Govt pulling away oxygen masks of the leather sector – PTA

26 Jun '09

3 min read

Several tanneries in the Korangi tannery zone have downed their shutters on account of lack of business as the foreign buyers have stopped importing leather goods due to the worldwide economic slowdown, informed Mr. Afzal Husain, Chairman, Pakistan Tanners Association.

The Chairman said, in a meeting held recently, that in the nine months (July to March) of current fiscal, leather exports witnessed a drop of 20 percent, which could reach up to 25 percent by end of the fiscal year.

The leather sector is in need of an immediate rescue package from the government, otherwise exports from the second largest foreign exchange earner could witness a down fall, added the Chairman.

In order to salvage the tannery industry, the tanners have already started taking preventive measures and as a first step, Saturday has been announced as a holiday in addition to Sunday, from June, informed Mr. Husain.

He further said that pilling up of stocks in the tanneries due to decline in exports forced the leather producers to slow down production and save the cost of utilities at least for one day in a week.

He added by saying that, buyers say that, despite the bad and harsh weather, consumers are not purchasing leather jackets, as most of the leather products are expensive.

He said, after textiles, leather sector is the second largest export earner but as its exports have fallen down, it would hardly achieve the target of $2 billion this year.

Shut down of leather industries has left more than 7,000 workers unemployed as well as the prices of hides and skins had dropped by about 50 percent, informed Mr. Afzal, who had offered proposals for the budget to rescue the industry.

He had proposed the government to declare zero-duty for the raw materials used in leather processing, in the same way as it has been declared for the other export oriented industries, to provide them a level-playing field.

The chemicals that are being used only in the leather processing are being loaded with high custom duties, though they are not being used in any other industry, he said.

Leather sector, that had always faced the shortage of skins and hides, is unable to buy raw hides in spite of the plunge in prices of all kinds of raw skins, he revealed.

Cow skin that previously was purchased at Rs 2,400 to Rs 3,000 can presently be purchased at Rs 1,200 to Rs 1,400. Similarly, skins of Goat, Sheep and Buffalo are available at half the price but demand has been extremely low.

Increase in transportation cost of goods has become unbearable and it has been feared that more manufacturing units would go out of business, said Mr. Afzal, who warned that if incentives were not provided, it would affect the leather industry as well as exports.

He sarcastically said that governments all over the world were providing a slew of incentives for their crippled sectors, but the government in Pakistan was pulling away even the oxygen masks meant for survival of the leather sector.

Fibre2fashion News Desk - India

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