NEW LEATHER INDUSTRY

 LEATHER INDUSTRY:                                                                                                                                                                                                                                     The leather industry of Pakistan is confronted with stiff competition from the regional players who are supported by their governments in terms of rebates and different packages and needs support from the government to save the second largest export oriented sector, Pakistan Tanners Association (PTA) said on Friday.

Chairman PTA, Agha Saiddain, while talking to Daily Times told the government was informed in advance about this situation and requested to provide level playing field with neighboring countries.

“The governments of China, India and Bangladesh have introduced new incentives to save their leather industries,” he said.

Due to global slowdown and weak demand, the Chinese government issued circulars raising the export rebates from 11 percent to 14 percent on various leather items.

India is already paying 11.50 percent and Bangladesh 15 percent rebate on leather, leather garments, gloves and shoes.

India has recently announced 11th leather plan with an outlay of Rs 9.13 billion which is in addition to 10th plan with an outlay of Rs 4 billion. 

In these circumstances Pakistan is losing its market share and tanneries are running on 50 percent capacity, he lamented.

He said on the one hand we are facing stiff competition from China, India and other countries and on the other hand government has fixed the National Environmental Quality Standards (NEQS) much tougher than developing countries.

The Federal Ministry of Environment is aware of this fact and the government has announced no relief. 

He said some of the major international chain stores have stopped buying leather products from Pakistan because of non-compliance with the very tough NEQS. 

The export of finished leather has shown a decline of 17.67 percent in first six months of current financial year over the previous year. The exports during July-December 2008 were recorded $163.935 million against $199.116 million for the same period of 2006-07.

Similarly, the export of leather garments went down by 16.49 percent and overall exports of leather industry have shown decline of 12.40 percent over the same period of previous year. He said the total exports of leather, leather garments, footwear, gloves and leather goods were recorded $526.353 million for the period July-December 2008 against $600.830 for the same period of 2006-07.

He said there is an import duty of 20 percent and 25 percent on chrome and formic acid. 

“Due to government protection the manufacturer of these chemicals are increasing their profits at the cost of leather industries,” he added.

The leather industry is providing employment to more than 500,000 people in the country and leather industry needs immediate attention of the government to save it from total collapse. 

He said we are planning to have a meeting with PM and President to discuss this serious situation.