Plgmea seeks level-playing field

Pakistan Leather Garments Manufacturers and Exporters Association (Plgmea) has requested the government to look into various factors that are hindering trade to compete with China and India and are necessary for the survival of leather garments and goods industry in the international markets. In a set of proposals sent to the government, Plgmea has pointed out that the government will have to support the exporters and provide level playing field to them.
It is said that Chinese exporters are swiftly capturing international markets with the assistance of their government, which heavily subsidises the exporters. "Our exporters are finding it difficult to compete with low cost Chinese exports and they will be forced to close down their businesses rendering thousands of workers unemployed if remedial measures are not urgently undertaken. Chinese exporters are supported by their government to a large extent through various subsidies and relaxation."
It is said that Indian government has also offered several incentives to its exporters to bring them at par with Chinese exporters. "Our exporters face disadvantage in costs as compared to Chinese and Indian exporters," it added.
There are several factors, which are hindering in competing with China and India. One of major factors is electricity. According to World Bank's study dated April 17, 2004, electricity charges are most expensive in Pakistan as compared to India and China. In Pakistan, its ratio is 3 percent of export value of leather garments, whereas it is 0.75 percent in India and zero percent in China.
Labour expenses constitute about 20 percent of cost incurred by leather garment exporters. The labour force here constitutes nearly 5 percent in the form of direct labour (pattern makers, cutters and stitchers) and 50 percent indirect labour (office and admin staff). In India, the labour expenses are about 12 percent, while in China this ratio is only 8 percent. The productivity of Pakistani work force is about 50 percent of the productivity of Chinese workers.
There is no local manufacturer of high quality trimming and accessories in Pakistan. Pakistani exporters have to import uneconomical quantities and incur excessive costs for short deliveries, documentation and transportation of these inputs. These inputs constitute nearly 18 percent of costs of the exports. The Chinese and Indian exporters, who have easy access to high quality local trimmings and accessories, incur only 12 percent of their costs on these inputs.
Unabated increase in prices of fuel in Pakistan is further escalating the costs of Pakistani exporters and making them uncompetitive. The exporters have to deal with several government agencies collecting various levies. In addition, the exporters have to bear not only the cost of couriers but also the sample costs.
Moreover, some chemicals, which are used for tanning new types of leather, have to be imported from the best producers in Europe urgently by air that increases the cost of R and D done by exporters.
Besides, exporters who are interested in developing new types of leather have to hire laboratory staff on high pay, incur expenditure on expensive chemicals, and maintain modern equipment for this purpose. Only a few exporters can afford these expenses. Now the buyers all over the world are demanding various product tests to be performed on the products being exported and inputs being used in this production. These tests are very expensive yet these have to be done on continuous basis. Several such tests have to be performed abroad. The cost of these is borne by the exporters.