LAHORE

The leather sector has registered a decline of 1.63 percent in its export during the first eight months of the ongoing fiscal year, while regional countries of China, India and Bangladesh registered increase of 4, 18 and 32 percent, respectively, in their leather exports.

Chairman, Pakistan Tanners Association (PTA), Muhammad Musaddiq, expressed concern over downward trend in leather exports despite GSP Plus status and asked the government to take measures for containing decline in exports of the value-added leather industry.

He said that major hurdles of the dwindling leather industry, which needs preferential attention for its revival, are depreciation of the local currency and increase in the cost of doing business. Musaddiq said high cost of energy in Pakistan is also playing havoc with leather sector as per unit cost of electricity in Bangladesh is 7.3 US cents, China 8.5 US cents, India 9.0 US cents, while in Pakistan it is 14 US cents/unit, including the diesel usage during load shedding.

He mentioned that industry is facing liquidity crunch as large amount is stuck-up with the Federal Board of Revenue (FBR) in respect of duty drawback, sales tax and income tax claims of the claimants concerned.

 He stated that presently there is no policy support from government for the exporting industry resulting in closure of many units and capacity is lying idle and urged the government to bestow zero rate sales tax status to leather industry as all regional countries keep zero rating of taxes on exports whereas there are multiple tax regimes in Pakistan and export industry is dying a slow death. He said the leather industry is facing export burden by multiple local, provincial, federal taxes and inefficiencies which included social security 7.0 percent of wages, EOBI 6.0 percent of wages, stamp duty 0.2 percent on export/import documents, electricity duty, line losses/theft of electricity at Rs 1.5/unit, WWF 2.0 percent on profit in addition to 5.0 percent on profit for workers profit participation fund and custom duties on spares used for export industry.

The PTA chairman appealed to the government to issue instructions to the ministries of commerce, finance as well as the 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.

He said despite many hurdles in exploring the export as per aspiration of the Prime Minister of Pakistan, the Leather Industry successfully organized first Pakistan Mega Leather Show in Lahore International Expo Centre in March 2015 along with other leather related associations and allied services to accentuate the image of Pakistan worldwide.