Pakistani Leather Industry – A Marketing Report


Pakistani Leather Industry – A Marketing Report

INTRODUCTION AND BACKGROUND

Pakistan is already recognized in the world for its export of finished leather. The need has arisen to make our leather into further value-added items. The export of leather goods from Pakistan fits the bill. The time is here to concentrate on the export of leather goods, which would fetch more value in the international market. The item can be exported year round and is not subject to seasoned export like leather or leather garments.

 

PRODUCT DEVELOPMENT

Leather goods have the potential to be developed for international market and on the international export standards. This conclusion is drawn on the basis of the following facts and research:

 

  • Major part of product is made out of indigenous material available locally.
  • In the local market leather goods have already been adopted and people are using these frequently.
  • More often leather goods make good give away and presents.

 

Due to their improved quality over the last few years considerable demand has been noticed with the incoming foreigners. The leather products have comparative edge over other gift items from Pakistan; i.e. in quality and price from items like carpets, leather jackets, handicrafts made out of wood and brass.

 

The packing on all export of leather goods need to be improved. However concentration is needed to further bring down the price level to international standards during manufacture/production. This can easily be achieved which manufacturing units are geared up for export production and sizeable export orders are processed year around.

 

NEED FOR PROMOTION

 

It is essential that as an export item leather goods should be pushed rather over the leather. Following observations will adequately prove the above axiom:

  • It is more value-added incentive.
  • It is a new item and therefore can create its own place in the market without hurting the present export products currently being exported from Pakistan.
  • It has all the potential of being exported existing market where other Pakistani products of repute have already gained a foothold.
  • Leather goods being a new industry in Pakistan has a great chance to grow and broaden its base culminating export oriented industry.
  • Pakistan’s leather products have gained an international reputation and are now recognized world over.

 

IMPORTANCE OF LEATHER SECTOR FOR THE ECONOMY

The leather and leather based industries represent one of the most important sector contributing about Rs. 20 billion to the national economy and directly employ more than 250,000 workers with an export income of over US $ 650 million annually. It contributes approximately 4% to the GDP and ranks as the third export earning sector. The GoP in order to improve its balance of payment and to increase income in foreign exchange services to develop the industries, which are about to put added value to raw materials available in the country before exporting commodities.

 

The leather sector industry i.e. tanneries and the garment manufacturing when compared with the available domestic raw hides and skins. Luckily, at the same time tanneries in the developed countries were closing down and also the leather garment manufacturers in Europe not being able to compete the third world countries reduced their or closed the factories.

 

Perhaps due to easy profits tanners and garment manufacturers did not spend money and time for research and development, except for a few units. Now the leather sector industry is having tough time due to the changes taking place worldwide.

 

Leather sector has now to face a challenge in the open markets. It is not only competition with the under developed or developing countries but the industry now also have to compete with the developed countries.

 

Being producer of finished leather and leather products, Pakistan is facing tough competition with all the countries that produce these items. Technical improvements, market research, adoption of new techniques and improvements in designing are must now, besides the units have to be more efficient.

 

EXPORT OF LEATHER GARMENTS

 

The export of leather and leather garments now stands at 345 million dollars. There has been seen and increasing tendency in the value added products exports as can be seen from the figures of leather garments export during 1996-97 than previous years i.e. the exports of leather garments was 345 million dollars, i.e. 107 million dollars higher i.e. compared to more than the exports of tanned leather which is 238 million dollars.

The commerce minister has accepted another demand of the exporters by allowing samples, labels etc. Duty free and quick release of such samples and labels will help execution of export orders.

