Pakistani Business Community Fears That CPEC Will Damage Local Textile Industry

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Pakistan’s local business community has expressed fears that once Chinese textile companies begin relocating their textile units in tax free industrial zones across the country, as part of the China-Pakistan Economic Corridor (CPEC), local textile companies would be hit. 

“Whenever China enters any country it damages the domestic market – it’s a fact,” said Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Senior Vice President Jawad Choudhry told a group of journalists, according to a recent report in the Pakistani newspaper The Express Tribune.

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“Our industry is currently facing a declining trend due to the high cost of doing business and productivity, whereas China plays with price by increasing its production,” he said.

Pakistani industry experts believe that if China locates its textile units to Pakistan they will have an edge over existing domestic players due to benefits, such as tax-free zones, under the CPEC. Another benefit for Chinese textile companies would be low energy prices, since they are setting up their own captive power plants to feed their plants in Pakistan.

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“We expect the Pakistan government to share CPEC cost and benefit ratio with the local industry so that we can plan for our future investments,” PRGMEA Central Chairman Ijaz Khokhar said, adding that a CPEC business wing should be established to safeguard Pakistani industries as well as international investors.

Khokhar said that the Pakistani government should bind Chinese investors to establish new industries as a joint venture with local stakeholders with 49:51 equity ratios.

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“It is not possible for existing local players to relocate their industries in tax free zones in the current scenario,” he said.

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