LEATHER SECTOR HIT HARD BY WOT
Jan 18 - 24, 2010
The leather sector is badly hit by war on terrorism, said Aga Saiddain a leading leather exporter. He was the central chairman of Pakistan Tanners Association.
To save leather industry from disaster of war on terror we need to announce immediate relief package with more incentives than allowed in India, China and Bangladesh, he added.
In India, exporters are entitled to duty free import of 5 percent of the FoB export values. Machinery for treatment plants is exempted from customs duty and other taxes. Pre-shipment and post-shipment credit at 7 percent is available to export industry. Duty credit facility at 2.5 percent of the FOB values of exports is allowed. Duty free import authorization is for minimum 20 percent of value addition. For establishment of design centre at individual units, 25 percent of financial cost of such design centre is to be provided by the ministry of commerce, Aga said.
In an interview he said, "Export industry is facing severe pressure because of substantial increase in cost of business in the country. Importers preference for holding meetings outside Pakistan and shifting of visa offices in other countries on account of prevailing law and order situation is also matter of concern. The foreign buyers, who used to visit Pakistan for on-spot inspection to check the quality of goods and manufacturing facility, are reluctant to visit Pakistan due to o travel restrictions by their respective countries."
Aga Saiddain said the foreign buyers were forcing the exporters to hold business meeting outside Pakistan like Dubai, Abu Dhabi, Bangkok, Singapore, and Hong Kong. The foreign buyers/importers of Pakistani goods prefer holding of meetings outside the country provided the hotel charges, travel expenses including insurance cost are paid by the exporters; earlier they were used to bear all these expenses at their own, he added.
Some of the countries like UK have increased visa fee and presently they charge Rs 62000 for 5-year multiple visa. Frequent traveling by the exporters for holding business meetings have also added the cost for the export goods which is rendering our product uncompetitive in the international market, he maintained.
Despite providing all supporting documents, like visa recommendations from the chamber of commerce and industry, bank certificate, export performance, previous travel records, most of the embassies are reluctant to issue visa to genuine businessmen, he said. The embassies have adopted a new strategy to delay the visa so that the visits of Pakistani businessmen are delayed to such time when business opportunity at other end is lost, he added. He also pointed out that some of the countries have shifted their visa offices to their own countries or to some other country where they feel safety for their staff members. To get visa for UK, it takes six to eight months. They are operating from Abu Dhabi where Indian national is handling visa for Pakistanis. Some 500 passports have been lost in the UK Embassy in Abu Dhabi, which is pathetic, he claimed and questioned why these embassies keep original passports with them when visa formalities take so long.
The embassies can simply keep the copies and return passports to the applicants so that travel document remains with a person to visit other countries, he added.
Aga further pointed out that the process of transfer of technology has also been affected in the absence of foreign technicians' visit to Pakistan because of no travel advice of some developed countries. In the past, the chemical
Suppliers were sending their technicians to conduct trials of their new developments in our tanneries. Results of new R&D and innovations are not reaching Pakistan, which has pushed our industry to disappointing position like Africa, Bangladesh and other under developed countries, he said.
As a result of technology transfer Pakistan has attained number two position in the world after Italy. For last three years, he said, "Our tanners have stopped developing new products for upcoming fashion industry of Europe, USA and Japan." Moreover, the tanners and footwear manufacturers have not added new machinery in their factories for the last 4-5 years, he added.
Due to lack of product diversification Pakistan has lost its market share and India, Bangladesh, China have benefited from this situation.
Pakistan can become a raw skin supplier if the transfer of technology and new development remains away from our leather industry for next two three years, he said.
He revealed that there has been no foreign or local investment in leather sector for the last three years. Foreign investors are shy of investing in Pakistan due to war on terror and uncertain political situation in the country. He said that frequent changes in energy prices and increase in tariffs have caused negative impact on foreign and local investment. Conditionalities of IMF and the US have further created uncertainty and doubts among investors.
Apart from other factors, the higher mark up rate has created an environment not suitable for local and foreign investment, he said. Aga Saiddain also said there is a flight of capital from the country and people are investing in other countries. The government is focusing more on increasing foreign remittance at the cost of brain drain, which must be needed for the industrial development in the country, he said.
Since first two quarters of current financial year have already passed and no initiative has been taken by the ministry of commerce, the country, which had got rid of IMF, is forced to beg again and we are once against strangulated by conditionalities. Pakistan is a frontline country sacrificing its economy, human lives, and future on the war on terrorism but we have not been compensated for this by so called rich and developed nations, which have taken us for granted, he said.
"We are fighting against terrorism but we are being treated like a top terrorist country. Hypocrisy among our coalition partners is visible, as they want us to do more but without proper support. Pakistan businessmen are reluctant to visit countries who are our coalition partners in war against terror due to insulting behaviour of these countries at immigration counters," he maintained.
Aga said that leather industry may be allowed 25 percent subsidy on electricity and gas bills as allowed in Turkey. The leather industry may be exempted from payment of social security, EOBI, and other charges for two years. The leather industry may be exempted from withholding tax and export development surcharge for two years. The leather sector may be allowed export refinance at 5 percent, he added.
He said the government may take all traveling and other charges of international fairs with at least 75 percent subsidy. Like India, the government may announce investment grants from Rs 5 million to 25 million for technology up-gradation, expansion and capacity building. The government may ask coalition partners to facilitate training of trainers for various leather technical institutes of Pakistan. The government may announce various industrial parks as announced by the Indian government for leather, leather footwear, leather garments and leather goods. These parks may be equipped with all facilities and infrastructure and handed over to the SME and large size exporters on easy terms, he added.
He urged the government to allow duty free import of all types of tanning machinery and parts and to remove 16 percent sales tax on import of tanning machinery and parts.