at the Quaid-e-Azam Business Park in Sheikhupura. This industrial estate is designed specifically to empower SMEs with modern infrastructure and compliance standards. The government invites the textile industry to partner with it in making this a showcase for Asia. Let us work together to strengthen Pakistan's textile value chain—through smart policy, shared responsibility, and forward-looking strategy. The $100 billion export dream is achievable, but only if we move decisively beyond short-term fixes and toward long-term transformation. The article does not necessarily reflect the opinion of Business Recorder or its owners
Business Recorder
3 days ago
- Business
- Business Recorder
Export-oriented sectors on the brink, PRGMEA tells PM
LAHORE: Pakistan's $11 billion value-added export-oriented industry —contributing nearly one-third of the country's total exports — has issued a strong SOS appeal to Prime Minister Shehbaz Sharif, warning that recent budgetary measures are set to derail the export-oriented sectors at a critical time. In a joint statement, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), in collaboration with the top export-oriented associations including PHMA, SIMAP, PSGMEA, PGMEA, PLGMEA, PCSUMEA and Sialkot Chamber of Commerce, demanded the immediate revival of the Final Tax Regime (FTR) and restoration of the Export Facilitation Scheme (EFS) to its original structure. The appeal was endorsed by industry stalwarts including PRGMEA Chairman Dr Muhammad Ayyaz Uddin and former Central Chairman Sohail A Sheikh, Sialkot Chamber of Commerce and Industry (SCCI) President Ikram ul Haq, PSGMEA Chairman Khawaja Masud Akhtar — whose company's footballs are used in FIFA World Cup tournaments — SIMAP Chairman Zeeshan Tariq, PLGMEA Chairman Syed Ahtisham Mazhar, PHMA Chairman Abdul Hameed and former chairman Khawaja Mushraf, PGMEA Chairman Annas Raheel Barlas, PCSUMEA Chairman Muhammad Jamal Bhutta, Majid Bhutta, Ansar Aziz Puri, Sheikh Luqman Amin and other prominent exporters and business leaders. They expressed deep concern that despite government slogan of 'export-led growth,' the reality on the ground is entirely opposite. The Government always talks about promoting exports, but in practice, no department seems to be on board. They pointed out that in the entire budget speech, the finance minister uttered the word 'export' only once — and that too in a negative context while imposing duties on imported yarn under EFS. Addressing the Prime Minister directly, the joint statement said: 'Honourable Prime Minister, we urge you to intervene immediately. Please convene an emergent meeting with the leading export associations and the Sialkot Chamber before this budget is passed. If this situation persists, Pakistan's most reliable foreign exchange earning sector will suffer irreparable damage.' They stressed that in such a policy environment, the government's vision 'URAAN PAKISTAN' of taking exports to $100 billion is simply not possible. The industry leaders were clear: 'We're not asking subsidies, exemptions, or special treatment—just a level playing field to compete globally. Unfortunately, the current policies have drastically raised the cost of doing business and severely impacted ease of doing business. Work must begin on a war footing to restore confidence and streamline processes. International buyers are actively seeking long-term clarity and stability in the EFS framework, as Pakistan stands at a strategic moment to attract business being diverted from China. This opportunity must not be missed. They said the abolition of FTR and the breakdown of EFS have created chaos in the industry. The Final Tax Regime, which once offered a simple and predictable tax mechanism, has now been replaced by complex procedures, audits, and refund hurdles, particularly hurting small and medium (SMEs) exporters. Meanwhile, the EFS—once a vital mechanism for importing essential raw materials not produced locally, or required by buyers to use their nominated suppliers to meet international quality standards, such as specialized materials and technical fabrics — has been bogged down by unnecessary conditions, limiting access to critical inputs and undermining export competitiveness. Business leaders emphasize that it is time for Pakistan to strategically move beyond cotton and adopt a more diversified, innovation-driven approach to value-added apparel exports. Copyright Business Recorder, 2025
Express Tribune
3 days ago
- Business
- Express Tribune
PM asked to save value-added sector
