LEATHER INDUSTRY UNDER NEGLECT

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

June 25 - July 1, 20
12

Pakistan's leather industry has the potential to increase leather and leather products exports to five billion dollars per annum. However, it seems the industry is neglected much more than others are. Government remains evidently oblivion to genuine grievances of the industry regarding smuggling of wet blue leather and animals.

For last few months, Pakistan Tanners Association (PTA) has been demanding the government to slap ban on export of wet blue leather/wet blue split leather of all kinds, raw hides and skins and pickled leather. The export of raw materials are hampering production in the industry as it is creating supply shortages in the local market, said the PTA. The government has assured the industry of measures to check smuggling and mis-declaration in export of wet blue leather.

The leather and leather exports are showing declining trend. In July-May, 2011/12, overall export of leather manufacturers including leather garments, gloves, etc. fell five per cent to $472 million as against $494 million in July-May, 2010/11, according to statistics of Pakistan Bureau of Statistics. However, exports of leather gloves climbed 37 per cent. Exports of footwear went down sharply nine per cent $89 million from $98 million. Tanned leather earned the government $401 million in the first 11 months of the outgoing fiscal year as against $422 million in the same period last fiscal.

It is interesting to note that during the period under review, exports of non-textile group comprising carpets and rugs and sports goods rose 19 per cent to four billion dollars as compared to $3.6 billion a year earlier.

In a recent meeting of officials of trade development authority of Pakistan (TDAP) and office bearers of PTA, chief executive TDAP, Tariq Puri, directed the concerned officials of the authority "to take urgent action on measures suggested by PTA for controlling the mis-declaration and smuggling of pickle and wet blue". Other issues related to the government subsidies were also discussed in the meeting.

Leather industry is entitled to government funds for laboratory test and effluent treatment. On that, chief executive TDAP said: "All subsidies of PTA members in connection with exhibitions will be released within one month and subsidies related to outstanding claims on lab test and effluent treatment plant will be released once PTA members submit complete documents and funds are released by the ministry of finance."

Power crisis is stifling the growth of industries. Leather industry is also affected by this. While companies have resorted to alternative private electricity generation to keep working during load shedding, yet the cost of production escalates. Gas shortages are also affecting the leather industry. Small and medium footwear makers are defying the impact somehow by encouraging manual working during power outages. However, precision works need uninterrupted electricity.

Leather garments, gloves, tanned leather, and footwear are the major products of leather industry of Pakistan. According to an estimate, there are 450 leather manufacturing units operating in the country producing 60 million square meters as opposed to its production capacity of 100 million square meters. The industry accounts for merely seven to eight per cent of global production of hides and skins. Footwear industry is yet to utilize its latent potential. Footwear manufacturers manufacture 100 million pairs per annum whereas they can increase this figure by 100 per cent, said the experts.

Leather industry gives employment to more than 500,000 workers directly. It accounts for five per cent of gross domestic product (GDP) and five per cent of exports.

Leather industry of Pakistan poses serious challenges to the environment and human health. Wastewater is a major contaminant emitting from the leather industry. Generally, the industry causes three different kinds of pollutants namely solid waste, air emissions, and wastewater.

According to a conservative estimate, a tannery uses 50 to 60 liters of water for per kilogram of hide. The water is discharged in open pits without treatment. Tonnes of solid wastes are produced from these tanneries. According to an estimate, a tannery processing 10,000 kilograms skins per day can produce 5,500 kilograms of solid waste. In the same way, ammonia emissions during the processing do not only affect health of workers but also disturb natural balance. Various technologies have been developed to ensure environment friendliness of leather industry through for example reducing and recycling chrome in the wastewater and sludge.

Moreover, workers should be informed of safety measures, and provided with gears to avoid risks associated with the chemicals and direct exposure to hazardous processing.

Meeting environmental challenges is a daunting challenge for the industry and despite fine quality of leather products that Pakistan produces the industry is not likely to increase its share in the international market until it is able to comply with the national environmental quality standards.

Leather manufacturers have asked the government to lend due support to enable them to improve their presence internationally. Pakistani tanners have ample potential to move ahead and achieve five billion dollars export target within three years but in order to further develop the leather industry the government should provide some due incentives and concessions, said PTA in a statement.