Without guaranteeing rates of return Pakistan can’t attract foreign investors.
Pakistan’s economy needs foreign direct investment in the manufacturing sector where the country has a competitive advantage in global markets.

Instead of continuing with fiscal incentives that are a risky and generally costly means of attracting foreign investment, a level playing field should be ensured for foreign investors.

Pakistan’s yarn and fabric exports have declined in the past decade because of high prices.

The country has an advantage in coarse cotton yarn, but the world has moved beyond cotton to blended yarn made from cotton and manmade fiber. Fabrics made from various blended yarns are used to produce very high value apparel. Pakistan does not produce most of these yarns so it does not export high value apparel.

Instead of protecting the domestic basic textile industry, the aim should be to ensure the availability of high quality blended fabric and yarn for exporters so they manufacture high value apparel for exports.

Value-added exports are only going to pick up if apparel exporters have access to inputs at globally competitive rates. Fabric and yarn imports should be allowed duty free on bank guarantee that should be released automatically when apparel produced from these materials are exported and export proceeds realised.