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KARACHI: A nationwide strike by goods transporters has triggered growing concern among industrialists, who fear that a prolonged disruption in cargo movement could disrupt factory operations, delay export shipments and add further pressure to Pakistan’s already fragile economy. Business leaders have warned that the continued suspension of freight services could create serious bottlenecks in the supply chain, particularly for industries that rely on the regular movement of raw materials and intermediate goods. Any prolonged shortage of essential inputs could force factories to slow down production or temporarily shut operations. The industrial sector is also facing the risk of delays in the delivery of finished products to domestic markets and international buyers. Export-oriented industries, in particular, could suffer if consignments fail to reach ports or overseas customers within agreed timelines. President of the SITE Association of Industry (SAI) Abdul Rehman Fudda said the transporters’ strike had created a critical situation for the manufacturing sector, as industries could not maintain uninterrupted production without a reliable logistics network. He said factories depended on the timely arrival of raw materials and the smooth transportation of finished goods. Any disruption in freight movement, he added, could interrupt production schedules and increase costs for manufacturers. Fudda warned that the impact of the strike could extend beyond factories, affecting workers, suppliers, exporters, retailers and other businesses linked to the industrial supply chain. He pointed out that Pakistan’s export sector was already operating under significant pressure because of high production costs and other economic challenges. A disruption in transportation, he said, would further increase the difficulties faced by exporters. The SAI president cautioned that delays in export shipments could have financial as well as reputational consequences. International buyers may impose penalties, demand price reductions or seek compensation when shipments fail to arrive within agreed deadlines. According to him, exporters operate under strict delivery schedules, and even a temporary disruption in logistics can affect production planning, container bookings and shipment arrangements. Fudda stressed that the consequences of the strike should be assessed from a broader economic perspective rather than being viewed solely as a dispute between transporters and other stakeholders. He said an interruption in the movement of goods could affect the entire supply chain, from the procurement of raw materials to the manufacturing process and eventual delivery of products to customers. The industrialist further warned that repeated delays in fulfilling export orders could undermine the confidence of foreign buyers and make it more difficult for Pakistani businesses to retain existing international contracts or secure new orders. Industrialists have therefore urged the relevant authorities and representatives of goods transporters to resolve their differences at the earliest and restore the movement of cargo across the country. They maintained that an uninterrupted logistics system was essential for keeping factories operational, protecting jobs, meeting export commitments and supporting economic activity. Business leaders also called for a sustainable resolution to the issues behind the transporters’ strike so that similar disruptions could be avoided in the future. They said uncertainty in the movement of goods not only affects individual industries but can also have wider implications for investment, exports, government revenue and overall economic growth. With industries already facing a challenging business environment, manufacturers fear that a prolonged transport shutdown could further increase operational costs and compound supply-chain problems. They urged the authorities to prioritise negotiations and ensure the resumption of freight services without further delay.

