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Declining exports taking toll on textile sector

ISLAMABAD: Non-performing loans (NPLs) of the textile sector have increased to Rs188 billion, indicating the after-effects of a constant fall in exports amid declining profitability, leading to huge defaults among industry participants.

These loans were obtained from private banks by several textile firms and have been outstanding for more than a decade now, Textile Secretary Hasan Iqbal informed a meeting of the Senate Standing Committee on Commerce and Textile on Tuesday.

The secretary said that most of these loans were taken from private commercial banks, including Habib Bank Limited.

Textile mills obtained these loans to fulfil working capital requirements and expand production lines, but the millers could not meet their obligations due to a decline in exports over past several years.

Another reason for default is that some companies have redirected their loans, meant for textile businesses, towards the real estate sector where there are greater returns, according to the Textile Division secretary. Some companies, he said, have also gone bankrupt. “Thousands of acres of land were purchased by these companies which also have capital in other businesses,” said the secretary.

Iqbal said NPLs amounting to Rs10 billion were recovered by the government over the past few years, adding, however, that the amount is not enough. Iqbal also said that a high amount of NPLs was one of the factors for low textile exports. “We can touch the $30-billion mark but are standing at $14 billion.”

Pakistan’s total exports plunged by one-fourth to $20 billion during first four years of the PML-N government.

Committee Chairman Senator Shibli Faraz urged the government’s support to resolve the lingering issue of huge NPLs, although majority of these loans were obtained from private banks.

Meanwhile, The Digital Printing and Signage Technology Exhibition brings modern machinery and equipment, which will spark revolution in the textile and printing industry in coming years, leading to job creation and higher industrial growth.

These were the opening remarks of Lahore Chamber of Commerce and Industry (LCCI) President Malik Javed Tahir at the three-day 3rd International Digital Printing and Signage Technology Exhibition.

The event began on Friday at the Lahore Expo Centre and around 150 local and foreign companies participated in the fair.

Tahir said foreign companies were exhibiting their products for joint ventures with local companies, which was beneficial for Pakistan’s economy as local companies would be able to manufacture modern equipment to save capital.

He urged the Trade Development Authority of Pakistan (TDAP) to facilitate local manufacturers in importing latest printing technology.

Responding to a question, he said the government had imposed unjustified regulatory duties on the import of raw material, which would be resisted by the business community at all levels.

“Around 500 textile units have already been closed due to unfavourable government policies,” he remarked.

Speaking on the occasion, Inks Global EMEA APAC Commercial Director Rudy Grosso said their ink technology had a great potential in the Pakistani textile market. “We will start from textile and go to food and other innovative industries in Pakistan for digitalisation purposes.”