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Leather exports drop 20pc, tanneries closed
 admin May 3, 2010, 03:41:05 AM 

KARACHI: Pakistan Tanners Association Chairman Afzal Husain has said a number of tanneries in the Korangi’s tannery zone have closed down due to lack of business as foreign buyers have stopped placing orders in the wake of the global recession. In a meeting held recently, he said exports of leather had dropped by 20 per cent in nine months (July to March) of the current fiscal year and feared they might reach 25 per cent by the end of the year. The global recession had taken its toll on the leather sector, which needed an immediate rescue package from the government, otherwise exports from the second largest foreign exchange earner might collapse, he added. Afzal said the tanners had already started taking measures to ward off total collapse and as a first step they had announced holiday on Saturdays, in addition to regular Sundays, from June. “The 20 per cent decline in exports and piling up of stocks in the tanneries have compelled leather producers to slow production and save the cost of utilities at least for one day,” he said. “Leather products are usually expensive and our major buyers are complaining that the consumers are facing monetary crisis and are unable to purchase expensive leather jackets even during harsh weather.” He said the leather sector was the second largest export earner after textiles but exports had already dropped and “it is feared that the country will not be able to achieve the target of $2 billion this year.” He said the closure of industries in the leather zone had resulted in lay-off of over 7,000 workers so far, adding due to the situation, prices of hides and skins had dropped to about 50 per cent. The PTA chairman said he had given proposals for the budget to rescue the industry, asking the government to declare all inputs used in leather processing zero-rated as offered to other export-oriented industries in order to provide them with a level-playing field. “It is unjustified that our chemicals, which are being used solely in leather processing, are being subjected to a higher slab of customs duties despite the fact they are not used in any other industry or any commercial purpose.” He disclosed the leather sector, which always faced a shortage of skins and hides, “is now unable to buy raw leather despite a sharp drop in prices of all kinds of raw skins.”Cow skin can be purchased at Rs1,200 to Rs1,400 compared to Rs2,400 to Rs3,000 previously. Similarly, goat, sheep and buffalo skins are available at almost half the price but demand has been extremely low. Afzal was of the view that law and order situation had also resulted in an increase in the transportation cost of goods from Lahore to Karachi as owners of container services were charging $1,000 for a container of 40 feet. He said the freight charges of Rs70,000 to Rs80,000 for a container had become unbearable and it was feared that more manufacturing units would go out of business. He warned that no incentive for the industry, especially the leather sector, would cripple leather exports. “All over the world, the industries are being given stimulus injection while our government is pulling the oxygen mask from our industry,” he commented.

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