 

EXPORT OF LEATHER & LEATHER MADE UPS FROM PAKISTAN

(During July 1996- January 1997 & July 1997- January 98)

 

PRODUCTS VALUE ‘000’ US $(July-January)1996-97 VALUE ‘000’ US $(July-January)1997-98 % CHANGE
Leather 140318 119527 (14.82%)
Leather garments 219465 207380 (5.51%)
Leather gloves 10938 13712 25.36%
Leather manufactures 4595 7224 57.21%
Leather footwear 24437 18471 (24.41%)
Total 399753 366314 (8.36%)

 

COMPARATIVE EXPORT FIGURES OF LEATHER & LEARTHER MADE UPS

(During 1997/98 and 1996/97)

 

1997/98 1996/97
Month Leather Leather Manuf. Total Month Leather Leather Manuf. Total     % Change
July ’97 18778 28086 46864 July 96 22000 22164 44164 6.11%
Aug.’97 17823 24010 41833 Aug.’96 20651 34559 55210 (24.23%)
Sep.’97 14658 44208 58866 Sep.’96 22728 36338 59066 (0.34%)
Oct.’97 18035 37665 55700 Oct.’96 20031 38706 58737 (5.17%)
Nov.’97 18601 32525 51128 Nov.’96 17431 39067 56498 (9.51%)
Dec.’97 17015 35807 52822 Dec.’96 18619 37797 56416 (6.37%)
Jan.’98 14619 19752 34371 Jan.’97 18858 26367 45225 (24.0%)
Total 119529 222053 341582 Total 140318 234998 375316 (8.99%)

 

 

TYPES OF LEATHER BEING EXPORTED TO DIFFERENT COUNTRIES

  • Buffalo Calf Crust
  • Buffalo Calf Finished
  • Cow Calf Finished
  • Cow Hides Crust
  • Cow Hides Finished
  • Buffalo Crust
  • Buffalo Hides Finished
  • Leather Bovine Equine N.S
  • Sheep Skin Tanned
  • Goat Skin Tanned
  • Kid Skin Tanned
  • Lamb Skin Tanned
  • Leather Lamb Skin Parch
  • Leather Sheep Skin Parch
  • Leather Goat Skin Parch
  • Leather Kid Skin Parch
  • Leather Of Other Animals

 

TANNING INDUSTRY

Pakistan leather sector has been facing a difficult situation during the last 2-3 years. The total exports of the sector during 1996-97 again did not exceed US $ 650 million, which more or less is the same figure as that of previous year, and obviously there has been no improvement in the export figures. First of all there is a great shortage of raw materials (hides and skins) in the local market and the tanning industry has to rely on imported raw materials which is not as good as local raw material as far as the texture/grain quality. Mostly low grade quality of hides and skins are imported. However there are some origins with good quality, which will also be used in future by our tanneries.

 

 

SHORTAGE OF HIDES AND SKINS

Due to shortage of raw material several small tanneries as well as the leather garment units have to close down. Some of the medium sized units have been forced to reduce their production by 50% and most of the large size units are running below their installed capacity due to non-availability of raw material. Infact, the imported raw material to a certain extent has helped the tanning industry to keep the prices of local raw material within a certain limits which otherwise would have increased very high. During 1995-96 Government imposed 10% duty on the import of hides and skins which have been recently removed by the federal commerce minister M. Ishaq Dar while announcing the 1997-98 trade policy. It is hopefully going to help overcome the shortage of basic raw materials for the leather sector industry and it will also help to increase export of finished leather and the leather manufactures with value addition.

Monthwise Imports of Hides & Skins

(During July 1997 to January 1998)

 

MONTH QUANTITY    (kg) VALUE  (Rs) VALUE (US $ mn)
July 97 1679454 136422000 3.37
August 97 1847625 166305000 2.87
September 97 1577404 90969000 2.25
October 97 1271487 88580000 2.18
November 97 1876071 133155000 3.02
December 97 438586 27055000 0.64
January 98 493046 37891000 0.90
Total 9183673 630377000 15.23

 

COMMODITYWISE IMPORTS

                                                                                                Value in “000” US $

COMMODITIES 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97
Raw hides & skins 13250 20500 33655 37650 25098 21.57
Tanning chemicals 71000 76500 82000 85000 87000 ——-
Machineries and spares 95000 112000 120000 132000 140000 ——-
Other imports 12000 20000 24000 30000 36000 ——-
Total imports 191250 229000 259655 284650 288098 ——-

 

FOOTWEAR SECTOR

During last three years very little progress was made in the shoe industry. Having neither a great demand at home nor technical help and enough incentives from government, and due to higher profits in other sectors, the footwear sector remained all along neglected. Perhaps due to easy profits, the tanners and garment manufacturers did not bother to spend money and time for research and development for footwear sector except a few units.

