Pakistan is facing a major economic crisis with businesses struggling to continue operations and the country’s textile exports are in danger since factory owners are unable to import raw materials due to refusal or hesitation by banks to open Letter of Credit (LCs).
Exporters from the textile industry / sector have warned that situation may get worse with factories at the verge of closing operations completely as they are unable to fulfil current orders due to shortage of raw materials and the refusal of LCs by local banks.
The situation is made worse are exporters and factory owners are finding trouble getting new orders because international clients have lost faith in local factories due to the current economic situation and condition of factories.
“Exporters should be allowed to import 35% value of raw material against 100% value of export because without the import of raw material, we cannot export,” said Muhammad Amjad Khawaja, the Senior Vice Chairman of Pakistan Hosiery Manufacturers and Exporters Association (PHMA) (North Zone) and Faisalabad Chamber of Commerce President, Dr. Khurram Tariq, while holding a press conference this week.
Textile Sector Exporters Shares Concerns With Government – Demand Opening LCs for Import Worth 35% of Exports pic.twitter.com/BeBJ4rJmPR
— INCPak.com (@INCPak) January 8, 2023
Meanwhile, Arif Ihsan Malik, former Chairman of All Pakistan Bedsheets & Upholstery Manufacturers Association (APBUMA), Waheed Khaliq Ramey, Chairman Power Loom Owners Association, Chaudhry Muhammad Nawaz and Chaudhry Ijaz Ahmad Nagra, Chairman Power Loom Association, Hafiz Muhammad Asghar from APTPMA, Mian Kashif Zia and other industrialists were also present.
President Faisalabad Chamber of Commerce and Industry (FCCI), Dr. Khurram Tariq said that main problem being faced by Pakistan was the imbalance of payments. In exchange of 100% exports, the exporters should be allowed to import raw materials equal to 35% value because without raw materials, the factories will shut down.
He added that current government has completely failed to solve the country’s problems and recover its economy, which is now on the verge of collapse due to the clear difference in the exchange rate of Pakistani Rupee against the US Dollar (USD to PKR).
He said that putting the burden of line losses of one DISCO and doing the recovery from customers of other DISCOs was unfair and excessive. Meanwhile, Senior Vice Chairman PHMEA (North Zone), Muhammad Amjad Khawaja, said that country wasn’t just facing severe economic problems but factory owners and millions of workers were also at risk and suffering from severe problems.
Arif Ihsan Malik, former Chairman of All Pakistan Bedsheets & Upholstery Manufacturers Association (APBUMA), urged the government to consider the demands and solve all the problems of the textile sector as soon as possible.
Exchange Firms Offer to Open LCs
Meanwhile, the country’s exchange firms have offered the government to open Letter of Credit (LCs) for imports but willing to do at open market rates. The General Secretary of the Exchange Companies Association, Zafar Paracha, said, “If the government allows, the exchange companies are ready to pay up to $50,000 for pending LCs and open new LCs to facilitate concerns for the nation.”
He added that exchange firms are willing to finance imports and open LCs worth $200-250 million in the next month but would be willing to do so at Rs. 255 per USD compared to the interbank rate of Rs. 227 per USD.
Read more: Pakistan’s Forex Reserves Fall to New Low After Loan Repayments
