Friday, November 11, 2011

Pakistan textile producers to relocate in Bangladesh

PHOTO: ARIF SOOMRO/ EXPRESS

SALEEM SAMAD

THE ENTREPRENEURS of Pakistan plans to relocate their textile manufacturing units to Bangladesh in a bid to reap advantages given to least developed country (LDC) of duty-free markets in European Union.

The textile and clothing entrepreneurs blame Pakistan for rising cost of production, power shortage, higher taxes and poor market access to developed countries, former textile minister Mushtaq Ali Cheema said.

It is understood that Bangladesh offered lucrative incentives, including uninterrupted power supply and tax-free status for the first ten years and tariff-free access to markets in the European Union.

In September a Pakistan business delegation held parleys with Bangladesh trade bodies and expressed their eagerness to relocate their textile industries to Bangladesh.

The exporters and manufacturers are disappointed with the Pakistan government for its poor business vision, which left the Pakistan textile in tatters, said Cheema.

Comparing business prospects in Bangladesh and Pakistan, Cheema said the cost of textile production is very high. Whereas, labor cost in Bangladesh is cheaper and the workers are more efficient, said the former textile minister.

Already several Pakistani entrepreneurs have invested in composite textile units in Bangladesh. The entrepreneurs argue that several facilities gives way to profit margin of an average 30 percent higher for textile exporters than in Pakistan, he added.

The international buyers and retail giants are reluctant to place orders with exporters for unpredictable breakdown of supply chain causing immense embarrassment, said the outspoken politician.

Another huge attraction in Bangladesh is the lack of tariffs in major markets such as the United States and the European Union. Classified as a ‘Least Developed Country,’ Bangladesh has been given special tariff-free access to markets in developed countries as an indirect form of aid.

Bangladesh’s textile industry has made such an impact on the global map that international buying houses have opened their offices there, which made Pakistani textile and clothing manufacturers to travel to Dhaka to negotiate orders for goods destined for markets around the world.

However, the entrepreneur’s business bodies are yet to explain the negative impact on millions of workers currently employed, after the textile manufacturer’s exodus from Pakistan.

Dr Mirza Ikhtiar Baig, Adviser to Federal Government on Textile said on Thursday that after withdrawal of complaints by Sri Lanka, Bangladesh and India at World Trade Organization would pave the way for duty free exports of 75 items out of which 65 textile items to EU.

He said Bangladesh was already enjoying duty free market access to the EU on account of Least Developed Country and already exporting about $10 billion of textile products to the EU as on year ended June 2011, whereas Pakistan’s total exports to EU during the same period was $3.3 billion out of which $900 million comes from the 75 items for which duty free market access was allowed by the EU.

Saleem Samad, an Ashoka Fellow is an award winning investigative journalist based in Bangladesh. He specializes on Islamic terrorism, forced migration, good governance and elective democracy. He has recently returned from exile from Canada after return of democracy. He could be reached at saleemsamad@hotmail.com