Faisalabad district has made rapid strides in the field of industry after independence. It is now called the "Manchester of Asia" for its extensive development of textile industry. This development has been made possible by the continued efforts of pioneering entrepreneurs as well as workers over a period of four decades. Before independence, there were only five industrial units in Faisalabad City (then Lyallpur). Now, there are dozens of textile mills with other subsidiary units. Roughly, there are 512 large Industrial units, out of which 328 are Textile units, 92 engineering units and 92 of chemicals and food processing units. Other industries include hosiery, carpet and rugs, nawar and lace, printing and publishing and pharmaceutical products etc. There are also some 12,000 house-hold industries, which include some 60,000 power loom factories.
Brief History of Industrial Development
In 1947 there were 4 big Floor Mills, one Textile Mill, 12 Ginning units and 6 Engineering units. A few other industrial units also existed at that time. After independence, the large-scale migration of population, which included skilled workers and entrepreneurs, adversely affected the industrial set up. The government support also encouraged the entrepreneurs considerably, which resulted in rapid industrialization mostly in the textile sector.
Industrial Estate Faisalabad
An Industrial estate on Sargodha Road has been developed by Punjab Small Industrial Corporations (PSIC) over as area of 244 acres. Establishment of Industry in the estate is highly convenient because of availability of all the infra-structure through the PSIC.
Faisalabad Chamber of Commerce and Industry is a very strong and recognized chamber, which functions for the improvement and betterment of the business and industrialists community. The Chamber also gives suggestions to Federal Finance, Commerce Ministry, Provincial Finance, Excise and Taxation Ministry and Central Board of Revenue in formulating budget proposals or tax recovery proposals.
Besides Faisalabad Chamber of Commerce and Industry, there are number of other industrial associations each related to different sector of Industry or business. The role of these associations is similar to the role of Chamber but restricted to the sector concerned and relatively confined to lower tiers of the government.
The important Associations contributing to the Industrial growth are appended below:
- All Pakistan Textile Mills Association ( APTMA) Regional office, Lahore.
- All Pakistan Textile Processing Mills Association, Susan Road, Faisalabad.
- All Pakistan Bed Sheets and up-Hosiery Association, New Civil Lines, Faisalabad.
- All Pakistan clothe Exporters Association Faisalabad.
- All Pakistan Hosiery Mills Association Gulistan Colony, Faisalabad.
- All Pakistan Power Looms Association, Faisalabad.
- Export Processing Zone
An Export Processing Zone (EPZ) is being established near Khurrianwala as a joint venture of PSIC & EPZ.
Foreign investors are permitted to hold 100% of the equity of industrial projects without any permission of the Government.
No prior Government sanction is required for establishment of an industry outside Ex-Municipal Territorial Limit of Town Committee/Municipal Corporation irrespective of its cost and size except the following:
- Arms & Ammunition
- Security Printing Currency & Mint
- High Explosives
- Radio Active Substances
- Alcoholic Beverages or Liquors
- Cotton Ginning Industry
- Flour Mills
Transfer of Technology
There is no restriction on payment of royalty and/or technical service fees for the manufacturing sector. However, such agreements shall be registered with the State Bank of Pakistan.
The payments of royalties and technical service fees to foreign companies will be taxed at 15%. However, reduced rates under the treaties with different countries remain applicable.
The payment of franchise, royalty or technical fee in case of non-manufacturing sectors is allowed subject to following conditions:
In case of foreign investment in non-manufacturing sectors including food sector, the initial/lump sump fee should not exceed US$ 100,000 irrespective of number of outlets under one franchise.
A maximum 5% of net sales (excluding 15% Sales Tax) in the food sector may be allowed as franchised fee only for these items, which are core items of the franchised and are the specialties of the trade name. The payment of such fees is allowed on monthly basis. No item will be eligible for twice payment of royalty / franchised fee, e.g. soft drinks, etc.
Percentage/amount of fees etc. for other non-manufacturing projects is also be upto the maximum of 5% of net sales (excluding 15% Sales Tax).
Initial period for which such fees may be allowed to projects in non-manufacturing sectors should not exceed five years. Subsequent extension in time period may be considered provided these projects also make investment in alive upstream projects.
The agreements conforming to above guidelines will be sent by the sponsors to State Bank of Pakistan. However, any relaxation or deviation from the guidelines will require prior approval of the Cabinet Committee on Investment.
Industrial Financing Facilities
Following Financial Institutions in Faisalabad are providing various types of fixed investment industrial financing in the foreign and local currency to the industrial sector for establishment of new industrial units as well as for Expansion, Balancing, Modernization and Replacement (BMR) of existing industrial units within the framework of industrial/financial policies of the Government of Pakistan.
- Agricultural Development Bank of Pakistan (ADBP)
- Allied Bank of Pakistan Limited (ABP)
- Habib Bank Limited (HBL)
- Industrial Development Bank of Pakistan (IDBP)
- Muslim Commercial Bank (MCB)
- National Bank of Pakistan (NBP)
- Pakistan Industrial Credit & Investment Corporation (PICIC)
- Pak-Libya Holding Company (PLHC)
- Pak-Kuwait Investment Company (PKIC)
- Saudi-Pak Industrial & Agricultural Investment Company(SAPICO)
- Askari Commercial Bank
- United Bank Limited (UBL)
- PICIC Commercial Bank
- Alflah Bank
- Union Bank
- SME Bank
- Soneri Bank
Punjab Small Industries Corporation has launched a Soft Loan Credit Scheme to provide credit to Small Industrial Sector. The main priority sectors will be as under:-
- Service Industries
- Agro/Agro Support Industries
- Food Processing Industries
- Export Oriented Industries
- Import Substitution Industries
- Information Technology (IT) Projects
- Handicraft Industry
- Women Enterprises
The maximum loan limit will be up to three (3) million with debt equity ratio 60 : 40 for new units and 50 : 50 for existing projects. The mark up ratio will be 8% for new projects, 9% for BMR/Expansion and 12% for working capital loans. The repayment period will be 6 years for new projects, 5 years for BMR/Expansion and one year for working capital including grace period.
In order to promote the traditional crafts in Punjab, the PSIC is also launching a Soft Loan Scheme to provide loan upto Rs. 40,000/- at the mark up rate of 7% per annum with repayment period of two years including a grace period of 4 months to individuals/units with fixed investment upto Rs. 2 lac. 50% beneficiaries would be the women. Other details can be obtained from the Regional/Local Offices or the Headquarter of Punjab Small Industries Corporation, Egerton Road, Lahore.
Small & Medium Enterprise Development Authority (SMEDA) has also been established to develop small and medium enterprises in Pakistan through aggressive sector development programs, formulation of policy guidelines and facilitate the small & medium enterprises by providing a variety of support services.