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The export of leather and leather products would likely suffer a decline of around $350 to $660 million in foreign earnings if the government fails to ensure uninterrupted supply of electricity and gas to the leather sector for the next 60 days say the Pakistan Tanners Association (PTA).
Leather and leather products exports are reported to be worth $1.01 billion this fiscal year. Reliable energy supply is necessary for the smooth processing of hides and skins of sacrificial animals collected during Eid-ul-Azha, which is a vital for the industry in order to complete exports orders and getting foreign exchange for the promotion of country’s exports.
PTA Chairman, Saqib Saeed Masood said on October 19 that this year (2013) around 5.5 million hides and skins are expected to be obtained from the sacrificial animals in the country. He said that the raw material industry desperately needs the uninterrupted supply of power and gas to enable the leather manufacturers to process perishable hides and skins within the humid climate of the country. The PTA’s member leather makers would have problems processing the raw material to become finished leather and may face financial losses without adequate power supplies.
The country would also be deprived of the foreign exchange from export orders when meeting foreign buyers’ demands. Pakistan leather sector exports have declined 17.2% during the last six fiscal years from $1.22 billion in FY 2007-08 to $1.01 billion in 2012-13, said PTA senior member Agha Saiddain. The growth rate of leather sector exports was declining and exports reduced by 14.1% compared with positive growth in other Asian countries such as India, Bangladesh and China. A major reason for decline is said to be an energy crisis, which has hit all sectors of the economy but the leather sector in particular. “Export of wet-blue leather is another important factor retarding growth of our leather sector. The law and order situation, impact of war on terror, increasing cost of doing business and wrong policies of the Federal Board of Revenue were major irritants hampering exports of leather sector”, say the PTA.
The Pakistan government has also withdrawn a subsidy on setting up of effluent wastewater treatment plants allowed under STPF 2009-12.
Saiddain said Pakistan has lost 40% of its global share in leather exports in the past six years, which was alarming.comments powered by Disqus