Making Pakistan Textile City work

The countrys first WTO and ISO-14001 compliant textile processing industrial zone is due to be officially launched next week near Port Qasim, Karachi.
Named Pakistan Textile City (PTC), the special industrial zone is being developed as an exclusive industrial estate dedicated to value-added textile products, with separate clusters for weaving, denim, bed linen, knitwear, towel, apparel, dyeing and for support industries like zips, button, thread packaging etc.
Included in the list of offerings at the PTC is uninterrupted utility supply on the back of 250-MW coal-fired captive power plant that will also provide the byproduct steam to textile processing units within the zone, while selling excess power to buyers outside the zone.
The project, which is expected to create some 80,000 jobs, also features a dedicated water supply line, combined effluent treatment plant, one window operation, fire fighting system, and potable water supply line.
Wooed by the projects features, several Chinese buyers have already shown interest in buying plots in the zone, Zaheer Hussain, the projects CEO told a select band of industrialists and foreign delegates at the pre-launch ceremony held last week.
Zaheer, who said they were "not in for profits or making windfall gains", added that soon after the launch, the PTC, which is being built on public-private partnership basis, will be holding road shows in UAE, Turkey, and London to attract foreign investors.
Contrary to the optimism of the developers, however, the response of domestic textile players appears lukewarm.
"When the existing industry lacks proper infrastructure and the provision of basic facilities like water, gas and power, then who would be willing to install new plants elsewhere? "Our existing plants are working at 60 percent capacity. The government should support the existing industry and then go about undertaking such plans," the chairman of one of the Karachi-based value-added producers told BR Research.
A leading player Muhammad Razzak, Director Finance - Sitara Textiles, however, believes that the current economic situation of the country doesn support the required investment, whereas several others question whether the authorities would provide the promised facilities.
"If they have not been able to provide basic facilities (power, gas and water) to the existing industry, how will they keep their promise in the Textile City," said another leading player from Faisalabad, while referring to years of mistrust between the private sector and government.
Similar feelings echoed at the pre-launch ceremony in Karachi, when representatives of several leading companies expressed their doubts. Confiding their fears, they told BR Research that the project is unlikely to be completed in two years, and therefore they will just wait and see till the project is completed.
Participants also believe that power tariffs of the coal-based fire plant will be expensive, and therefore the government should be urged to provide gas for power production, while removing the burden of cross-subsidy on gas from the sector at the same time.
The most crucial reservation, however, is of the price and the payment structure. Priced at a whopping Rs21 million per acre, the PTC offers payment in four equal installments; the construction of plant and factory will be allowed only after the final payment has been made.
"They are short of funds, and therefore want all the funds to be paid before construction is allowed on the plots. But they must also realise, that it takes nearly two years to set things up, and nobody would want to pay 100 percent upfront and block their money for two years," says S.M. Muneer, the former director of the PTC and chairman of Din textile group.
Muneer, who had also voiced his concerns at the ceremony suggested that construction should be allowed after a down payment of 25 percent. This would enable parties to complete the construction of their plants in two years that it takes to develop the infrastructure of the Textile City.
So, while the project itself appears promising on paper, the goals it has set out to achieve may become formidable unless the concerns of the stakeholders are addressed by way of a combined effort from the government and industrialists.
Some of the suggestions, like the one offered by Muneer, are indeed "doable", as Federal Textile Minister Makhdoom Shahabuddin said last week. But whether the cash-starved developers including the fiscally challenged Federal and Sindh governments will actually follow through on the suggestions depends on the will of the politicians.