 

In the last couple of years heavy investment were made in shoe making by entrepreneurs and many modern shoe factories were installed in the country but unfortunately these factories could not come into production from the day one. Their failure was due to non-availability of materials and spares required for mechanized shoe production. The very high import duties imposed on these materials which made our shoe prices uncompetitive in the international markets. These impediments restricted the growth of footwear industry in Pakistan and we lost our exports to countries like Indonesia, Philippines, Malaysia, Thailand and India.

 

INSTALLED CAPACITY NOT FULLY UTILIZED

Leather sector industry in Pakistan is running at least 30% short of installed capacity due to non-availability of raw, pickled and wet blue hides and skins. Due to the imposition of duties and taxes on import this used to be imported in very small quantities from foreign countries and then thus production cost of our leather and leather made ups was higher, making our products incompetitive in the global markets. Now with the removal of import duty it will be possible to increase the imports of hides and skins from abroad and utilize the installed capacity fully.

 

IMPORTS OF DYES/PIGMENTS/CHEMICALS FROM INDIA

The import of dyes and chemicals and raw materials from India tanning industry has been allowed in the 1997-98 trade policy. It will help our leather sector industry to a large extent. This has been done under the most preferred nation argument and will helpful for the trade industry to get benefited in Pakistan and India. It may be pointed out that our industry would be able to import dyes and pigments and tanning materials/chemicals for the processing of hides and skins at a cheaper cost as there was no sense to purchase these materials from a third party via Dubai or from Europe. This will certainly help the industry and enable it to cut down the cost of production.

 

IDENTIFYING MARKETS

Markets will be based on the information to be collected in the following four areas.

 

  1. Knowledge of market trends.
  2. Knowledge of consumer needs.
  3. Knowledge of competition.
  4. Strengths and weaknesses of the product.

 

Markets that are selected to sell leather goods have to be carefully chosen applying the following criteria.

 

  • There should be a substantial growth in market prospects.
  • Competition can be reduced by providing good quality products with discounted price.
  • Ensuring that the item will sell both in the remote areas as well as in the cities.
  • The item will be easily adopted and projected within the existing distribution setup.
  • To assess correctly that the improve volume can increase due to price sensitivity.
  • The product does not need a special selling/handling skill.

 

The product should dictate an increase of a profitability ratio on volume and turnover basis. On the basis of the identified key areas and criteria established above. We have selected following markets i.e. USA, France, Germany, Switzerland, Mexico, South America, Scandinavian Countries.

 

ACTUAL MARKETING

Actual marketing is done:

 

  • Through commercial offices of Pakistan abroad.
  • Through chamber/association in that market.
  • Individual efforts to locate buyers. Through participation in selected exhibitions.
  • Through selected international marketing agencies.

EXPORT REGISTRATION PROCEDURE

The potential exporter must get his company registered as exporter with the office of Export Promotion Bureau or with any of its regional or sub-regional offices under importers and exporters registration order 1993.

 

The export registration certificate issued is valid for five years after which it can again be renewed on deposit of renewal fee. The application for export registration is submitted on the prescribed application form. A person interested in obtaining export registration should complete the following formalities in the first instance.

 

  1. A firm should be constituted with proper name and address in any of the following three types:
  • Proprietary concern
  • Partnership
  • Limited company (Private or Public)
  1. A current account is opened in any branch of scheduled bank, which deals in foreign exchange, and a bank certificate is obtained from the bank verifying that the firm is holding a current account with the bank.
  2. National Tax Number certificate is to be obtained. This NTN certificate shows the name and address of the firm duly certified by Income Tax authorities.
  3. Membership certificate of Chamber of Commerce and Industry or any of the concerned trade association.

