Energy shortages, law and order: numerous textile companies relocated to Europe, Bangladesh

As many as 34 textile companies have shifted their business to Europe and Bangladesh during the last few years due to power and gas shortage and the prevailing deteriorating law and order situation in the country, informed sources revealed to Business Recorder here on Wednesday.
Another reason behind the relocation or shifting of textile industry is better financial benefits of preferential trade agreements, uninterrupted power and gas supply to the industry, better law and order situation and concessions on taxes provided by the competitors, sources maintained.
Sources further said that a total of 34 companies have shifted outside the country; however every company has a number of units. This means that a large number of textile units have been shifted to other countries. Pakistan is expecting a bumper cotton crop of over 14 million bales for the current season. The industry is facing serious problems due to non-availability of gas and electricity therefore it is next to impossible for the industry to consume domestic cotton and fulfil export orders.
On the other hand, Bangladesh has been offering a lot of incentives, including uninterrupted power supply and tax-free status for the first ten years along with tariff-free access to the European Union markets. Pakistani businessmen have already invested heavily in Bangladesh owing to the aforementioned facilities. Sources further said that Bangladesh has been given tax-free access to 37 countries including the European Union, Canada and Australia, which is one of the key reasons that a large number of Pakistani textile units have relocated to Bangladesh. Sky-rocketing prices of inputs are another reason behind the shifting of textile companies to other countries where the cost of doing business was comparatively less than Pakistan.
Whereas, the number of textile units that have shifted outside the country may be in hundreds. USA as well as Europe is taking keen interest in the Pakistan textile industry, which has great potential. But due to shortage of gas and electricity, the industry is unable to meet orders, which has hurt the textile sector the most, as foreign buyers raise questions about the capability of the industry, which is quite alarming.
The textile sector is playing a pivotal role in the economic development of the country and is absorbing the skilled and un-skilled labour force. Textile exports comprise 57 per cent of total exports, whereas the sector was providing employment opportunities to 39 per cent labour, but large-scale relocating of textile units outside the country is negatively affecting the growth rate, sources maintained.