ISLAMABAD: Pakistan needs to revise its trade policy for the leather sector, in order to enhance exports and properly tap leather resources, experts said.
Pakistan’s leather export has struggled to compete with its South Asian neighbours in the last few years.
Its leather industry produces a broad range of goods and consists of sub-sectors namely leather garments, footwear, leather gloves, shoes, tanning etc.
According to the Pakistan Tanners Association (PTA), Pakistan is the only country that experienced negative growth in exports as opposed to the optimistic growth by its neighbouring countries namely India, China and Bangladesh.
The contribution of Pakistani leather goods [hand bags, purses, suitcases, key chains, belts, and footwear etc.] is small in the international market, mainly because this sector is less developed.
In the previous five years, exports of leather and leather products declined gradually and slipped to below $850 million in FY19. The Pakistan Bureau of Statistics shows a declining trend in export earnings of leather and of leather products.
From July 2020 to March 2021, the country exported $427.73 million of goods compared to $401.03 million in 2019-2020 fiscal year, increasing by 6.66% year-on-year.
Compared with China and India, high cost of production, particularly wage differentials, higher energy and input prices with no subsidy provided by the government, add to the hurdles.
Severe impact of COVID-19 has made the situation worse, causing cancellation of export orders, while ongoing shipments are being halted by the foreign customers and due payment against the shipments are being stopped.
The Government of Pakistan should follow export-led policies like China while revising its trade policy for the leather sector. It should also pay attention to reducing duties on import of tannery-related machinery, as locally manufactured machinery is of inferior quality, which not only increases the cost of production, but also makes products less competitive
in the international market. (With input from INP)
