Chinese keen to invest in textile sectorChinese keen to invest in textile sector
News added on 29-Jan-2014 in China

Chinese investors have shown interest to invest in the textile sector of Pakistan and offered government to relocate 200 spinning mills in Punjab, if land is leased at $8,900 per acre per annum and electricity assured at 12 cents, official sources said. The officials told The News that on the request of Punjab Chief Minister Shahbaz Sharif, the Chinese investors agreed to relocate their yarn making industry in Punjab, if the government removes infrastructure bottlenecks. "They specifically demanded availability of land in developed industrial estates at a yearly lease of $8,900 per acre and power supply at 12 US cents per unit," an official said, adding that the Punjab government is already developing large special export zones for this purpose and provision of land as desired by the Chinese investors will not be a problem; however, providing power at the rates demanded by the Chinese is not currently possible. This is possibly the reason that the provincial government has shown urgency in establishing 6,000MW coal-fired power plants, as the power rates could only be reduced by establishing low-cost power generators. The officials said that the Punjab government intends to establish two dedicated coal-fired power plants in its industrial estates, which will resolve the tariff issue for the Chinese. "The Chinese want to opt out of basic textile production at the earliest, as lower value addition in fabric and yarn does not cover the ever-increasing cost of production," Gohar Ejaz, group leader of the All Pakistan Textile Mills Association (Aptma), said. He said this is the reason that they are trying to buy out existing textile mills in the country, adding that buying majority shares in Masood Textile Mills Limited was their first success. However, he said, their attempt to lure other textile entrepreneurs have not met with success, adding that the reason is simple that the textile boom in Pakistan is on the cards. In two to three years, Pakistan will be a force to reckon within the textile world, he said. Ejaz said that besides buying majority shares in MTML, which is a composite unit, the Chinese have relocated their 15 spinning mills in Vietnam but have put on hold further relocation, as they explore investment opportunities in Pakistan. Pakistan is the most competitive producer of cotton-based products such as knitted shirts, denim and towels, besides home textiles where Pakistan has huge advantage, he said. Moreover, he said, Pakistan is the fourth largest producer of cotton, which is best dyeable fibre in the world and attracts foreign investors. Meanwhile, Aptma Punjab Chairman S M Tanveer said that the domestic investors are also upbeat about the textile sector of the country. They have earmarked everything that they earned in recent years for further investment in this sector, he said. "This time around, the investment will be in the value-added textiles," he said. Aptma has evaluated that if all the yarn and fabric that is being produced in Pakistan is utilised in the country the textile exports could cross $40 billion, he said, adding that this will require an investment of $8.7 billion. "In the first phase, the industry aims at converting entire 67,000 tons of yarn that we monthly export into fabric." He said there is a ready market for Pakistani fabric across the world. To produce fabric from the total yarn that is exported from the country will need to install 10,000 latest air jet power looms, he said, adding that this will mean 100 weaving mills each with 100 high-speed looms. Each factory, he said, will cost Rs2 billion. The total investment needed for converting spare yarn to fabric will be Rs200 billion or $2 billion. He said the industry needs government support in the form of low-cost project financing, adding that this should be achieved in the next three years. The textile exports, he said, will double to $26 billion in the next five years, if the government continued with its current industry facilitation policies. Tanveer who is also the chairman of the Punjab Industrial Estates Development and Management Company, said he is receiving requests for land for establishing textile units not only from domestic but Chinese and Turkish investors, as well. New industrial estates are being rapidly developed to accommodate all requests and the Punjab government is providing all facilitations needed in this regard, he added.

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