KARACHI: A proposed move to withdraw the permission allowing factories operating in Pakistan’s Export Processing Zones (EPZs) to sell up to 20% of their output in the domestic market has triggered concerns among exporters, investors and international textile-recycling organisations, who fear the policy could disrupt investment, employment and a wider global circular-economy supply chain. The controversy has emerged after Pakistan committed to the International Monetary Fund (IMF) that it would amend the existing rules governing EPZs and prohibit sales from these zones into the domestic tariff area. According to the IMF’s latest programme review, Pakistan has committed to introduce amendments aimed at ending domestic sales by EPZ-based manufacturers. The report states that the amendments were to be placed before the federal cabinet for approval by September 2026. However, exporters and industry representatives have challenged the move, arguing that the existing 80:20 arrangement was part of the investment and regulatory framework under which many businesses established operations in the zones. Under the existing system, EPZ manufacturers can export 80% of their production while selling up to 20% in Pakistan after payment of applicable duties and taxes. Industry stakeholders say the domestic-sale provision is particularly important for products that have limited commercial demand in overseas markets. The proposed abolition has also attracted attention in the United States because American companies supply raw materials and used textiles to Pakistani businesses operating in the EPZs. The US-based Secondary Materials and Recycled Textiles Association (SMART) has approached IMF Mission Chief to Pakistan Iva Petrova, warning that eliminating the domestic-sales provision could have consequences extending beyond Pakistan’s industrial sector. The association has argued that Pakistan occupies an important position in the global textile circular economy, particularly in the sorting, grading, reuse and recycling of used textiles collected in North America and Europe. According to SMART, used clothing and textile materials collected in the United States, Canada and European countries are sent to Pakistan, where they are sorted and graded before being channelled into reuse, recycling, manufacturing and affordable consumer markets. The association has warned that ending the 80:20 mechanism could reduce demand for recovered textiles and place downward pressure on their prices. Such a development, it said, could weaken textile-collection programmes in North America and reduce the income generated by charitable organisations from donated clothing. Organisations including Goodwill, the Salvation Army and St Vincent de Paul depend partly on revenues generated from donated goods to finance a range of social programmes, including workforce training, employment assistance, food support, recovery services, youth programmes and housing assistance. SMART has therefore cautioned that a major disruption in Pakistan’s used-textile market could have financial consequences for charitable organisations in North America, with potential losses running into tens of millions of dollars. The association also warned that reduced demand for used textiles could ultimately result in a greater volume of reusable material being sent to landfills or incinerators rather than being recycled or reused. US exporters raise objections US exporters have also expressed concern over the proposed withdrawal of the 20% domestic-sale allowance. Their concerns are significant because American suppliers form part of the upstream supply chain that feeds Pakistani recycling and manufacturing units located in EPZs. Abid Iqbal, representing Nashmia Industries, said during Express News programme The Review that US exporters had communicated their concerns to Pakistani counterparts. According to Iqbal, US exporters had also been told informally that the IMF itself had not initiated the proposal to remove the 20% quota. The development has consequently raised questions within the industry about how the condition was incorporated into Pakistan’s commitments under the IMF programme and whether sufficient consultation took place with affected stakeholders. Industry representatives have also warned of possible legal and contractual disputes, maintaining that the 20% domestic-sales provision was part of the regulatory and investment framework under which businesses made their investment decisions. They argue that companies entered the zones with an understanding that they would be able to export the bulk of their production while disposing of a limited portion in the domestic market after meeting applicable tax and customs obligations. EPZ rules and proposed amendment The Export Processing Zones Authority (EPZA) operates under the legal framework established through the EPZ Act of 1980. The law enables the establishment of export processing zones with approval from the federal government. Under Rule 228(5) of the Customs Rules, EPZ-based factories have historically been allowed to sell up to 20% of their production in the domestic tariff area, subject to applicable duties and taxes. A higher limit of 30% had been applicable to the Resalpur area. EPZA has reportedly forwarded a proposal to the Federal Board of Revenue (FBR) to eliminate the 20% quota from October 1 in line with the IMF-related commitment. The proposal, however, has exposed differences within the government over the scope and interpretation of the IMF condition. Proceedings of the Senate Standing Committee on Industries held last month indicate that the Ministry of Industries and Production maintained that abolition of the 20% domestic-sales quota was not included in the original IMF agreement. According to the ministry’s position, the initial IMF requirement was restricted to preventing the introduction of new fiscal incentives, including tax concessions and subsidies, rather than immediately eliminating the existing domestic-sales