The 22nd Pakistan Leather Show in April was made more colourful by the fashion show organised by the garment manufacturers. This year’s show was jointly organized by the Pakistan Tanners Association and Pakistan Leather Garments Manufacturers & Exporters Association with the active cooperation of Export Promotion Bureau, Government of Pakistan.
Inaugurating the Pakistan Leather Show, commerce industry and production minister, Abdul Razak Dawood said that the Pakistan Government has decided to form the Pakistan’s Leather Development Board to discuss various prospects for developing the leather industry. He hoped that all the major stakeholders in the leather industry would be called to discuss the issue of whether the government should impose any duty on the finished leather as demanded by garment manufacturers.
The minister pointed out that the September 11 incident coupled with worldwide recession had a significant negative impact on exports but now the situation is improving. The footwear sector has recorded a growth of 23% and hopefully the sector will be able to export up to $50 million. There are four major stakeholders in the leather industry. Leather, leather garments, leather gloves and footwear and up to last year total export earnings stood at US$650 million. But the minister was strongly of the view that if they put in a little more effort and joined hands, the industry could export products of up to $1billion.
Chairman of the newly formed Pakistan Leather Garments & Manufacturers Association, Fawad Ijaz said in his welcome address that due to the high prices of leather in the local market, their main competitors, such as India and China, have gained an edge over Pakistan. They are selling leather garments at lower prices than Pakistan and he called on the government to impose a 20% export duty on exports of finished leather.
PTA chairman Masood Shaikh opposed the imposition of export tax on leather, claiming that the garments manufacturers were not able to fetch a better price for the products in the international market due to quality. Moreover, they are free to import finished leather duty free from any part of the world.
At present all exporters, including leather and leather garments exporters, are facing big problems with the dollar’s value in terms of the Pak Rupee falling rapidly. A leather exporter told Leather International that if the dollar falls further, their margin of profit would come down sharply and thus their existence would be at stake.
Exports of finished leather and leather garments are estimated to be US$700 million during the current fiscal year ending June 30, 2002, against exports of $650 million during the last year. Out of total exports Pakistan has already earned $455 million during the first nine months while $245 million are expected during the remaining period.
Later, the minister Abdul Razak Dawood assured a delegation from the Pakistan Tanners Association that there was no question of imposing any export duty on finished leather. According to a press release, the delegation met the minister on May 4.
He was informed that the exports of finished leather were down by 5.5% during the past nine months as compared with the corresponding period of the previous year but exports of leather garments were higher in this period when compared with the corresponding period of previous year.
Delegation members told the minister that the proposal from PLGMEA to impose duties on finished leather is illogical and even unethical and contrary to the national interest. The delegation said that out of twenty top leather garment exporters about twelve have their own tanneries and the remaining have arrangements with their affiliates to get raw hides and skins tanned and finished under their own control.
The raw hides and skins market today is dominated and controlled by the leather garment manufacturers who have created the situation whereby small tanneries are closing down and medium and large tanneries have had to reduce their production as they have to compete for export of leathers. If this situation continues it is thought that thousands of workers would lose their jobs.
The 23rd Pakistan Leather Show will be held from January 24 to 26, 2003, at Karachi Expo Centre.
