Pakistani industrialists shifting units to China

KARACHI- Some local exporters and industrialists have shifted their industrial units from Pakistan to China due to numerous tax incentives and better opportunities of market access across different regions, sources familiar with this development told The Nation on Monday.
Sources said that some export-led value added industries, either related to textile or non-textile sector, are being relocated to China. Pakistani industrialists are manufacturing their products in China and exporting to Pakistan. They even some time show their corporate presence here but their production set-up has been transferred to China, sources said. This trend has been on the rise owing to countrys negative perception among international investors and buyers, they added.
Sources said depreciation of rupee, increased cost of business, as well as global recession, has also taken its toll on export driven industries (including textiles). Such types of industries are also facing marketing problems due to security situation, and country image, with attendant concern over Pakistani producers ability to meet delivery deadlines.
In view of the long range of issues facing exporters like continued severity of the domestic energy crisis, political uncertainty in the country and law and order issues triggered manufacturers to move from Pakistan to other countries.
After exploring Bangladesh and Dubai, Pakistani exporters and industrialists are looking for China, aiming expected decrease in input cost, better prospects of tax inducements and concessions, improved infrastructure, cheap labour and an anticipation of getting attractive destinations to market their products.
The Chinese government is offering number of opportunities to foreign investors to invest there by establishing new industries and factories belonging to different sectors of economy. The Chinese government is providing free land for creating factory premises and godowns. There is no condition of paying income tax to the government by the investors.
Sources said that, a year ago. few exporters had moved to Bangladesh and Dubai and started industrial activities but could not sustain their presence for a long time on account of Bangladeshs deep political crisis and instability. Also, Dubai has been adversely affected by the global financial meltdown.
Meanwhile, PMs Advisor of Finance Shaukat Tarin had reportedly asked textile manufacturers to take countrys textile exports to $ 25b in next five years, through value addition. He had said that the Pakistani textile sector was currently converting 1m bales of cotton into less than a billion dollar ($ 0.94b) while it was $ 3.9b in China and $1.94 in India.
He maintained that textile sector was the largest export earner, employing 39pc of the total employment in the country and a major contributor to the national economy. He pointed out that Pakistan was ranked 12th in global textile exports. This ranking must be improved. According to data released by FBS, LSM has depicted a fall of 5.73pc during July-Feb FY09. The break up shows a decline largely broad based with major decline observed in production of petroleum products, automobile and food sectors. However, cement was amongst the sectors which showed a rise in production. Alone in Feb 2009, LSM posted a decline of 7.9pc YoY. There are many structural issues that need to be tackled but, most importantly, the severe domestic power shortages and deteriorated law and order conditions have created an environment that is least conducive for productive activity in the economy. LSM sector growth, in particular, the performance of export driven industries has been negatively affected amid energy outages, deteriorated law and order condition, and most critically, weaker external demand due to the recessionary tendencies in most of the major trading partner countries.