 

After completion of these formalities, an application form for export registration (Form APP “A”) is filled in, giving information in all columns. The signature made on application forms must be verified by the bank alongwith application form, following forms should also be filled in:

 

  • Registration/ renewal form for exporters
  • Exporters profile Performa

 

Following documents in original and one photocopy of each should also be submitted:

 

  1. NTN certificate form by Income Tax department giving both NT number and address of the firm (original and photocopy).
  2. National Identity card of proprietor/partners/directors (original and photocopy)
  3. Membership certificate from Chamber of Commerce and Industry or a recognized trade association (original and photocopy)
  4. Partnership deed in case of partnership concern.
  5. Certificate of registration from registrar of firms, in case of a partnership concern (original and photocopy).
  6. Memorandum and Articles of Association duly signed by the directors and chief executive in case of a limited company (original and photocopy).
  7. Certificate of incorporation from registrar of Joint Stock Companies in case of limited company (original and photocopy).

 

These documents are submitted through bank to the respective regional/ sub regional offices of EPB alongwith treasury challan of Rs. 1500 is deposited in NBP branches in the following head of account:

 

1300000  –  Miscellaneous receipts

 

1390000  –  Others (not elsewhere stated)

 

1391000  –  Other receipts

 

1391013  –   Other –receipts – fees realized under the import and export (Federal control) act. 1950 where fees had been paid in advance (original copy of challan to be attached).

 

Export registration certificate is issued in favor of the firm. This certificate is sent to the exporter at the given address by registered mail.

 

After formal registration, the exporter can export any item, which in on the export items list. The exporter can export through an agent or through personal efforts. In the latter case the exporter should start correspondence with the foreign buyers. The addresses of the foreign buyers can be obtained from the EPB or from other exporters. The addresses obtained form other exporters are more reliable because others have tested them and can tell every little detail about them.

 

The EPB issues a weekly bulletin, which tells about the foreign buyers, their demands, and the items of their interest and their addresses. The name of the bulletin is “Pakistan Export Information Bulletin”. The EPB also provides addresses of foreign buyers. Through research and interviews conducted we conclude that the German buyers are very straightforward in their dealings and never make their payments late to Pakistani exporters. It is advisable to do business with them. The British exporters are also much reliable as compared to the other foreign buyers. The Pakistani leather products find attractive prices in England and Germany. Following is the list of some foreign buyers of leather products with whom Pakistani exporters are doing business:

 

DISMERO MODE VERTREO GMBH

THICRSCHETR 37 8000 MUNCHEN 22,

GERMANY FR.

TEL: 089-221796

 

LESCO HANDELS GMBH & CO

EXPORT IMPORT KG

FURSTENRIEWER STR 49-1 8000

MUNCHEN 21, GERMANY FR.

TEL: 089-5803066

TLX: 27 898925

 

LISSY PELZMODEN GMBH

SCHWANTHALERSTR 76 8000

MUNCHEN 2, GERMANY FR.

TEL: 089-555040

 

RENE LEDER-UND FREIZEITMIDEN

GMBH TAUNUSSTR 45/M 4/223 8000

MUNCHEN 40, GERMANY FR.

TEL: 089-3598959

 

REGENCY BEDDING LTD.

MOORLANDS BUSINESS CENTRE

UNIT 28,  BALME ROAD OFF

BRADFORD ROAD

CLECKHETON BD 19 4EZ UK.

TEL: 0274-852335

FAX # 0274- 852477

 

ECONOMY CLOTHING & FURNITURE

112 N 20TH STREET (BUD-P-M) DEPT.

BESSEMER A 135020 ALABAMA USA.

TEL: 205-425-3578

 

After finding the buyer, a sample is sent to the buyer by air. Airway bill is made and invoice from the seller is sent alongwith the sample. If the sample is approved there comes the stage of settling down the mode of payment. The most safest and advisable mode of payment is “LC at Site”. The foreign buyer opens LC and the local seller receives the LC through the bank. In Karachi, HBL Boltan market branch deals with LC’s. The LC contains every detail about the shipment, quantity, and rate per piece, shipment date and branch of the bank, which will be dealing the transaction. After the completion of all the documents the original LC documents are sent to the opening bank by courier and the payment is received by the exporter through the local dealing bank.

