Call to fast-track carbon policy
Listen to article
LAHORE:
Garment manufacturers and exporters have said that Pakistan's first-ever National Carbon Market Policy, launched in November last year, demonstrates the country's commitment to emissions reduction but it lags behind regional counterparts in ambition, sector-specific coverage and global integration, potentially limiting its effectiveness in attracting climate finance and investment.
In a statement, Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Regional Chairman Dr Ayyaz Uddin observed that the new policy marked a significant step towards integrating carbon trading into the broader climate strategy. The policy suggested that the government could encourage investment in carbon capture and storage as well as renewable energy through public-private partnerships, besides revising the high Carbon Adjustment Factor to a more flexible rate by ensuring participation of startups and SMEs.
He recommended the launch of nationwide awareness campaigns and capacity-building programmes to involve communities and private sector as well as called for decentralising governance, encouraging regional collaboration and enabling cross-border carbon trading. Ayyaz Uddin stated that the government had pledged to reduce greenhouse gas (GHG) emissions by 50% by 2030, with 15% being unconditional and 35% depending on international support.
Meanwhile, India has pledged 45% reduction in emissions intensity by 2030 and China has set the goal of peaking emissions by 2030 and achieving carbon neutrality by 2060.
Bangladesh's Nationally Determined Contributions (NDCs) envisage an unconditional reduction of 12 million tons (5%) in GHG emissions from the business-as-usual scenario by 2030 and conditional reduction of 24 million tons (10%) with support from the international community. Bangladesh also has a strong focus on renewable energy.
The PRGMEA regional chairman was of the view that sector-specific coverage for Pakistan was narrow, where sectors having high emissions such as cement, steel and transportation were underrepresented in the country's strategy while regional peers – India and China – prioritised those industries. Advanced technologies such as carbon capture and storage, and green hydrogen production were also areas where Pakistan lagged behind, he stated.
He noted that the government was currently developing a nascent voluntary carbon market and was operating without a formal compliance framework. In comparison, India's market is more mature with a well-established PAT Scheme (since 2012) and discussions underway for a broader carbon trading mechanism.
Meanwhile, Ghana is in an emerging phase, with initiatives largely centred on REDD+ (Reducing Emissions from Deforestation and Forest Degradation) projects.
Ayyaz Uddin pointed out that Pakistan's carbon market efforts were currently focused on sectors such as agriculture and a developing energy sector. This contrasts with India's emphasis on heavy industry, including cement, steel, aluminium and power, Ghana's focus on forestry alongside renewable energy and transport, and Bangladesh's concentration on renewable energy (primarily solar and wind) and agriculture.
By addressing such challenges, Pakistan can strengthen its carbon market policy, attract international investments and become a key player in global climate action. While the 2024 policy was a step forward, bold reforms and enhanced integration with international markets would be crucial for achieving climate targets, he remarked.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Express Tribune
16 hours ago
- Express Tribune
Govt urged to restore EFS in original form
Listen to article Pakistan Hosiery Manufacturers Association Chairman Babar Khan has emphasised that the Export Facilitation Scheme (EFS) should be restored in its true spirit and local supplies should also be included in its scope as the scheme has contributed to boosting exports not only in the value-added sector but also across several non-traditional areas. Speaking at a press conference in Karachi on Wednesday, he noted that the process of depositing sales tax and receiving refunds was taking five to six months, which created liquidity issues. He was of the view that the spinners' lobby was demanding duties on yarn and fabric to maintain its monopoly and was misleading the government. "We make up to 70% value addition in imported cotton; therefore, we demand a long-term policy," Babar Khan said, adding that there was constant anxiety before every budget over possible policy changes. Karachi Chamber of Commerce and Industry (KCCI) President Jawed Bilwani claimed that the All Pakistan Textile Mills Association (Aptma) chairman had acknowledged during a Planning Commission meeting that the quality of their yarn was substandard. He emphasised that imported cotton was both cheaper and of better quality, which