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ISLAMABAD: Pakistan business chiefs are clamouring for the cash-strapped government to allow manufacturing materials stuck at the key port of Karachi into the country, warning that a failure to lift a ban on imports will leave millions jobless.

Faced with critically low US-dollar reserves, the government has banned all but essential food and medicine imports until a lifeline bailout is agreed with the International Monetary Fund (IMF).

Industries such as steel, textiles and pharmaceuticals are barely functioning, forcing thousands of factories to close and deepening unemployment.

The steel industry has warned of severe supply-chain issues caused by a shortage of scrap metal, which is melted down and turned into steel bars. In the past few weeks, the bars have reached record prices. “We directly feed materials to the construction industry which is linked to some 45 downstream industries,” said Wajid Bukhari, head of Pakistan’s Large Scale Steel Producers Association.

Pakistan’s economy grinding to a halt as dollars dry up

“This whole cycle is going to be jammed.”

Smaller factories have already shut after exhausting stocks, while some larger plants are just days from closing, he said.

With an import bill of around $150 million a month, the steel industry says its operations directly and indirectly affect several million jobs.

Latest data from the central bank said foreign exchange reserves had plunged to just $2.9 billion — enough for less than three weeks of imports.

“This situation triggers fears the construction industry will close down very soon, plunging thousands of labourers into unemployment,” the Constructors Association of Pakistan said, echoing calls for steel and machinery to be exempted from the import ban.

Years of financial mismanagement and political instability have damaged Pakistan’s economy — exacerbated by a global energy crisis and devastating floods that submerged a third of the country.

Alongside a shortage of raw materials, soaring inflation, rising fuel costs and a plummeting rupee have battered manufacturing industries. An IMF delegation left Pakistan on Friday after urgent talks to revive a stalled loan programme ended with no deal, leaving lingering uncertainty for business leaders.

The textile and garment industry is responsible for around 60 percent of Pakistan’s exports and employs about 35 million people, processing items such as towels, underwear and linen for major brands across the world.

“The textile industry should be prioritised,” said Shahid Sattar, secretary general of the All Pakistan Textile Association.

“We are the mainstay of the country’s exports,” he told AFP. “If you don’t have exports, how will you shore up your foreign exchange reserves? Then consequently, how will the economy recover?” After floods devastated domestic cotton crops last summer the sector is importing a significant amount of raw fabric.

Factory owners appealed to the finance minister last month for “direct intervention” to unjam the backlog, which also affects dyes, buttons and zippers.

“The textile industry has more or less come to a grinding halt in Pakistan. We don’t have raw materials to operate our mills,” Sattar said.

Around 30 per cent of the textile mills have shut down operations completely, while the rest are working at less than 40 per cent capacity.

Tauqeer ul Haq, the head of the Pakistan Pharmaceutical Manufacturers Association, said 40 medicine factories were on the brink of closure because of a lack of key ingredients.

Pakistani economist Kaiser Bengali said the supply-chain crisis was “feeding inflation and also hitting the government’s revenues”.

It is also escalating unemployment and fuelling poverty, with a large proportion of construction and factory workers in Pakistan paid daily.

“On average during regular production, workers are paid for around 25 days (per month) but now they are getting wages for 10 to 15 days. While some companies have even suspended their production and workers will only get paid once manufacturing resumes,” Bengali told AFP.

Nasir Iqbal, an economist at the Pakistan Institute of Development Economics, said export bans like the one currently in place “can never be a sustainable solution”.

Comments

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Abid Feb 14, 2023 08:53am
Have almost gone back in stone age.......
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Hassan Suleri Feb 14, 2023 11:55am
"30 per cent of the textile mills have shut down operations completely, while the rest are working at less than 40 per cent capacity" - this is not because of ban on imports rather due to price hike in export markets owing to global energy crisis where they are already sitting on tons of imported inventory and have stopped further purchase till existing stocks clear.
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questionnmarkss Feb 14, 2023 02:38pm
seems the US (via IMF) is teaching Pakistan a lesson for not being compliant with the 'master' regarding the previous policy in afghanistan
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Muhammad Ali Panhwar Feb 14, 2023 03:56pm
The construction industry is being badly impacted by the non-availability of raw materials for steel bars. Within just three months, the market price of 60 grade steel bars has risen from 210,000 to 310,000 PKR per metric ton, and the same trend can be seen with concrete and other materials. These price increases will halt both existing and new projects, as they will become unaffordable. This will lead to increased unemployment and a decrease in the purchasing power of people directly or indirectly associated with the industry, including the 70 allied industries. Such a massive loss of employment could result in a law and order situation. The government should immediately remove the ban and allow the import of raw materials for the steel (construction) and textile industries.
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TimeToMovveOn Feb 14, 2023 05:34pm
@questionnmarkss, Dont blame the US. This is all your fault. You did not run the economy well, and you want to continue doing so with IMF help. The IMF refused. The reforms that IMF is suggesting -- such as remove subsidies for the rich people-- is something that Pakistan should do on its own. Why does Pakistan allow imports of BMWs for the army, but leaves food and medicines stuck at the port. The IMF wants to fix this. Even if the IMF is teaching a lesson, it is a good lesson. Pakistan is like a problem student who refuses to study learn. The IMF is like a strict teacher which has to force Pakistan to learn. So Thank the IMF!
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bonce richard Feb 14, 2023 06:13pm
@Abid, Bacuase of Punjabi
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Prof. Dr. Muhammad Abdul Quddus Feb 15, 2023 11:16am
Tax to the elite class and in real terms and compensate the poor masses. Sale out Governor's houses and the GORs. Follow Allah Subhanahu Ta'ala and Hazarat Muhammad Sallalahu Elayhay Wasalam's Teaching to make our country Pakistan develop and flourish, In Shah Allah
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