The leather and leather goods including garments, footwear and gloves exports registered a decline of 12.4 percent to $526.353 million during the first half of the current financial year (July-December 2008) against $600.830 million of the corresponding period of 2007-08.
The leather garments' exports slid down by 16.49 percent to $230.103 million during this period, as compared to $275.540 of previous year. Similarly, finished leather export also went down by 17.67 percent to $163.935 million against $199.116 million. This was stated by Pakistan Tanners (PTA) Association central chairman Agha Saiddain while talking to Business Recorder here on Friday.
He said that the government has already been informed about the future of leather exports. Leather is the second largest export-oriented industry of Pakistan and needs immediate remedial action and quick decision of the authorities to stop present downward trend, he added.
He said the government has also been requested to provide level playing field with neighbouring countries, China, India, and Bangladesh, who introduced new incentives to save the leather industry in the respective countries. Recently, due to global slowdown and weak demand, the Chinese government issued circulars raising export rebate from 11 percent to 14 percent on various leather items. India is already paying 11.50 percent, and Bangladesh 15 percent rebate on leather and leather garments, gloves and shoes. In these circumstances, Pakistan is losing its market share and tanneries are running on 50 percent capacity only, he said.
On essential chemicals like chrome and formic acid there is import duty of 20 percent and 25 percent, respectively. Higher tariff rates are to protect the local industry that hardly meets 40 percent of the total demand of these two inputs. Because of government protection to the manufacturers of these chemicals are fattening their profits at the cost of leather industries.
He said that government authorities have been informed well in time about the situation. However, despite the request the government has taken no decision on this issue of national importance. The leather industry is providing employment to more than 500,000 people in the country. He said that on the one hand the industry is facing stiff competition from China, India and other countries and on the other hand the government has fixed the NEQS (national environmental quality standards) much tougher than development countries.
The Federal Ministry of Environment is aware of this fact and no relief or relaxation of NEQS has been announced by the government. Some of the major international chain stores have stopped buying leather products from Pakistan because of non-compliance of irrational NEQS. He said it is the first time when the industry is getting no response against requests to various ministries.
He said that PTA has not even received any acknowledgement of its letters to various ministries, and added that the leather industry needs immediate attention of the government to save it from total collapse. "We are planning to have a meeting with Prime Minister Yousaf Raza Gilani and President Asif Ali Zardari to discuss serious situation the leather industry is confronted with," he said.
India has recently announced 11th leather plan with an outlay of Rs 9130 million in addition to 10th plan outlay of Rs 4000 million, he said, and urged the government to also take measures in the interest of local industry to as enable it to compete in the international market.