Footwear industry can increase exports to $1bn by 2027: PFMA chief

LAHORE: Pakistan’s footwear industry is in a position to increase its exports to $1 billion by 2027, said Pakistan Footwear Manufacturers Association (PFMA) Chairman Zahid Hussain.

He said exchange rate in real proportion will be helpful in achieving the target of $1 billion by 2027. He underlined that the industry was probably the only sector which had reduced its import share drastically in the past three years.

In an interview with Business Recorder, Hussain highlighted that the sector’s domestic production had increased by 50% in the past three years mainly owing to import substitution.

He pointed out that footwear imports had gone down to just 1.6 million pairs from 26 million pairs four years ago.

“The target of exports worth $1 billion is not something out of the hand and is very much doable, keeping in view the growth of footwear sector in recent years,” he maintained.

“We are hopeful that we will achieve this target by 2027, by adding more export markets like China,” he emphasised.

The industry’s exports currently stand at around $130 million (16 million pairs) and its main markets are the United States, United Kingdom, European Union and Australia. Owing to the rising demand in global markets, “we are eyeing the Asia Pacific market and are likely to start exports to China by 2025,” he said. “Pakistan is currently manufacturing around 300 million pairs per annum.” Hussain revealed that some big groups were in the process of establishing new manufacturing units for exporting their products.

The government realised the potential of footwear sector and provided incentives by reducing import duties on almost 40 raw materials and intermediate goods, he cherished.

“The ‘Make-in-Pakistan’ policy has started giving results,” he stressed. Giving an example, Hussain said that the smartphone and footwear sectors had reduced their imports due to domestic manufacturing.

“Their exports have also started increasing,” he underlined.

“We have got everything in our supply chain including manpower,” he said, adding that raw material was the only area where the industry needed the government’s support.

“The government has responded positively and Pakistani manufacturers are ramping up exports,” he said. The reduction in import duties enabled the raw material importers to effectively establish their supply chain, which supported import substitution over the next three to four years, he elaborated.

“The shift has now gone towards manufacturing in Pakistan.” Talking about the past, Hussain lamented that the industry missed some opportunities in the past, as the sector was unable to align with previous governments on export-related matters. “Things are on a different track now.” Yet, there were some issues that needed to be addressed, he added. Hussain maintained that the government should give proper reasons before imposing certain taxes.

The government wants to collect taxes which “are now more than the income of a business”. “This cannot work,” he exclaimed. “If the government wants to collect taxes aggressively, then it has to show that it is better or equal in competitiveness with regional countries,” he underlined.

Zahid said that the shoe manufacturing industry is one of the ancient and major industries of Pakistan which produces high-quality finished products and has a great potential to grow. Pakistan exports footwear to more than 60 countries in five continents of the world. Pakistan’s exports of footwear have registered a high rate of growth in the recent past.

Revenue in the Footwear segment is projected to reach US 358 million dollars in 2021. Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 6.7%, resulting in a projected market volume of US 464 million dollars by 2025. User penetration will be 9.7% in 2021 and is expected to hit 14.0% by 2025.

However, with yearly exports of only $110 million, Pakistan’s share in global footwear exports is only 0.001 percent. All other countries in the region are exporting much more. These include India, Bangladesh and Sri Lanka.

While talking about the association, Zahid said that since its inception in 1983, PFMA is an association dedicated to promoting and enhancing the growth and development of the footwear industry in Pakistan. He also said that the primary objective of the association is to facilitate association members in liaising with government bodies in enhancing productivity and skill development.

Copyright Business Recorder, 2021