Pakistan leather garment sector in distress

Pakistan
Published:  30 November, 2016

Representatives from Pakistan’s leather garment industry have warned the Government of the sector’s distress and its future collapse if it does not intervene to bail out with financial incentives.

According to Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA), leather garment exports dropped 12.4% in fiscal 2015-16 against the previous year and, unless the Government announces and implements a financial relief package for the industry, the exporters will suffer unit closures resulting in unemployment, the association said in a statement.

Atif Ashraf, Chairman, PLGMEA, said that while the regional competitors are gaining strength in different markets, Pakistan’s exports are declining. According to Ashraf, countries such as India and China offer high rates of duty drawback to their exporters as an incentive for boosting exports, 9.5% and 8.5%, respectively, while Pakistan offers 4.3% for leather jackets.

However, this facility was given at a time when there were no taxes at the import of raw skins, pickled pelts and wet-blue leathers, but now Pakistan’s government is said to charge a 3% customs duty and 1% withholding tax on imports, with no revision on the duty drawback rate. It is estimated that the leather garment exporters have to import 60%-70% of their raw materials for manufacturing the end products.

In a recent official statement, Ashraf urged the Prime Minister of Pakistan and the Federal Minister for Commerce to activate the Trade Development Authority of Pakistan (TDAP) and the Commercial Consulars on missions abroad.

Source: The Express Tribune