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Friday, March 1, 2024

SBP hinders the expansion of a major manufacturing company

The project as it will not only generate foreign exchange for the country but will also create employment for more than 15000 people in addition to tax collection by the government.

Pakistan’s textile industry is highly significant for the economy, accounting for 60% of the country’s exports. To survive in today’s highly competitive global environment, the textile sector must improve its supply chain, increase productivity, and enhance value-addition.

Faisalabad is the hub of textile industry which contributes to the Pakistani economy differently. It is responsible for the occupation of thirty-eight percent of the labor power in the nation.

However, textile sector became a major victim of economic upheavals in the country as power shortages, skyrocketing power charges and massive taxation led to closure of various textile mills mainly situated in Punjab.

Read more: 400 textile mills facing shutdown

In these circumstances, textile sector being the backbone of Pakistan economy needs special attention in order to bring colors to the fading economy.

Muhammad Maqsood Director /Group CFO at Interloop Limited shared that the manufacturing company is setting up an apparel manufacturing plant in Faisalabad. Most of the cost has incurred but the State Bank of Pakistan (SBP) is not allowing to open couple of Letter of Credit (LCs) for import of machinery.

 

He highlighted the importance of the project as it will not only generate foreign exchange for the country but will also create employment for more than 15000 people in addition to tax collection by the government.

He added, “delay in project is not good for us, for the country and for the people.” At the end, he appealed the Prime Minister, SBP and the Finance Minister to help them establish LCs.

Interloop is the manufacturer of quality socks, hosiery products, Denim apparel, cotton Yarn, activewears and fashion knitwear in Pakistan. It is a B2B manufacturing company based in Faisalabad, Pakistan. Its major purchasers are renowned international brands such as Nike, Adidas, H&M, Puma, Levi’s, Reebok and Target.

Pakistan is the 8th largest exporter of textile products in Asia. It is 4th largest producer and 3rd largest consumer of cotton. It comprises of 46% of the total manufacturing sector and provides employment to 40% of the total labor force. However, the country is not self-sufficient in the production of machinery, so it has to import that in order to establish the project.

Considering the situation country is going through, such projects can prove to be a blessing and a win-win game for all, including government, company itself and the public. However, the central bank has imposed strict conditions on imports in order to curb the trade deficit which has created hurdles for several businesses especially those who import their raw materials.