By Moonis Ali, WEEKLY PULSE MAGAZINE, October 28, 2013
The leather sector exports have declined 17.21 percent during the last six fiscal years from $1.220 billion in FY 2007-08 to $1.010 billion in 2012-13, said Pakistan Tanners Association.
This year the export of leather goods and allied articles would likely suffer a decline of around $350 million to $660 million in case the government fails to ensure uninterrupted supply of electricity and gas to the leather sector for the next 60 days.
The export of this sector stands at around $1.010 billion yearly.
This is necessary for the smooth processing of hides and skins of sacrificial animals collected on the eve of Eidul Azha, which is a vital need of the industry for smooth execution of exports orders and fetching precious foreign exchange for the promotion of country’s exports.
Pakistan Tanners Association (PTA) Chairman Saqib Saeed Masood said that this year (2013) around 5.5 million hides and skins were expected to be received from the sacrificial animals in the country.
He said this raw material industry desperately needs the uninterrupted supply of power and gas to enable the leather manufacturers for smooth processing of these perishable hides and skins within the humidity climate of the country otherwise PTA’s leather manufacturing units would be in great problem in processing the raw material to become finished leather with necessary addition and face financial loss. The country would also be deprived of the foreign exchange in failure of timely execution of export orders for meeting the foreign buyers’ demands.
PTA senior member Agha Saiddain said that the growth rate of leather sector exports was in minus and exports reduced to 14.09 percent as against positive growth in the region with 47 percent, 40 percent, and 102 percent in China, India and Bangladesh, respectively during the six fiscal years.
He said Commerce Secretary Qasim Niaz discussed the problems of this important sector, which was providing jobs to about 1.0 million people across the country at the meeting of all stakeholders of leather industry.
Pakistan has lost 39 percent global market share whereas the global growth rate from 2007-08 to 2011-12 was 40 percent.
The global share of Pakistan was 1.25 percent during 2007-08 in total global market size of $98 billion. The global market has grown to $137.96 billion during 2011-12 whereas Pakistan exports reduced by 14 percent during this period.
As against total exports of leather sector $1.220 billion during 2007-08 the exports recorded during 2012-13 were $1.010 billion. It is strange the country rich in livestock has just 0.76 percent global market share as against global share of 37.50 percent, 13 percent, 6.0 percent, and 3.50 percent for China, Italy, Vietnam and India, respectively.
The governments of these countries are paying special attention to the leather sector of their respective countries being labour intensive and providing jobs to the weaker section of the society.
India alone has injected 4,000 million rupees, 9,130 million rupees and 12,510 million rupees under 10th, 11th, and 12th Indian Leather Development Plans, respectively.
On the other hand under Strategic Trade Policy Framework (STPF) 2012-15 Leather Export Promotion Council was formed without any single initiative by the government during last one year.
PTA has been requesting time and again the government for ‘priority status’ of the sector but except announcement of Leather Export Promotion Council there is not a single practical step towards uplift of the sector.
Another major reason for decline is said to be energy crisis, which has hit all sectors in general but leather sector in particular.
Export of wet blue leather is another important factor retarding growth of our leather sector. Law and order situation, impact of war on terror, increasing cost of doing business and wrong policies of the Federal Board of Revenue were major irritants hampering exports of leather sector.
The government has withdrawn subsidy on setting up of Effluent Waste Water Treatment Plants allowed under STPF 2009-12. Immediate corrective steps need to be taken to halt stagnation and decline in exports in last five years.
Pakistan is at number two position after Italy as far as quality of leather is concerned and under these circumstances it is not difficult for leather industry to achieve the same growth rate of 46.60 percent.
Saidain said Pakistan lost 40 percent of its global share in last six years, which was alarming.
Stability has been witnessed in the rates of hides and skins of sacrificial animals on Eid-ul-Azha, as the institutions and political and religious organisations hold their collected stocks to be sold next week.
On the other hand in the local market the rates of hides and skins of cow/calf were sold in the range of Rs 3,500 to Rs 4,000 per piece, Rs 500 to Rs 600 for goat and sheep, while Rs 1,200 for camel hides.
The rates of hides and skins of the sacrificial animals were almost in the same range for the three days of the last year’s Eid-ul-Azha.