mechanism. The ministry has reportedly argued that the later addition of the quota-related condition requires further clarification. Assessment of EPZs The issue is also linked to an assessment of Special Economic Zones (SEZs) and EPZs that Pakistan was required to undertake under the IMF programme. The government engaged consultancy firm AT Kearney to assess the zones and determine whether their operations were creating distortions in the domestic market. According to records presented before the Senate Standing Committee on Industries, the assessment completed last year concluded that EPZs were not creating significant market distortions. The report, according to the parliamentary proceedings, did not recommend withdrawing existing fiscal incentives. The issue has therefore become a point of discussion between government officials and the IMF as authorities seek to reconcile the lender’s programme requirements with

LAHORE: The cotton crop in Punjab is currently showing a generally satisfactory condition, while rice cultivation in the province has exceeded the government’s target by a significant margin, with growers sowing the crop over more than six million acres against the planned five million acres. The latest assessment was shared at a high-level meeting held in Multan on Saturday to review the progress of major standing crops, agricultural extension services and measures aimed at strengthening farming activity across Punjab. The meeting was chaired by Additional Chief Secretary Punjab Iftikhar Ali Sahoo and brought together senior officials from the Agriculture and Irrigation departments, representatives of the farming community and experts from the agricultural sector. Among those attending were Muhammad Nawaz Sharif University of Agriculture Vice Chancellor Professor Dr Asif Ali, Special Secretary Agriculture South Punjab Sarfraz Hussain Magsi, Agriculture Department Directors General Abdul Hameed, Naveed Asmat Kahloon, Dr Aamir Rasool and Dr Sajid-ur-Rehman, as well as Kissan Ittehad President Khalid Mahmood Khokhar, Syed Hassan Raza and Dr Muhammad Iqbal Bandesha. Additional Secretary Task Force Shabbir Ahmed Khan, Director General Crop Reporting Dr Abdul Qayyum and Agriculture Department Consultant Dr Muhammad Anjum Ali participated in the meeting through a video link. Officials briefed the meeting on the condition of major crops and the progress of field-level initiatives designed to assist farmers. Cotton remained a major focus of the discussion because of its importance to Pakistan’s textile-based economy and its contribution to agricultural incomes. The participants were informed that the cotton crop across Punjab was in a satisfactory condition. However, officials stressed the need for continued field monitoring and timely technical support to protect the crop from potential threats during its critical growth stages. Cotton is considered one of Pakistan’s most important cash crops and serves as a major source of raw material for the country’s textile industry. Its performance has a direct bearing on farmers, ginners, textile manufacturers and export-oriented businesses. In recent years, cotton production has faced challenges from changing weather patterns, pest attacks, input costs and competition from alternative crops. Sahoo emphasised that the government was giving priority to agricultural development and the economic well-being of farmers. He directed agriculture officials and field formations to maintain regular contact with growers and ensure that technical advice reached farmers in a timely manner. He said the strategy prepared for the revival and strengthening of cotton cultivation should be implemented in letter and spirit. Officials were also asked to remain active in the field and assist growers in dealing with crop-related issues. Highlighting cotton’s wider economic significance, the additional chief secretary said the country’s economy and textile sector could not be viewed separately from the performance of the cotton crop. He stressed the need for coordinated efforts to improve productivity and strengthen the position of cotton growers. The meeting also reviewed the progress of rice cultivation. According to the officials, rice had already been planted over more than six million acres in Punjab, exceeding the season’s target of five million acres. Sahoo directed agricultural authorities to intensify technical guidance for rice growers, particularly to help them improve productivity, maintain crop quality and adopt better farming practices. He called for greater involvement of regional agricultural forums and professional experts in addressing issues faced by farmers at the local level. Such platforms, he said, should use their technical expertise to help improve agricultural performance and provide practical solutions to growers. The additional chief secretary also appreciated the efforts of Agriculture Department field teams for their role in supporting farmers and monitoring crop conditions across the province. Later, Sahoo visited the Model Agriculture Mall in Multan to inspect arrangements for the provision of agricultural inputs to farmers. During the visit, he reviewed the availability of fertilisers and other essential inputs and sought information from officials regarding stocks and farmer demand. He directed the relevant authorities to ensure uninterrupted availability of fertiliser at the facility so that farmers did not face shortages during the ongoing crop season. Officials said crop conditions would continue to be monitored closely in the coming weeks. With rice cultivation entering the final stages of the transplantation period and cotton moving into an important phase of its growth cycle, timely field intervention and availability of agricultural inputs would remain crucial to determining overall crop performance. The government is expected to maintain its focus on farmer guidance, crop monitoring and input availability as the province moves further into the agricultural season.