KARACHI: Amid Pakistan’s deepening economic crisis, a Karachi-based textile unit, Naz Textiles (Private) Ltd, has announced its closure, indicating a broader collapse in the country’s export industry as other companies brace for similar outcomes, exporters revealed on Wednesday.
Official Notice to Employees
In an official notice issued on July 1, 2024, Naz Textiles informed its employees of the impending closure, advising them to seek alternative employment due to significant financial losses stemming from a lack of orders. The company announced that the last working day would be July 31, with all dues to be settled by August 10.
Industry Response and Impact
Muhammad Javed Bilwani, Chief Coordinator for the All Export Associations of Pakistan, confirmed the closure and attributed it to overwhelming taxation and soaring costs for fuel, electricity, and gas, which have crippled industrial production. He warned that numerous industrial units are likely to close in the near future, with exports expected to plummet over the next six months.
“Industries are struggling to complete pre-budget export orders, and many are on the brink of shutdown,” Bilwani stated. He highlighted widespread dissatisfaction within the business community, exacerbated by an unsustainable taxation burden that has reduced industrial output and increased operational costs.
Taxation and Economic Policies
Bilwani criticized the government for imposing exorbitant taxes on the export sector, amounting to 42%, without establishing an effective refund mechanism. He noted that the super tax and other levies have significantly increased the tax burden on exporters, making it challenging for them to sustain operations. He condemned the government’s removal of crucial export support programs, including the Export Facilitation Scheme (EFS), leaving the export sector vulnerable and financially strained.
“The current government’s economic policies have led the country into turmoil, and even reversing these decisions may not restore lost confidence,” Bilwani warned. He expressed concerns that the government’s taxation policies would devastate the export sector, increasing reliance on imports and steering Pakistan toward becoming a trading nation.
Naz Textiles’ Internal Decisions
Fahim, HR Manager at Naz Textiles, confirmed that the notice had been distributed but denied the complete closure of the company, suggesting that operations might continue beyond July 31. He explained that the notice was part of an internal restructuring process, including the removal of one of the two general managers, and assured that the company is exploring options to continue its operations.
Conclusion
Despite concerted efforts to maintain operations, Naz Textiles has faced a severe downturn due to escalating production costs and a significant decline in orders. The company’s decision to shut down highlights the broader economic challenges facing Pakistan’s export industry, with numerous businesses struggling to survive under the weight of financial pressures and adverse economic policies.
