LCCI chief apprised of challenges facing carpet sector: Need for streamlining processes for seamless movement of goods to Afghanistan underscored

LAHORE: A delegation representing the Carpet Industry, led by Mian Attiq Ur Rehman EC member LCCI met with President LCCI Kashif Anwar on Tuesday.

The meeting shed light on a range of pressing challenges that the carpet sector is grappling with, casting a shadow over its growth and competitiveness.

A prominent issue that took centre stage was the urgent need to streamline border processes for the seamless movement of goods between Pakistan and Afghanistan.

The delegation highlighted the intricate journey of materials, which are first dispatched to Afghanistan for initial processing, only to return to Pakistan for washing, treatment, and eventual export. A staggering 90 percent of these materials navigate the complex Afghanistan-Pakistan border, often encountering unwarranted delays that disrupt supply chains. The delegation emphasised the need for a more efficient mechanism to ensure the timely release of products, citing the current process’s detrimental impact on the sector’s operational efficiency and buyer loyalty.

Transportation emerged as a substantial hurdle for the carpet industry, even in the post-war scenario in Afghanistan. The cost of transporting goods to Afghanistan remains disproportionately high, especially when compared to shipping costs to the United States from Pakistan. This anomaly has been attributed to the pervasive influence of a powerful transport mafia in the region.

The delegation members said that Trade Development Authority should take carpet industry on board on 80-20 ratio.

To address this challenge, the delegation proposed the implementation of a free barter system, which they believe could inject new life into carpet exports from Pakistan while mitigating the transportation impediment.

Furthermore, the delegation stressed the need to address the repercussions of Afghanistan’s Free Trade Agreements (FTAs) on Pakistan’s carpet industry. The existing FTAs have facilitated the entry of competitively priced foreign goods into Afghanistan, creating an uneven playing field for Pakistani carpet manufacturers.

To restore equilibrium, the delegation called for improved market access, particularly in countries with which Pakistan has signed trade agreements, such as Turkey and Indonesia. They urged the Ministry of Commerce to take proactive steps to include carpets in these FTAs which would enable local producers to better compete.

The delegation highlighted the challenges posed by the State Bank of Pakistan’s policy of withholding a portion of exporters’ funds. While acknowledging the complexities involved, especially given global economic challenges like the Ukraine War and inflation, the delegation underscored the need to strike a balance that would ensure exporters’ viability without compromising economic stability.

In an industry-wide concern, the delegation raised an alarm about the export of substandard products – unwashed and unfinished carpets – which find their way to markets after undergoing final processing elsewhere. The delegation passionately called for stringent measures to halt this practice, which not only erodes the sector’s credibility but also threatens its economic viability. They sought robust support and regulations to uphold the industry’s integrity.

President Kashif Anwar responded to the delegation’s concerns with a firm commitment from LCCI to actively engage with relevant authorities. He disclosed that LCCI had already communicated with the Ministry and State Bank to address the issue of withheld funds. Anwar also pledged LCCI’s support in advocating for the inclusion of the carpet sector in FTAs, a strategic move that would safeguard the industry’s interests and enhance its competitiveness on the global stage.

The meeting between the Lahore Carpet Industry delegation and LCCI’s President underscores the sector’s urgent need for concerted efforts to overcome multifaceted challenges.

As industry stakeholders collaborate to find pragmatic solutions, the revival of the carpet industry remains a pivotal factor in Pakistan’s economic growth. The delegation’s call for support and reform resonates strongly, reminding policymakers of the sector’s essential role in shaping the nation’s economic landscape.

Copyright Business Recorder, 2023