Spinning Sector Overview

SPINNING | REGIONAL COST COMPARISON • • 21 Pakistan has the second highest interest rate in the region behind Turkey. The high cost of borrowing acts as a barrier to investment in the country. In contrast, China has the lowest borrowing rate. However, the SBP provides subsidized financing at internationally competitive rates to the textile cluster. The Pakistani businesses face competitive disadvantage due to the high electricity tariffs it incurs which exceed all regional players. However, the government provides subsidized electricity and gas at internationally competitive prices to the textile cluster. In contrast, Sri Lanka and Indonesia have the lowest electricity tariffs in the region. Pakistan's minimum wage translates to 0.6 USD per hour which is higher than countries such as Sri Lanka, Bangladesh and India. However, we maintain competitive advantage of low labor cost over regional players China, Vietnam, Indonesia and Turkey. USD/kwh 2% 0% Electricity Tariffs 2.50 0.16 2.00 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 China Bangladesh Sri Lanka Vietnam Pakistan Overall Pakistan Textile Indonsia Turkey World Average 1.50 1.00 India Interest Rates 10% 8% 6% 4% India China Bangladesh Turkey Sri Lanka Vietnam Pakistan Overall Pakistan Textile Indonsia Minimum Wage Rates ..... 0.50 0.00 India China Bangladesh Sri Lanka Vietnam Pakistan Indonsia Source: Trading Economics, Statista.com, globalpetrolprices.com Turkey PACRA

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