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Fast collapsing textile sector

PAKISTAN’S textile industry is fast collapsing after the closure of around 100 textiles mills and their Non-Performing Loans (NPLs) are massively rising, causing more setbacks to the struggling economy.  

Out of total of 250 textiles mills, these 100 mills located in Punjab and Sindh are feared to have added another Rs3 billion in the already piled up Rs630 billion NPLs by the end of June 2015, up 5.8 per cent from a year ago.

Though most of the increase in NPLs came from the agricultural sector because of the unfavourable weather conditions, the continued closure of small and large textile units is said to have speedily increased what is also termed “bad loans”.

Nevertheless, the way textile mills are closing down due to the lukewarm attitude of the ministry of commerce, their bad loans could soon pose a serious threat to the banking industry as well as the overall textile sector which is one of the vital pillars of the economy.

Banking industry, it is said, has started worrying as these NPLs are fast becoming unmanageable and has started bluntly refusing the textile industry to seek any kind of loaning with the result more and more mills are closing down in both the provinces.

While all regional economies are flourishing, Pakistan lags behind in terms of witnessing certain increase in exports. The dream of achieving $25 billion annual target of exports is fast becoming a difficult undertaking. The trade gap has widened by 18 per cent from $2.6 billion to $1.76 billion because of the decline in exports which have gone down by seven per cent while imports are up by six per cent. This all is happening despite the fact that oil prices still are very low and helped reduce the oil import bill that went down by almost $5 billion a year.

Among various sectors, textile industry has recorded the highest amount of bad loans which is whooping 28.4 per cent followed by automobile/transportation (19.2) per cent, electronics (16.8) per cent, shoe and leather garments (15.9) per cent and cement (14.9) per cent.

Meanwhile, the government is believed to have decided to effectively counter what it often terms “propaganda” that growth numbers are exaggerated. Critics of the government do not think that 5.7 per cent GDP growth set for the current fiscal year compared to 4.7 per cent of the last financial year is achievable. This is being said in the backdrop of the much needed tax and energy sector reforms beside the poor performance of the agriculture sector that registered 0.3 per cent negative growth in 2015-16.

There is an increasing consensus that without introducing structural reforms, the real turnaround in the economy will remain a distant dream and textile sector is one of the major sectors contributing heavily in country’s economy.

The industry needs incentives to come out of the present highly-sluggish mode to perform and that the government has to offer uninterrupted supply of power and gas along with other utilities to enhance overall exports which continue to go down due to one reason or another


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FAST COLLAPSING TEXTILE SECTOR PAKISTAN’S TEXTILE INDUSTRY IS FAST COLLAPSING

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