 

 

IMPORTING COUNTRIES

ITALY

Although Italy has a large leather industry, its performance has been on the decline for last few years. Rising labor cost, appreciating currency and stricter pollution control measures have substantially affected the performance of leather industry, especially the footwear sub sector.

 

Italy has a large, fashion oriented leather garment exporting industry. Although imports of leather garments into Italy are increasing and the trade surplus is shrinking, Italy’s position in this sector remains very strong. As the world leather industry is shifting from the developed to the developing countries, the size of the leather industry in Italy has begun to shrink. The exports of all leather products from Italy are on the decline. In line with this trend, its imports on finished and semi finished leather are also now declining.

 

The Pakistani leather industry can greatly benefit from the technology, design capability, skill and marketing prowess of the Italian leather industry. Connected efforts need to be made to establish equity Joint ventures, transfer of technology arrangements, contract manufacturing, sub contracting, buy back arrangements, marketing and distribution arrangements, etc. With Italian manufacturers and trading houses. The EPB Leather Industry’s Development Organization (LIDO) and PTA should make contact at both official and private levels to assist the local industry in establishing the above mentioned relations with Italian leather industry.

 

FEDERAL REPUBLIC OF GERMANY

Germany has a leather industry whose size and strength are considerably greater than expected in a high wage economy, open to imports and with strict affluent control regulation.

 

The German market presently offers good opportunities for Pakistani leather exports. Concerted efforts need to be made by the Pakistani leather industry to establish relations with large distribution and retailing chains, as these would ensure wider distribution and large orders. The Pakistani leather industry can benefit from the German experience in the following ways:

 

  • The Pakistani tanners can greatly benefit from the affluent treatment methods and technologies used by German tanners.
  • The EPB, LIDO and PTA need to increase efforts to assist the local chemical industry in acquiring German technology for manufacturing of tanning chemicals, dyes, pigments and machinery as Pakistan still heavily relies on imports for these items.
  • Joint venture agreements with German distributors will ensure a strong presence in Europe due to the strength of the German presence in the EEC.

 

SPAIN

Spain’s leather industry has expanded rapidly in the past fifteen years, following the general expansion in Southern Europe. Spain ha slowly emerged as a major buyer of Pakistani leather. Efforts need to be made to establish equity joint ventures in Pakistan for quality production of leather garments, shoes, shoe uppers, and leather goods. The Spanish marketing companies can also be used for effective marketing of Pakistani products.

Spanish technology for leather processing can be usefully employed in Pakistan. The EPB, LIDO and PTA need to increase efforts to tap the Spanish industry for this purpose.

 

HONG KONG

Hong Kong does not have a large leather industry, but is an extremely important center for trading in East Asia. Its importance is likely to grow further. Hong Kong exports and imports virtually all products, which can be considered part of the leather industry, but there is a little manufacture in the colony. Hong Kong is also growing as a fashion center for leather garments. Leather gloves are Hong Kong’s top leather manufacture, although there is also an extremely large trade in leather watchstraps and small leather goods. Pakistani leather manufacturers need to maintain close liaison with the Hong Kong market in order to continuously update itself on fashion trends. Marketing companies located in the colony may be tapped for the marketing of Pakistani leather products. Large manufacturers should set up offices in the colony to better market their products in the international market.

 

AVAILABILITY OF RAW MATERIAL

According to estimates by agricultural experts, the Pakistani Cattle herd reached 31.0 million in 1988. This steady advance also permitted arises in slaughter to 4.4 million in 1988. Recent proposals by the national commission on agriculture calls for an annual growth rate of agriculture from 4% to 5% up to the year 2000. The emphasis is set to shift from food grains to live stock produce, where growth is expected to increase from 2.9% to 6% per year. Both meat and milk production are expected to double as improvements are made in ground conditions and fodder. In the years up to the years 2000, this expansion is forecasted to continue as rapid population and income growths are translated into demand for meat.

 

However this demand is increasingly likely to be channeled into poultry. Beef consumption is forecasted to decline from almost 49% of meat off-take in 1986 to 37% by the year 2000. Nevertheless, the demand for beef will still be sufficient to boost slaughter to 5.9 million animals per year by the year 2000.

