According to Pakistan Tanneries Association, leather industry is the second biggest dollar earning sector after textiles in Pakistan. Well, we don’t know what kind of data are they watching, but according to latest trade numbers released by Pakistan Bureau of Statistics, leather has the third biggest share (4.5 percent) in the country’s total exports, after textile (54%) and rice (9%)-–a position that it shares with the chemical industry.
During 10M FY14, leather products worth $957.5 million were exported compared to exports of $853.3 million in the same period of last year-–led by 12 percent growth each in tanned leather and manufactured leather products.
However, on month-on-month basis, exports of manufactured leather products were largely flat—showing a meagre growth of 0.29 percent in April 2014. And from what it seems the slowdown everybody dreaded in the sector is here to stay.
The decline in export of leather goods is attributed to the increasing cost of production, limited availability of leather and its high prices, law-and-order situation in Karachi in particular and severe power shortage and gas crisis. Leather tanneries are also in the muddle as hides and skins obtained from animals sacrificed last year at Eid-ul-Adha are declining due to smuggling of livestock to neighbouring countries.
Speaking on the condition of anonymity, a member from Sialkot of Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) said rupee’s appreciation against the dollar is affecting the margins of export-oriented industries that are already operating on low margins of 2 to 5 percent. He added that as the 2015 spring season collection is being manufactured, leather goods exporters are unsure as to what price they should quote to their prospective buyers-–the confusion stemming from currency fluctuation.
The one thing that needs to be noticed is that across the eastern border, the Indian government plans to inject $168 million for the enhancement of its leather sector under the 12th Indian Leather Development Plan (ILDP) and aims to achieve a target of $14 billion by 2017. That plan envisages a 360 degree development of India’s leather industry, including relevant human resource, technology, environmental protection, design and development institutes to promote value addition and the formation of mega clusters.
With these kinds of developments on the eastern front, Pakistan’s leather industry will have to gear up, and the government will also have to provide necessary support and direction; failure to do so will leave the industry unable to capitalize on the GSP+.
Leather exports ($ 000)
10MFY14 chg Apr-14
Value MoM chg Quantity MoM Chg
Leather tanned 438,206 12.3% 50,752 -8.0% 1,958 -26.0%
Leather manufactures: 519,377 12.1% 45,706 0.29% - -
Leather garments 340,149 9.1% 27,776 -1.4% 64 -9.9%
Leather gloves 167,065 19.2% 16,627 4.1% 481 -9.4%
Other leather manufacturers 12,163 8.7% 1,303 -9.5% - -