enabled exports of non-traditional products. The EFS supported exports after the downturn caused by Covid-19 and should continue as originally envisioned, he said and mentioned that all textile composite units were supporting their stance. In response to a question, Bilwani stated that the value-added sector had not misused the EFS and a real-time audit could be conducted, alleging that the misuse occurred in the iron and steel sector. He stressed that the scheme had opened up new export opportunities. Bilwani questioned how exports were increasing when hundreds of spinning units had shut down. He proposed that the government should give sales tax exemption on local cotton and yarn sales as well. Furthermore, he urged that utility tariffs for the spinning and export industries be aligned with those in the regional competitor countries. He recommended introducing a final tax regime instead of a normal one for export sectors and abolishing the advance tax collection. Meanwhile, at a joint press conference held at the PHMA Lahore office, the hosiery manufacturers and the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) demanded urgent action to restore the EFS in its original spirit. The request comes after local yarn and fabric producers demanded the withdrawal of the scheme, citing its misuse. The leadership jointly called on Prime Minister Shehbaz Sharif to intervene and halt policy shifts that were threatening to dismantle the EFS. They warned that the ongoing bureaucratic distortions, compounded by lobbying from the spinning sector for new tariffs, were pushing the small and medium enterprise (SME)-based apparel export industry towards serious crisis. PHMA Zonal Chairman Abdul Hameed and PRGMEA Regional Chairman Dr Ayyazuddin said the EFS had been introduced to allow duty-free import of raw material for exporters, giving Pakistan's apparel sector a competitive edge. "Instead of simplifying exports, the EFS has become bogged down by manual procedures and is now under threat from proposed tariff changes," said Abdul Hameed. Ayyazuddin stressed that the SMEs, which formed the bulk of the value-added industry, could not survive under such conditions. "We operate on thin margins and short timelines. The EFS was a breakthrough for us, but now it's being reshaped to serve upstream interests. These tariffs, reportedly pushed by the spinners' lobby, protect a narrow segment at the cost of Pakistan's largest job-creating export base." The industry leaders expressed concern over reports of potential imposition of duties on raw material like synthetic yarn, man-made fibre, technical fabric and accessories – none produced locally. "Any tariff on items under HS Chapters 54, 55 and 96 is unacceptable," said Hameed. "These are essential production inputs and taxing them means taxing exports at the very beginning." Speaking virtually, former PRGMEA chairman Ijaz Khokhar said the entire value chain had welcomed the EFS as a much-needed correction in policy. "But distortions are creeping in. The original vision of a seamless, transparent system is being hijacked," he said.
Business Recorder
4 days ago
- Business Recorder
Trade barriers and cooling supply chains: Apparel sector warns of setbacks
LAHORE: Seeking an urgent meeting with Prime Minister Shehbaz Sharif ahead of the federal budget, Pakistan's apparel sector; a vital contributor of over $9 billion in export revenue has warned that the country's value-added textile industry faces serious setbacks due to continued tariff barriers and restrictive policies that are choking supply chains. In a joint statement issued by the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) and the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), apparel exporters stressed that global buyers now demand certified, high-performance materials that are simply not available in Pakistan. Yet, import of such essential raw materials remains hindered by duties and outdated regulations. PRGMEA Regional Chairman Dr. Ayyazuddin and PHMA Zonal Chairman Abdul Hameed jointly demanded a direct and an immediate meeting with the prime minister ahead of the budget, warning that without urgent intervention, Pakistan could lose out on the global shift in sourcing patterns that has opened fresh opportunities for new exporters. Dr. Ayyazuddin emphasized that Pakistan still relies heavily on cotton-based exports — primarily denim and fleece — while nearly 80% of global apparel trade has moved toward synthetic and functional textiles. 'We cannot expand or diversify if we don't have access to the right raw materials,' the statement said. 'We are being penalized for importing items that aren't even produced locally.' Abdul Hameed pointed out that man-made fibers, technical yarns, performance fabrics, and critical trims — many categorized under HS Chapters 54, 55, and 96 — are subject to duties despite not being manufactured in the country. 