Razzaq Dawood, special advisor to Pakistan’s Prime Minister on Commerce, said, “Every year, we will determine (prices) at the time of the budget. One of the main objectives is to give our textile industry internationally competitive electricity and gas rates.”
Pakistan will review the special energy rates granted to the textile industry by the government each year, taking into account prices offered by its competitors in the region, the country’s top commerce official said on Wednesday. The move is part of the South Asian nation’s latest textile policy, approved by the government, which seeks to consolidate recent growth in a sector that accounts for 60% of Pakistan’s exports. Pakistan competes with India, Bangladesh, and Vietnam in the textile export sector. It will be looking at the energy rates offered in these and other countries when determining support for its industry.
The country’s textile export target for this financial year is US$21 billion, compared to US$15.5 billion the previous year when total exports amounted to US$25.3 billion. The textile policy should have been finalized months ago but was delayed by differences between various ministries over the sweeping financial incentives and support traditionally given to the sector as Pakistan embarks on a fiscal tightening push.
Last month, the government removed tax exemptions given to several sectors in a bid to meet performance criteria set out in an International Monetary Fund (IMF) support program to curtail its budgetary deficit. The IMF has also asked Pakistan to review electricity tariffs to remove growing circular debt in its energy sector. However, the textile sector is not pleased with the news as changing tariffs each year could increase doubts, and profit margins could significantly alter energy, one of the primary influencers in the costing. The sector is looking for a consistent rate to increase the ease of doing business.