 

 

CONSUMPTION OF CHEMICALS AND DYES

Use of chemicals in tanning is increasing with the introduction of new processes for tanning of hides and skins. The market demand for new types of colors, fashion trends and types of leathers required by the manufacturers of leather made ups and end users also influence the use of chemicals in tanning.

 

 

PROBLEMS FACED BY THE INDUSTRY

The problems faced by the firms in the leather sector differ by size and type of manufacturing. However these may be grouped together into the following types.

 

  1. Government policies and sections.
  2. Manpowers supply.
  3. Raw materials availability and its quality.
  4. Technical and technology related.
  5. Export related
  6. Those related to industrial market.

 

Pakistan has no severe problems that could seriously hamper the leather sector’s growth. It has sufficient labor at a very low price, raw materials in large quantities and also the possibility of purchasing sophisticated materials. The large tanneries are equipped with modern machines and the new manufacturing units of leather products in particular in the footwear sector have the latest equipment.

 

However, it is quite difficult for small and medium sized firms to buy the latest equipment. Right now the industry is facing the following problems in addition.

 

  1. Custom Clearance Procedure:

At times, the clearance of imported materials take up sometime. This is due to the fact that some importers have mis-declared the accessories in the past causing the custom staff to become suspicious. It is necessary for PTA to exert pressure on its members to ensure that such practices are not indulged in.

 

  1. Non-Availability of Air Cargo Space:

In November and December every year, textile quota for the year is utilized at higher pace. Consequently, there is pressure on the airlines to lift as much of textile made ups as possible. In these two months, air cargo space is not available except on PIA flights and flights that originate from Pakistan. however, this problem will continue in the future unless the ‘GOP’ and PTA were to take it up seriously. With the establishment of the new cargo airline, this situation is expected to improve somewhat.

 

  • Financial Constraints:

The most frequently mentioned problem by the cottage-based units was the scarcity of finance. The smaller units cannot go for mechanization primarily because they do not have the financial resources to purchase the requisite machinery. As small units have later or no machinery, are dependent on skilled labor and basic tools, the capital requirements are very low. Many owners workout of their own houses. Units having stitching machines require an investment of RS. 3000 to 5000 per stitching machine, generally bought second hand. A new industrial stitching machine costs between RS. 17000 to 25000.

 

  1. Customs Duty on Multiple-Use Machinery:

Although import of footwear machinery has been made duty free, there are difficulties faced by the importers at the appraisal stage, when a machine is deemed as being multi purpose by customs. This problem can be solved if a list of specified shoe machinery is drawn up by custom with the help of the Pakistan Tanners Association and Pakistan Footwear Manufacturers Association.

 

  1. Improper Taxation on Footwear Sector:

The present system of taxation in footwear acts as a deterrent to establishment of mechanized and organized footwear units. For example, a 12.5% sales tax is levied on footwear retailing at over RS. 250. Units classified as cottage industry are exempt from such levy. This tax has two effects. First it encourages the production of low quality and low priced footwear. Second it acts as an incentive for units to remain small instead of expanding and benefiting from economies of scale, since a unit which mechanizes and expands comes from within the purview of this tax. It is essential that this tax be removed in order to encourage the cottage industries to move towards expansion and upgradation.

 

  1. High Custom Duty on Certain Raw Materials:

The new customs import tariff on the import of certain raw materials used in the manufacturing of shoe uppers such as TPR is very high and needs to be rationalized.

 

  • Low Duty Refund Rates on Made Ups:

The gap between the duty refund on finished leather and made ups needs to be widened to further boost export of made ups. The duty refund on made ups may not necessarily be increased, only the gap may be widened.

 

BARRIERS IN INTERNATIONAL MARKET

Pakistani exports of leather and leather products are not high enough to induce any quota restrictions on it by the importing countries, with the exception of Japan. Imports of leather (tanned leather and dyed colored leather) into the Japanese market were until March 1986m allowed only under an import quota system. That is, the quantity of imported leather was restricted and no excess imports over the stipulated quota were permitted. However, with the increasingly favorable balance of trade and pressures from overseas, Japan switched over from import quota to tariff quota system. This is applicable to leather shoes and leather gloves. The types of leather to which these tariffs apply are cattle and equine leather. Preferential tariff rates, which are half of the actual, apply to most of the countries including Pakistan.

