ISLAMABAD: The State Bank of Pakistan has refused to provide any financial assistance with low mark-up rate to the textile industry citing huge internal borrowing burden, sources told Business Recorder here on Saturday. The mark-up rate rose three-fold in 4 years. The rate, which stood at 3.5-4 percent in 2003-04, jumped to 16 percent in 2008.

A member of the Federation of Pakistan Chambers of Commerce and Industry, requesting anonymity, told this scribe that a few months back SBP Governor Dr Shamshad Akhtar during her visit to FPCCI, said that SBP is not ready for any financial assistance to textile industry especially with low mark up rates.

She emphasised that the bank was already preoccupied with huge internal borrowings. For instance, the government of Pakistan has already borrowed Rs 400 billion in the current fiscal year against the target of Rs 181 billion set for the year.

The inflationary pressure is likely to build up further, with headline inflation projected to be in the range of 8.0 percent for the whole year, higher than the target by 1.5 percentage points. The textile sector is facing numerous challenges amid high mark-up rates, shortage of energy, gas, unskilled labour, and imposition of GST on the import of latest machinery.

“We are demanding for the mark up rate to be not more than 5-6 percent as the high rate is not only creating trouble for industrial concerns but also making Pakistani goods uncompetitive in the global market,” sources said. Only because of high mark-up, nobody is ready to put up new industry. This situation can lead to massive unemployment that has already rendered 40,000 people jobless within four months (December-March 2007). Business Recorder, 2008

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