China and Pakistan will cooperate on the development of the textile and apparel sector of both countries.

This will include promotion of trade and investment cooperation, exchange of ideas for developing the sector, organizing and participating in fairs, exchange of information and support in business partner search, visits and event participation, training and working group arrangements.

The rising cost of business and environmental issues in China have made Pakistan an ideal destination for relocation of the Chinese textile industry.

The aim is multidisciplinary, multiple-format, diversified development of modern textile enterprises in the future. Chinese investors have been invited to take advantage of liberal trade and investment policies in Pakistan by entering into joint ventures with Pakistani entrepreneurs in the textile industry.

Pakistan allows foreign direct investment in all sectors, treats local and foreign investment equally, permits 100 per cent foreign equity investment, requires no government sanction and allows remittance of royalty, technical and franchise fee, capital, profits and dividends.

Another reason for the Chinese to invest in the textile sector of Pakistan is that the cost of doing business in Pakistan is lower compared to China.

Pakistan’s export-led growth package includes zero-rated sales tax for the textile industry, drawback of local taxes and levies at four per cent on yarn and grey fabric, five per cent on processed fabric, six per cent on textile made-ups and seven per cent on textile garments against the realisation of export proceeds.