 

 

THE ROLE OF R & D

The Ministry of Science and Technology has played a very important role. In the development of leather sector research is a continuous activity. Results can be both positive and negative. Unfortunately, during the last more than a decade the research in leather sector has gradually diminished. It is unfortunate that many senior research scientists think that there is nothing further to research in leather. This is inappropriate because there are various areas in leather research where both troubles shooting investigations and long-term research can find scope for profitable utilization by industry.

 

The plus points of Pakistan’s leather industry are good raw materials, modern technology, qualified and experienced technologists and craftsmanship. The minus points relate not taking appropriate steps to upgrade raw material by adapting newer chemicals and processing techniques, lack of involvement in research and development activity e.g. too much reliance on imported raw material, not providing support to indigenous chemicals, when these are equally good and comparable to the imported products.

 

Pakistan leather industry now has attained a position like a full-fledged industry, which can supply the leather and its products according to the samples and specifications. But we are not daring to take chances to market innovative products. This trend is required to be changed for which research organizations like Leather Research Center Pakistan Council of Scientific and Industrial Research can play an effective role.

 

In order to enhance the image of leather garments internationally, Suede and Nubuck leathers be incorporated which are in the front line these days. High quality fashionable Suede and Nubuck leather garments can fetch a higher foreign exchange if we could ensure and guarantee good light fastness, good rub fastness, low wetability good tensile strength and good dry cleaning effects.

 

EFFECTIVE RUPEE DEPRECIATION

 

Over the past few years, the Pakistani rupee has depreciated considerably against all major international currencies especially the US dollar. The general effect of this depreciation has been that while our exports have increase 3.6 times in rupee value, they have not even doubled (increase only 1.7 times) in dollar value.

 

Pakistan’s exports have increased 15.4% in rupee value and only 5.9% in dollar value during the 1980’s. The average annual growth rate (5.9%) of Pakistan’s exports in dollar value is not very high, as the rupee has depreciated at the rate of 9% per annum against US dollar.

 

SUGGESTIONS

  1. Quota should be placed on export of finished leather from Pakistan so that the finished leather is made available to the leather industries / sports goods industries. As these industries fetch more prices than export of leather.

 

  1. Duty free imports of leather goods machinery and accessories parts etc. be allowed to this industry.

 

  1. Five year exemption of all taxes, duties leviable on the leather goods industries.

 

  1. Refinancing may be made available to the selected exporters of leather goods on the recommendations of Export Promotion Bureau under valid L/C. Rules regulations may be relaxed to ensure prompt action on the part of the banks.

 

  1. Duty free import of accessories needed for the products be allowed to this industry for export purposes only.

 

  1. Enhance and increase the role of Leather Product Development Center (LPDC) currently under the jurisdiction of Ministry of Industries.

 

  1. Duty on the import of tanning chemicals be reduced.

 

  1. Import of finished leather should be allowed duty free which will enhance the export of leather made ups.

 

  1. Machinery for tannery industry be allowed duty free under BMR scheme for the development of this sector.

 

  1. Withholding tax payable for hides and skins at the import stage be withdrawn as it increases cost of goods which are meant for re-export.

 

  1. For leather and leather products industry sales tax should be refunded at the time of export under duty drawback as in the past. Claiming local input is a complicated procedure and in the most cases local suppliers never give sales tax replacement invoices.

 

  1. All imports meant for export should be exempted from income taxes; withholding tax and all exports should be exempted from taxes like turnover taxes.

 

  1. The EPB should subsidize all exhibitions of leather and leather garments.

 

Quality Reports on Pakistan’s Economy and Business Sectors for Students

 

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3 Responses

  1. Marghoob Ahmed Sidiqui says:

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  2. Ravi Magazine says:

    You can check yellow pages at Sialkot, famous for leather industry.

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