$5 billion in textile export orders can shift from Bangladesh to Pakistan: former minister

While the ongoing political crisis and unrest in Bangladesh has caused concern among international brands that get their apparel manufactured there, it presents a significant growth opportunity for Pakistan's textile sector.

Industry leaders believe that disruptions in supply chains, delays in delivery schedules, and overall production difficulties in Bangladesh will prompt international buyers to seek alternative markets. This shift presents a potential boon for domestic manufacturers in Pakistan.

Former trade and industry minister Gohar Ejaz has claimed that $5 billion worth of apparel and garment orders from Western clothing brands could potentially move from Bangladesh to Pakistan. "The window of opportunity is only two weeks; otherwise, the orders will be placed in India, Vietnam, or Cambodia," he posted on X.

However, Pakistan's domestic textile mills face challenges due to high energy prices of 16 cents per kWh and heavy taxation on the export supply chain, he added. Gohar suggested that the government reduce energy prices to nine cents per kWh and immediately reinstate SRO 1125 to support the domestic supply chain for exports.

SRO 1125 enables the supply of raw materials like cotton yarn, grey fabric, and dyed fabric at zero percent sales tax with complete documentation. This regime, which was operational for seven years, has been suspended, requiring exporters to pay PKR 400 billion ($1.43 billion) in sales tax and then seek refunds after shipment. These refunds have been stuck for nine months.

Implementing these steps could enable Pakistan's textile industry to seize the orders shifting from Bangladesh, potentially creating hundreds of thousands of new jobs and adding $5 billion in export earnings for the country.