Shanghai Challenge Textile Company, a Chinese company, has purchased 14.6 million shares of Pakistan’s Masood Textile Mills. This is a first-of-its-kind deal in Pakistan in which a Chinese group has acquired a majority stake in a local textile company. Chinese investors hope to have the advantage of better cotton prices and cost-effective labor by investing in a Pakistani company.

Masood Textile Mills is a vertically-integrated textile manufacturing company with in-house yarn, knitting, fabric dyeing, processing, laundry and apparel manufacturing facilities. It posted a pre-tax profit of Rs1.1 billion in 2013, which was 13 per cent higher than its pre-tax earnings in the preceding year. It produces value-added textile products, whose exports to the European Union are expected to increase due to the GSP Plus status that Pakistan has received.

Shanghai Challenge Textile Company is engaged in the production and distribution of high-graded outdoor fabrics and apparels. The company operates its business through weaving, dyeing and processing of knitted fabrics as well as the production and distribution of apparels, accessories and specialty textile products.

China is investing billions in Pakistan. These are mostly centered around the energy sector. Pakistan suffers from chronic electricity shortages and has long sought investments in coal-fired power stations. Chinese companies will help build at least four new power stations in Pakistan, while the deals also cover the supply and mining of coal.

www.challenge-21c.com/en/

Pakistan is yet to announce the new textile policy for 2014-19. This has created a lot of uncertainty for exporters. The government had announced several schemes in the Budget for 2014-15 as a part of the new textile policy, but in the absence of any textile policy, the sector is not getting the benefit of these schemes.

The textile sector contributes about 55 per cent to the country’s exports, besides providing millions of jobs. However, there has been no sign of a textile policy for about five and a half months. The previous textile policy (2009-14) failed to meet its targets. Initiatives could not be implemented due to shortage of funds and the energy crisis.

As announced in the finance bill 2014-15, a sum of approximately Rs 80 billion has been earmarked for the textile sector support schemes over a period of five years. Drawback for local taxes and levies would be given to exporters of textile products on FOB values of their enhanced exports on an incremental basis if increased beyond 10 per cent over the previous year's exports at the following rates; garments four per cent, made-ups two per cent and processed fabric one per cent. The incentives will be provided to exports made in 2013-14 (calendar year 2014) compared to exports made in 2012-13 (calendar year 2013).

A business directory has been launched for the benefit of Bangladesh entrepreneurs. It contains more than 25,000 addresses of global apparel buyers in 160 countries. The aim is to help Bangladesh entrepreneurs expand their export destinations and thus post higher growth of exports.

It also gives information such as import statistics, lists of importable items, and tariff and non-tariff structures on knitwear and woven garments across the globe. Bangladesh hopes to become a middle income country by 2021 and to reach export earnings of $50 billion. The country has started exporting goods to non-traditional markets apart from the traditional ones. Chile, for instance, will grant Bangladeshi products duty-free market access from January 2015.

The readymade garment (both woven and knit) sector is a prime source of the country’s foreign currency incomes. Of the over four million employed in apparel sector 80 per cent are women. Knitwear factories in Bangladesh have maintained an aggregate 12 per cent growth. There are efforts to increase knitwear exports by seven per cent within the next seven years.

However, a serious hurdle exporters face is that of irregular supply of power, gas and water. As a result knitwear factories are now running to just 60 per cent of their capacity.

The Bangladesh Bank will formulate a separate risk management guideline for the textile sector aiming to get most green outputs necessary to be competitive in the global market. The bank has already given an environment risk management guideline for the financial sector and would give a separate sector-specific risk management guideline for the textile sector.

The guideline is aimed at making the textile sector socially responsible, induce it to adopt green practices, make the production process sustainable and avoid water and energy waste. It urges business to adopt a broader, societal view while pursuing profit.

The corporate sector is being induced to invest in green practices as this will give it a long-lasting competitive edge in terms of wages, ethical business and being responsive to laborers. The tax implication of CSR expenditure implies that money should be spent in a transparent way.

Bangladesh’s textile sector contributes 80 per cent to the country's export and 30 per cent to the GDP. It is becoming the lifeline of the country and most banks have been investing in this sector. Some 52 per cent of corporate boards in the world address corporate sustainability and 65 per cent of CEOs have developed policies and strategies for a more sustainable operation.