A look into Pakistan's furniture industry

With forests depleted to a mere two percent of the total land area of the country and the lack of scale and technical knowledge, one wonders what the prospects of the furniture industry of Pakistan might be without delving into the repercussions of forest depletion on rainfall and agriculture.
The wood furniture industry in Pakistan can be divided into cottage and small-scale sectors. These units, which are not mechanised, use outdated tools and employ manual labour for the production of furniture. According to the PTDA, there are about 700 registered units in the country. These units are operating on the basis of single shift/300 days per annum.
The wooden furniture industry represents 95 percent of the total market. It also produces some metal (wrought iron rod, steel) and upholstered furniture for offices and special medical furniture. As mainly solid wood of hardwood species like Sheesham (or Indian rosewood), walnut and oak is used; the furniture is normally quite heavy in weight. The four main styles are antique, mughal, modern (Italian), and oriental.
Most of the items fall in the living room, dining room and bedroom categories. "Other" or "accent furniture" fall outside the basic living, dining room and kitchen furniture ranges. It finds its role in the smaller, casual and miscellaneous items, sometimes referred to as "occasional furniture" due to its complementary role in home furnishing.
Typical items are side or corner tables, magazine tables, standing small shelves (etageres), nesting and pedestal tables, small chairs and home bars, etc. The leading furniture making areas of Pakistan are Gujrat, Peshawar, Lahore and Karachi and Chiniot. However, Karachi leads in terms of exports, followed closely by Lahore and Peshawar.
Pakistan's share in the world market for furniture is negligible, despite the fact that it has a valuable record of craftsmanship and innovation in this sector. Nonetheless, credit must be given to few players in the industry which by their effective marketing bought some semblance to the furniture industry.
Pakistan's exports kept increasing by 10 percent annually until 2007-08. However, the past decade can be considered as an opportunity lost for the nascent industry. A few years back, an exhibition on furniture was conducted by then commerce minister Razzaq Dawood in Europe which attracted the attention of many Asian art craft lovers, and furniture manufacturers back home got hefty orders which could not be met owing to scale limitations.
This calls for policymakers' attention to provide fiscal incentives to this baby to nourish it to its true potential. Easy access of credit, tax holidays on expansion, frequent road shows and visits to international exhibitions, along with assistance from government officials for marketing furniture in Europe are some of the initiatives that can benefit the industry.
Lack of these attributed to sudden decline in exports during testing times. In FY08, Pakistan exported furniture worth $12 million, while the amount fell to $9 million in 2009 and further declined to around $8 million in 2010. There are many other reasons for this decline too. The most important of them all is the lack of availability of Sheesham or rosewood. More than 80 percent of Pakistan's furniture is dependent on it. In the last five years, the Forestry department has noted that the reserves of Sheesham have decreased by 50 percent. Due to its shortage in the market, its prices are increasing every day. Importing this type of wood costs four times the cost of wood procured locally.
Moreover, the quality of local Sheesham, which was available a few years back is not available any more. It is cut on a large scale but it isn't grown on a large-scale to overcome this scarcity. Furniture grade Sheesham trees take more than 50 years to grow. But the timber mafia in the country ends up cutting Sheesham prematurely for use in low value-added structural or even for use as firewood.
There are several other reasons for this industry's current drawback. To start with, the cost of transport associated with the industry has increased manifold due to a significant rise in the fuel prices. The cost of labour too has increased without an increase in its quality. Even in this era of technological progress, at least 98 percent of manufacturers are using traditional methods in the furniture industry. The latest technology, hence, is not being used at all.
There are also no training and education centres available to boost entrepreneurship and craftsmanship in this sector. Furniture design education throughout Pakistan is plagued with both a lack of interest and a lack of demand. The fact that the larger Pakistani furniture industry is embroiled in a low-wage economy suggests that creative activities such as design and new product development, which involve a long period of time before becoming a success, may not be rewarding to most manufacturers.
Hence, there is reluctance among the furniture manufacturers in the country to employ creative design personnel. The investing fraternity does not fund such creative and innovative works. Rather, there is an apparent need for quick results on large, industrially manufactured furniture.
On a global level, the image of Pakistan in the furniture market is bad. Foreign firms do not trust Pakistani companies because the latter often fail to meet quality standards. Resultantly, these firms end up getting fewer orders. The government itself pays little attention to the problems faced by this industry. The fact of the matter is that there is a dire need to formulate a holistic plan of action to first make this industry sustainable, and later to help it foster and gain recognition on an international level. Otherwise, it's curtains for this industry.
For a good start, the government should immediately introduce and implement a reforestation plan that is focused on replanting and sustenance of the ever depleting rosewood. A minimum of ten trees should be planted for every tree cut, and a heavy penalty should be placed on cutting these trees prior to their maturity period, which is approximately fifty to sixty years.
To cut down the local wastage of this precious wood, a ban on its use for minor, less profitable purposes is necessary. This may include banning the use of rosewood to make school furniture. To meet such type of demand, research should be carried out on finding alternatives for rosewood. Acacia, for instance, is one such alternative. It can be used as a perfect substitute if it is properly seasoned.
Also, to make furniture goods more competitive at the international level, the government should revise its taxes and duties on this industry. Allocating idle industrial zones and premises to the furniture industry will also help in boosting its exports.
Furniture testing facilities should be set up to guarantee quality exports that would boost the confidence of international buyers. But most importantly, the government needs to give this sector a most favoured industry status. Resultantly, the cost to consumers will fall, thereby stoking demand. This will lead to more demand which will enhance this industrial base, and potentially enhance furniture exports further. The potential for growth of the industry exists. With the right policies and will, this sector has every chance of excelling, despite the general economic conditions of the country.
COURTESY: Economics and Finance Department, Institute of Business Administration, Karachi, prepared this analytical report for Business Recorder.
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