The government is finalising incentives-laden proposals for the textile industry to lure industrialists who are planning to shift their production units abroad because of rising production cost in Pakistan.

The proposals are likely to be approved by the prime minister within the next few weeks.

A senior official said the federal textile ministry was receiving and giving final touches to proposals forwarded by each segment of the industry to save flight of multi-billion dollar investment most likely to Bangladesh.

"We had earlier planned to offer incentives in the upcoming textile policy," Syed Masood Alam Rizvi, secretary textile, told the Daily Times on Monday. "But we believe it can be announced earlier as we can't wait for the textile policy for long."

He said the ministry was in contact with the local industry and its representative bodies, and was striving to build consensus on the incentives' proposals.

"The government's effort to offer incentives is aimed at convincing the industrialists to operate in the country, as major shifting of textile units could cause damage in terms of employment."

The power corridors in general and the newly-established textile ministry in particular got serious shocks last month, when several textile bodies' representatives visited Bangladesh and announced that they would shift their operations to the neighbouring country, which offered tax-free investment opportunity to the Pakistani industry.

The move rang alarm bells in government quarters and made the textile ministry to meet the major textile players. The meeting called by the textile ministry ended on an agreement that the local industry would wait for the government's offer before finalising investment plan in any foreign country.

"In a free environment one can't stop anyone from shifting his or her business and production units," said Mr Rizvi. "But still the government is concerned that it could cause unemployment, and that's why we are here with a plan of incentives for the textile industry." He said the ministry had also approach the government agencies concerned, including the Central Board of Revenue, as most of the issues and complaints from the textile industry related to the tax authorities. "Textile units' shifting is a worldwide phenomenon now, and many production units have shifted to different East Asian countries during the past few months," he added.

The textile exporters witnessed a sharp decline in orders mainly in beadwear products from European countries after the European Union in March 2004 imposed a 13.1 anti-dumping duty on imports from Pakistan claiming that the cheap Pakistani products were harming the local textile industries.

Later, it announced that it would readdress the issue and conduct a fresh inquiry, but the matter has not been resolved as desired by the local industry and exporters.

Pakistan, which entered the WTO regime in January 2005, is among top five textile goods' exporters across the world. On an average the country exports textile products worth more than $8 billion every year. Beadwear is one of the five items belonging to a billion-dollar club of the textile groups, including yarn, cloth, knitwear and readymade garments.

"The bedwear exporters have very serious plans to move to Bangladesh," said a senior beadwear exporter, who visited Bangladesh last month and asked not to be named. "Actually the exporters and manufacturers are really disappointed at the way our government handled the issues of anti-dumping duty with the EU and market access with the US."

Dailytimes.com.pk