Exports of leather and leather goods

Rice: Problems and prospects Exports of leather and leather goods WB Development Report 2000 - 2001 Shipbreaking industry

The new policy will identify the problems of exporters and their financing needs

From SHAMIM AHMED RIZVI, Islamabad
Sep 25 - Oct 01, 2000

Commerce Minister, Abdul Razak Dawood said that after textile, his ministry was focusing on promotion of export of leather and leather goods from Pakistan which had a tremendous potential. The government was preparing a new policy i.e. "leather vision" similar to "textile vision" with the same type of incentives to be offered to leather sector.

The Minister claimed that the "textile vision 2005" has been hailed by all concerned and the objective set therein would certainly be achieved. After textile, leather is an important export earning sector with a tremendous scope for growth. Export target for Leather Industry for 2000-2001 is $630 million against $270 million last year. Through new leather policy government intended to increase it to at least 1 billion dollars.

Addressing the inauguration of National Institute of Leather Technology of Pakistan, the Minister praised the export performance of the leather sector during the first 2 months of the current financial year which has showed an increase of 25% if compared to the corresponding 2 months of the last year. The new policy will provide all incentives and concessions to fully harness the potential in this sector. He disclosed that a meeting of stake holders in the leather industry will be held early next month to finalize Leather vision 2005" before giving a presentation to the Chief Executive and the Cabinet and finalise the package. After sectoral analysis of the leather industry the government, in consultation with the Industry, will finalise the package of incentives and concessions to increase exports.

Leather Policy will provide a broader framework to bring about improvement in its chain of processing and remove irritants at the export stages. The study currently being undertaken is also assessing the "financial back-up" that is needed to achieve desired goals in this important sector of economy.

The exports of leather and leather manufactures have witnessed a drop in the last five years, causing considerable loss to this industry that employ over 250,000 workers. Its share in total exports has declined from 8.0 per cent in 1994-95 to 6.9 per cent in 1998-99. The dip is registered both in exports of finished leather as well as leather manufactures.

As regard the leather manufactures, its exports had declined from 389 million in 1993-94 to 269 million in 1999-00. Leather made-up include shoes, uppers, jackets, gloves etc. However, the only plus point is the decline in exports of raw and semi-raw leather (wet blue) which indicates increase in the value addition. Its share in total exports has declined from 80 per cent to 60 per cent during the recent years.

The entire ranges that involves pealing of hide from the animal to its final processing is being studied to identify problems. It is being seen as to what level of education is needed for the labour involved in initial stages of hide preservation.

Particular emphasis is being laid to develop a mechanism to collect and preserve hides of sacrificial animals which are the best skins available and that too in the large quantity. The problems of tanneries and the downstream leather industry are also being looked into. The Policy will also identify problems of leather exporters vis-a-vis their financing needs and lack of access to the international market.

According to the sources, the major impediment in increasing leather exports is the price competitiveness our goods are facing in the international market owing to high cost of production. Similarly, there has been a very little improvement towards value addition that resulted in its low demand. At the domestic level, there is a lack of skilled manpower outside Karachi and Lahore. Non-availability of ancillary components and spare-parts for the processing industry has added to the problems.

Talking informally to the newsmen after a meeting with the members of Chamber of Commerce and Industry, the Commerce Minister said that economic salvation of the country lies in its exports. He said that during my meeting with the leading industrialists of the country we have visualised the 30 billion annual export target in ten years. It may sound too ambitious in the present circumstances but I am confident that it is achievable." If we wish to regain our economic sovereignty and get rid of foreign debts we will have to achieve this target", he added.

The achievement of 30 billion annual export target in ten years, as, visualized by the Commerce Minister and leading industrialists of the country may look like a tall order in the economic situation prevailing over the past many years. Examining it in the perspective of the country's track record in fulfilling plan targets generally, one may tend to dismiss it as yet another instance of wishful thinking. However, there can be no denying the urgency of making the best of the country's tremendous export potential to ensure its survival and release from the burden of accumulating external debt. It may be worthwhile to point out that although various strategies earlier adopted for export promotion from time to time were often appended with inspiring phrases, like 'export or perish' just for the sake of treating effect, how we are really in the midst of that kind of an appalling predicament. For, if we fail to increase our export earnings in a measure commensurate with our debt, defence and development requirements, we would lose the very chance of survival.

Hopefully now, the private industrial sector that had been relegated to the background, because of flawed policies and programmes of the past governments in a row and is now being conscientiously reactivated, and seems convinced of the prospects of a real export boom. This should be evident from their reported readiness to meet the challenge, positively responding to the government's realistic approach of taking them into confidence and associating them with the crucial primary phase of decision making in matters of vital economic importance. The variegated spread of the country's industrial sector, as built from scratch with the traditional enthusiasm by the entrepreneurs, should have sufficed to set the pace long before, for economic progress in the real sense. But the fact is, that despite its acumen, skills and resources, this pivotal sector of the economy had remained incapacitated and failed to make its contribution to national development mainly because of the flawed policies that continued to negate its enthusiastic moves in that direction. In this context, the minister's reiteration that departing from the past approach of utilising the bureaucratic inputs only, it has been considered imperative to interact with the private sector in the formulation of industrial policy, should have inspired the participants of the meeting to make practicable suggestions. Now that the industrial community has been given the chance of speaking its mind to the government on how best to help it improve its performance on the export front, indications are that the needful would be done.