S.KAMAL HAYDER KAZMI,
Research Analyst, PAGE
Aug 29 - Sep 11, 2011
Leather industry is the second largest export-earning sector in Pakistan which is representing highly dynamic, value added, and job creating industry.
The country has created its name and a separate identity in the international leather market and especially well known for leather made sports goods and sports wear.
Pakistan imports some rawhide, skins, and goods like handbags. Mainly the raw material of the leather products is imported, which is the main cause of higher prices of leather goods.
The leather finishing and made-ups industries represent an important sector in Pakistan, contributing almost more than half a billion US dollar in foreign exchange earnings to the national exchequer.
The leather industry consists of six sub-sectors namely tanning, leather, footwear, leather garments, leather gloves, leather shoe uppers, and leather goods.
The tanning industry plays a vital role in the progress of these subsectors by providing the basic material i.e. leather. Today, Pakistanis are among the leading countries in the production of leather garments and gloves.
The leather and leather made-ups industry plays a significant role in the economy of Pakistan and its share in GDP is four per cent.
Presently, leather maintained its second position in its group during April 2011. Its exports in this month amounted to Rs3,942.02 million as against Rs4,067.27 million in March 2011 and Rs3,095.45 million in April 2010 showing a decrease of 3.08 per cent over March 2011 while higher by 27.35 per cent over April 2010.
Exports of this item during July-April 2011 totaled Rs31,693.46 million as against Rs21,646.03 million during the corresponding period of last year showing a rise of 46.42 per cent.
In terms of quantity 23,009,613 sq. meters of leather was exported during July-April 2011 as against 18,358,687 sq. meters exported during the corresponding period of last year showing an increase of 25.33 per cent. The main buyers of leather during July-April 2011 included Hong Kong (Rs8,814.32 million), Italy (Rs4,146.84 million), China (Rs3,464.47 million), Korea Rep. (Rs2,995.52 million), Turkey (Rs1,658.41 million), Vietnam (Rs949.79 million), India (Rs932.22 million) and Indonesia (Rs920.88million) whose combined share in total exports of leather was 75.35 per cent as against their combined share of 73.49 per cent during the same period of last year.
The industry faced an acute shortage of raw materials as floods had swept away thousands of animals. Leather exports from last few years are continuously decreasing.
Furthermore, leather product prices and declining productions due to domestic power shortages and escalating raw material prices can make the products less attractive for exports.
Chinese leather products, being cheap and easily available, are creating hindrances for Pakistani leather exports despite the fact that the industry carries great charm for investment; Pakistani labor is quite cheap in cost and Pakistan being one of the richest cattle farming countries can produce low cost raw leather.
So far, the industry is concentrated only in a few cities of Punjab like Sialkot, Gujranwala, Lahore, and Multan. Keeping in view the superb quality of indigenous leather and low wage rate, foreign shoe manufacturers could join the local leather sector by setting up joint ventures with the local shoemakers.
The discharge of untreated effluents from tanneries is also a serious issue. Pakistani exports of tanned leather are on the increase following a decline of leather production in the developed world due to more stringent environmental controls.
The increase of tanneries in Pakistan is causing severe environmental degradation as the untreated effluent used in the tanning process is released into nearby water reservoirs and the sea. In addition, air pollution is on the rise with the tanneries burning residuals (i.e. hair) from the tanning process into the atmosphere.
The government must help the leather industry to set up treatment plants. It should provide financial support to research and development. This will also attract foreign investments in Pakistan specially in view of shifting of industries from Europe. Moreover, the government should provide regular funding to laboratory of international standards and human resource development. Huge funds for running of this institute are needed imperatively that ultimately will help leather industry to improve efficiency and quality of products enabling the sector to use local resources and raw materials in better way. The need of the time is to enhance investments in this industry.
|COMMODITY||JULY-APRIL 2011||JULY-APRIL 2010|
|Tanned/curst hide/skin bovine ani.||269,439||356.70||1,840,730||2,224.93|
|Tanned/curst dress bovine ani.||10,722,616||14,404.48||5,417,605||6,569.76|
|Tanned/curst hide/skin sheep/lamb||69,439||87.20||30,393||31.06|
|Tanned/curst dress sheep/lamb||2,748,099||3,649.67||2,257,134||2,338.00|
|Tanned/curst hide/skin goat/kids||83,877||112.66||151,737||205.64|
|Tanned/curst dress goat/kids||6,916,866||9,829.68||6,298,757||7,295.14|