Following Pakistan's accession to the EU's GSP+ scheme, Chinese firms are eyeing the country as a competitive destination for foreign investment in the textile and garment sectors.

Shandong Ruyi Technology Group of China last month acquired a majority stake in Pakistan's Masood Textile Mills at an estimated cost of US$25m.

Masood Textile is one of Pakistan's few vertically integrated textile plants with in-house yarn, fabric, processing, printing and knitted apparel manufacturing facilities. The company earned PKR906m (US$8.6m) profit after tax in the fiscal year 2012-13 (July-June).

The Shandong Ruyi group has also signed an agreement with the Punjab government to invest US$2bn to establish the Punjab Apparel Park near Lahore, and set up woven and knitted garment factories in the park.

Mian Muhammad Shahbaz Sharif, chief minister of the Punjab, says there are huge opportunities to invest in the province's textile and garments industry. As well as Chinese companies, those from Europe, Turkey and the Middle East are also looking to invest in the park, he explained. 

We are striving to double our textile exports from US$13bn to US$26bn per annum in the next five years, Aamir Fayyaz Sheikh, chairman of the international trade committee of the All Pakistan Textile Mills Association (APTMA), told just-style.

The sector requires investment of at least US$1bn per annum to grow production and exports, he elaborated.

Incentives to attract foreign investment in the textile sector include a regulatory framework giving equal treatment to local and foreign investors, ease of remittance of royalty, technical and franchise fees, capital, profits, and dividends, duty-free imports of machinery, equipment and raw material and flexible labour laws.