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Concern over decline in leather export

Karachi, April 15, 2015 (PPI-OT): Chairman, PTA, Mr. Muhammad Musaddiq expressing concern over downward trend in export of Leather and Leather Products from Pakistan in spite of facility of GSP plus status to Pakistan.

Despite many hurdles in exploring the export as per aspiration of the Prime Minister of Pakistan, the Leather Industry with dedication and hard work successfully organized first Pakistan Mega Leather Show in Lahore International Expo Centre during 6-8th March’2015 along with other leather related associations and allied services to accentuate the image of Pakistan world-wide. Resultantly leather industry was able to get participation of more than 15 Countries around the world as witnessed by Engr. Khurram Dastagir Khan, Commerce Minister.

Mr. Muhammad Musaddiq stated that neighbouring countries like China, India and Bangladesh have registered considerable increase in its export of Leather and Leather Products as 4%, 18% and 32% respectively while the export of Leather and Leather Products from Pakistan is still stagnant @ US$ 1 Billion since last several years and drastically is decreasing during the period of current financial year July-February 2014-15 by 1.63% as compared to the same period of last year which is alarming.

He urged the Government to take stock of the situation causing decline in export of the valued added leather industry and increasing cost of doing business as well as lesser compatibility against competitors. He highlighted following major hurdles of the dwindling Leather Industry which need preferential attention for its revival:

1. Due to Regional devaluation of currency.

2. Cost of doing business.

3. High cost of energy in Pakistan. A little comparison with regional countries is given hereunder for consideration:

– Bangladesh 7.3 U.S cents per unit

– China 8.5 U.S. cents per unit

– India 9 U.S cents per unit

– Pakistan 14 U.S cents per unit (including diesel usage in load shedding hours)

4. Minimum wages of Labourers.

5. Huge liquidity due to large amounts stuck-up with the FBR in respect of Duty Drawback, Sales Tax and Income Tax claims of the claimants concerned.

6. Heavy load shedding and no supply of gas to exporting industry.

7. To provide attention in increasing supply of raw material as continuous large scale slaughtering of animals for meat export is reducing raw materials in Pakistan substantially.

8. To provide due incentives to leather industry. Presently there is no policy support from government for the exporting industry resulting in closure of many units and capacity is lying idle.

9. To allow Zero Rating Sales Tax Status to Leather Industry while all regional countries keep zero rating of taxes on exports whereas there are multiple tax regimes in Pakistan and export industry is dying with slow poisoning.

10. Leather Industry is facing export burden by multiple local, Provincial, Federal taxes and inefficiencies:

– Social Security 7% of wages

– EOBI 6% of wages.

– Stamp duty 0.2% on export / import documents.

– Electricity duty.

– Line losses/ theft of electricity @Rs 1.5 per Unit.

– WWF, 2% on profit in addition to 5% on profit for workers profit participation fund.

– Custom duties on spares used for export industry.

Mr. Muhammad Musaddiq appeals to the government to issue instructions to the Ministries of Commerce, Finance as well as FBR for taking immediate necessary steps to remove the hurdles faced by the exporters of leather industry and frame business friendly polices keeping in view the above facts and announce tangible incentives for the Leather Industry in the forthcoming Trade Policy 2015-16 to save this highly value added foreign exchange earning sector from further damage.

For more information, contact:
Moinuddin Quraishi
Pakistan Tanners Association
46-C, 21st Commercial Street,
Phase II, Extn., Defence Housing Authority,
Karachi-75500 – Pakistan.
Tel: +92-21-35880180, 35880184, 35899819
Fax: 92-21-35880093
Email: info@pakistantanners.org
Website: www.pakistantanners.org

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