A man selects a dress for his child at a shop in the Saddar area of Karachi. Tailors claim they are losing business to readymade garments manufacturers. Photo: Jalal Qureshi/Express Listen to article Pakistan's $11 billion export-oriented value-added industry, which contributes nearly one-third of total exports, has issued a strong SOS appeal to Prime Minister Shehbaz Sharif, saying that recent budgetary measures are set to derail export-focused sectors at a critical time. In a joint statement, Pakistan Readymade Garments Manufacturers and Exporters Association, Pakistan Hosiery Manufacturers Association, the Surgical Instruments Manufacturers Association, Sialkot Chamber of Commerce and others demanded the immediate revival of the Final Tax Regime and restoration of the Export Facilitation Scheme (EFS) in its original structure. They expressed concern that despite the government's slogan of export-led growth, the reality on the ground was entirely the opposite. "The government always talks about promoting exports, but in practice, no department seems to be on board." They pointed out that in the budget speech, the finance minister uttered the word "export" only once and that too in a negative context in order to impose duty on imported yarn under the EFS. Addressing the prime minister, the joint statement said, "We urge you to intervene immediately and convene an emergency meeting with leading export associations before this budget is passed. If this situation persists, Pakistan's most reliable foreign exchange earning sector will suffer irreparable damage." In such a policy environment, they cautioned, the government's vision of taking exports to $100 billion under Uraan Pakistan was simply not possible. Industry leaders categorically said that they were not asking for subsidies, exemptions or special treatment, but just wanted a level playing field to compete globally. International buyers are actively seeking long-term clarity and stability in the EFS framework as Pakistan has a chance to attract businesses being diverted from China. The Final Tax Regime has been replaced by complex procedures, audits and refund hurdles.
Business Recorder
3 days ago
- Business
- Business Recorder
Pakistan's exporters urge PM to save value-added industry, seek FTR removal, EFS restoration
Pakistan's $11 billion value-added export-oriented industry—contributing nearly one-third of the country's total exports—has issued a strong SOS appeal to Prime Minister Shehbaz Sharif, warning that recent budgetary measures are set to derail the export-oriented sectors at a critical time. In a joint statement, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), in collaboration with the top export-oriented associations including PHMA, SIMAP, PSGMEA, PGMEA, PLGMEA, PCSUMEA and Sialkot Chamber of Commerce and Industry (SCCI), demanded the immediate revival of the Final Tax Regime (FTR) and restoration of the Export Facilitation Scheme (EFS) to its original structure. The appeal was endorsed by industry stalwarts including PRGMEA Chairman Dr Muhammad Ayyaz Uddin and former Central Chairman Sohail A. Sheikh, Sialkot Chamber of Commerce and Industry (SCCI) President Ikram ul Haq, PSGMEA Chairman Khawaja Masud Akhtar—whose company's footballs are used in FIFA World Cup tournaments — SIMAP Chairman Zeeshan Tariq, PLGMEA Chairman Syed Ahtisham Mazhar, PHMA Chairman Abdul Hameed and former chairman Khawaja Mushraf, PGMEA Chairman Annas Raheel Barlas, PCSUMEA Chairman Muhammad Jamal Bhutta, Majid Bhutta, Ansar Aziz Puri, Sheikh Luqman Amin and other prominent exporters and business leaders. The associations expressed deep concern that despite the government's slogan of 'export-led growth,' the reality on the ground is opposite. They pointed out that in the entire budget speech, the finance minister uttered the word 'export' only once, and that too in a negative context while imposing duties on imported yarn under EFS. Addressing the prime minister, the association urged the premier to convene an emergency meeting with the leading export associations and the SCCI before the budget is passed. 'If this situation persists, Pakistan's most reliable foreign exchange-earning sector will suffer irreparable damage.' They stressed that in such a policy environment, the government's vision of taking the country's exports to $100 billion is 'simply not possible'. 'We're not asking subsidies, exemptions, or special treatment—just a level playing field to compete globally. Unfortunately, the current policies have drastically raised the cost of doing business and severely impacted the ease of doing business,' the export associations stated. They said that international buyers are actively seeking long-term clarity and stability in the EFS framework, as Pakistan stands at a strategic moment to attract business being diverted from China. The exporters further said that the abolition of FTR and the breakdown of EFS have created chaos in the industry. 'The FTR, which once offered a simple and predictable tax mechanism, has now been replaced by complex procedures, audits, and refund hurdles, particularly hurting small and medium-sized (SMEs) exporters. 'Meanwhile, the EFS has been bogged down by unnecessary conditions, limiting access to critical inputs and undermining export competitiveness. Business leaders emphasise that it is time for Pakistan to strategically move beyond cotton and adopt a more diversified, innovation-driven approach to value-added apparel exports,' it added.
