The Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has urgently appealed to Prime Minister Shehbaz Sharif, warning that local export industries are being pushed to the brink due to an unlevelled playing field that heavily favours foreign investors.
In a letter dated October 17, the association stated that while it welcomes Foreign Direct Investment (FDI), the current policy imbalance is making local manufacturers uncompetitive.
The core of the issue, according to the PHMA, is the disparity in incentives. The letter highlights that foreign investors in Special Economic Zones (SEZs) are offered tax holidays of up to 10 years, duty-free imports, and pre-developed infrastructure.
In contrast, local manufacturers are “facing a disproportionately harsh tax regime, policy unpredictability and rising input costs.” The association specifically pointed to the shift to the Normal Tax Regime (NTR) as a critical threat, eroding their already thin profit margins. It also highlighted that PHMA represents a sector generating over $5 billion in exports and employing the largest industrial workforce.
“This (regime) will eventually reduce the sector’s contribution to national exports,” the letter stated.
The PHMA estimates that companies operating in SEZs will enjoy a 6-8% net margin advantage, allowing them to undercut the pricing of established local exporters.
The association has put forward key recommendations for the government, including:
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Reinstating the 1% Full and Final Tax Regime (FTR)Â for the value-added export sectors.
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Developing a policy framework to ensure a level playing field between local and foreign investors.
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Engage in consultations with industry stakeholders before make any long-term policies.
The letter concludes with a request for a meeting with the Prime Minister’s economic team to present a detailed roadmap for sustaining the industry, which it describes as a “vital and high-performing sector of Pakistan’s economy.”
