10 percent fall in leather goods' exports likely

Exports of leather goods are likely to decline by 10 percent during the current fiscal year, as compared to the preceding year, due to severe energy shortage. Leather goods worth $1 billion were exported last year. However, a massive decline is expected this year, said SM Naseem, Chairman of Pakistan Tanners Association (PTA).
Talking to Business Recorder he said that due to increase in input cost and growing energy shortage, leather goods exporters are now unable to compete with the international prices of finished leather after value-addition offered by other regional leather manufacturing countries. Exporters fear a massive decline in orders, he added.
China, Korea, Italy and Spain are the main importers of finished leather, leather garments and shoes. However, export orders of leather goods to the tune of billions of rupees are likely to be cancelled for failure to meet supply deadlines due to energy shortage. Due to gas load shedding, PTA members would have no choice but to shut down their factories, especially in Punjab where gas is being curtailed for 4 days a week. However, now one day gas load shedding has also started in Sindh which would further decrease leather goods exports, Nasem said, adding that they would also join the agitation and demonstrations announced by other business communities against gas load shedding in the country.
He said if smooth supply of gas was not ensured to the leather sector, the second biggest export-oriented value-added industry of the country, most of the units of the industry would be forced to move to other countries. Other leather goods exporters said that gas suspension, frequent power load shedding, high production cost and unavailability of raw materials would badly affect the leather industry. The sector is losing valuable export orders from foreign buyers and customers, which is hurting the sector's precious foreign exchange, they added.
Apart from earning huge amount of foreign exchange for the country, leather industries provide employment opportunities to about 0.3 million persons. According to government notification, gas will be curtailed for 4 days a week in Punjab which would result not only in considerable reduction in exports but may also increase unemployment.