'Keeping tariffs on non-available raw materials is equivalent to taxing exports before they even happen,' he said. Former PRGMEA chairmen Ijaz Khokhar and Sajid Saleem Minhas backing the joint demand highlighted that SMEs are particularly vulnerable due to rigid policies and lack of flexibility in global compliance. 'We've sent a detailed letter to the Prime Minister Shehbaz Sharif and commerce ministry outlining how certain recent policy changes, like the shortening of the Export Facilitation Scheme (EFS) input period from 60 to just 9 months, are unrealistic for the apparel sector,' he said. PRGMEA ex-chairmen Ijaz Khokhar added that the letter, addressed to the PM as well as the Commerce Minister Jam Kamal, strongly criticizes the abrupt shift in EFS timelines. He argued that value-added exporters often operate under just-in-time and never-out-of-stock business models, requiring longer input cycles to fulfil diverse orders. He said that the current restrictions, it warns, will disrupt operations and increase compliance burdens for exporters. Sajid Saleem Minhas added that the local spinning industry has not evolved to meet the requirements of today's global fashion market. Since we don't produce the materials our buyers demand, we should at least allow their duty-free import. Otherwise, we are locking ourselves out of high-growth product categories, he said. The PRGMEA and PHMA members also called for restoration of the Final Tax Regime (FTR) for exporters, stating that the shift to the Normal Tax Regime has led to complex audits and disrupted business continuity. We need simplicity and certainty, not additional paperwork and scrutiny,' the statement noted. Ijaz Khokhar also raised another concern which is the lack of government push on trade diplomacy, particularly with the United States, where Pakistani textiles face an average import tariff of 29%, compared to lower rates for competitors like Bangladesh and Vietnam. The letter suggests Pakistan negotiate preferential terms or targeted tariff relief with the U.S., especially for eco-friendly and sustainable products that align with global ESG compliance. He said that refund delays were also highlighted as a chronic problem. Exporters are facing severe liquidity shortages due to delayed disbursement of DLTL, DDT, sales tax, and withholding tax refunds. The industry has requested an automated and time-bound mechanism for refund processing to ease working capital constraints. Additionally, both associations emphasized the need for a strong national marketing campaign for 'Made in Pakistan' garments. They urged the Ministry of Commerce to initiate global trade outreach through embassies, digital platforms, and targeted B2B events to increase visibility and improve brand image. He said that this sector has the potential to double its exports in five years and added that we need the government to first remove these structural roadblocks. Sajid Minhas said that the Pakistan's value-added textile sector is one of the largest employers and a key contributor to national exports. The country cannot afford to lose this opportunity. We request the prime minister to meet us urgently and help align policy with global market realities. Copyright Business Recorder, 2025
Business Recorder
29-05-2025
- Business Recorder
PRGMEA opposes 18pc tax imposition under EFS
LAHORE: The Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) on Wednesday opposed any move to impose 18 percent sales tax on exporters under the Export Facilitation Scheme (EFS) and warned that such regressive measures will paralyze the garment export sector, stifle cash flow, and derail Pakistan's opportunity to capture a significant share of the global apparel market. Reacting to the proposals suggesting that the government is planning to slap a hefty tax burden on exporters, the PRGMEA voiced serious concern over what it described as a deliberate campaign by vested interests in the domestic textile sector to weaken the growth potential of the country's most dynamic and value-added industry — the ready-made garments (RMG) sector. The association called for the immediate withdrawal of any such proposal and demanded that the EFS remain untouched and fully functional to support exporters with timely and hassle-free access to tax-free inputs. Dr Ayyazuddin, PRGMEA Regional Chairman, stated that the EFS is not a luxury — it is a necessity for export-led growth. The garments industry is entirely export-oriented and sits at the end of the textile value chain, bearing the brunt of delayed refunds and multiple taxes. Exporters already pay sales tax upfront and wait for months to receive refunds, often facing a three-month delay, which severely hampers cash flow and operational capacity. Imposing additional taxes on top of this already burdensome system would be disastrous. Copyright Business Recorder, 2025
