Export potential is to cross $1 billion mark
May 13 -19, 2002
Pakistan's leather industry including tanners and
leather garment manufacturers collectively does a marvellous job by
retaining the top position in exports after the textile sector.
The average exports of leather, semi and finished
leather and leather products earn around $600 million a year and have
every potential to take the export figure to a billion dollar mark,
said Tariq Ikram, Chairman Export Promotion Bureau (EPB) while talking
to PAGE at a recently concluded leather exhibition held at Expo
Expressing his satisfaction over the performance of
leather sector in general, he said that to fully exploit the existing
potential of the leather industry it would have to move in diversified
products. He cited the example of leather shoes as one of the largest
exports earning items, which is exported to the tune of $6 billion
every year in the world market. He said that the leather industry
needs a push and guidelines to penetrate into the leather shoe
segment. He agreed with the idea that international leather
manufacturers can be pursued for joint ventures and international
designers to grab this huge market.
The internal rift between the garment manufacturers
and the tanners who export the finished leather is however giving a
bad taste about the health of the industry. Under the current scenario
the tanners supporting the concept of market driven policy to run the
trade and industry while the garment manufacturer seeking the umbrella
of protection by demanding levy of 20 per cent duty on export of
finished leather from Pakistan.
Pakistan Tanners Association (PTA) has however
strongly opposed the demand made by the leather garment manufacturers
and exporters of imposing a duty on export of finished leather from
Masood Shaikh, Chairman PTA pleads that garment
manufacturers enjoy the facility of duty free import of finished
leather. Local finished leather is available at 10 per cent less price
than the imported one.
The fact is that Pakistani leather garment
manufacturers are selling their garments at very low prices and
compete the cheapest garment segment with their competitors in India
The PTA chairman said that garment sector being not
innovative and efficient because of their dependence on the incentives
Out of 20 top leather garment exporters about 12
have their own tanneries and remaining have arrangements with their
affiliates to et raw hides and skins tanned and finished under their
While pointing out that the raw hides and skin
market is dominated and controlled by the leather garment
manufacturers who have created the situation that small tanneries are
closing down and medium and large tanneries had to reduce their
On the other side, Pakistan Leather Garments
Manufacturers and Exporters Association (PLGMEA) has refuted the claim
of PTA that the imposition of export duty on finished leather is
against the country's interest.
Fawad Ijaz Chairman of PLGMEA argues that leather
exporters in Pakistan have been enjoying protection of 20 per cent
export duty on the export of raw and finished leather for many years.
In fact the government has given protection by imposing export duty
and that is why the leather exporters were able to export finished
leather in a big quantity in the past.
Fawad also refuted the claim of PTA that the export
price of leather garments are low and pointed out that on average
export price of leather garments from Pakistan is much higher than the
average export prices of India and China.
He was of the view that if all the finished export
is converted into leather garments, Pakistan will earn minimum 30 per
cent more foreign exchange than being earned from export of leather
and in addition to this, 40,000 direct labor force and a similar
number of indirect force will also benefit from this industry.
He said loss in production of leather garments was
much more than the production and export of leather. The export of
finished leather increased $125 million to $167 million during
July-March 2001-02 compared to the corresponding period of last year
registering an increase of around seven per cent, while the export of
leather garments has declined from $286 million to $244 million during
the same period. This is a decline of 15 per cent over the
Apart from the arguments of the two factions of the
leather industry, the fact remains that instead of waging a war of
words against each other, the elders of the two important sections of
the leather industry should sit together to reach a consensus so that
the things could be sorted out gracefully.
It may be noted that recently, PTA and garment
manufacturers and exporters association jointed organized a leather
show in Karachi. Although Pakistan's leather sector enjoys a
respectable place in the world market, yet it was shocking to see
those foreign buyers and visitors avoided attending the leather show.
This state of affairs indicates leather industry is gradually losing
its luster to attract the foreign buyers. It is in the interest of the
country as well as the trade and industry to set aside internal rifts
and build an image of the country as the business friendly nation in
the eyes of the comity of nations.