Caretaker govt policies push leather industry to brink of collapse: exporters

LAHORE: The leather exporters have lashed out at the interim government for its policies that they say have harmed their business and put them on the verge of collapse.

The industry said the government’s actions have only made things worse, raising the cost of production and reducing the competitiveness of Pakistani leather products in the global market.

Agha Saiddain, Chairman Pakistan Tanners Association (PTA) in a letter to the caretaker minister for Commerce Gohar Ijaz stated that the sector was relaxed with his appointment and believed that the ministry of commerce will work in accordance with the statements of increasing the exports of the country to $100 billion.

"The policies of caretakers have disappointed us as we have never faced such harsh measures in the history of the last 76 years. The export sector has lost its competitiveness due following decisions of the government," Saiddain stated.

Sharing the comparison with India, Bangladesh and Vietnam with Pakistan, chairman PTA narrated that per kilowatt power tariff in Pakistan is 15 cents as compared to Vietnam 6 cents, India 8 cents and Bangladesh 10 cents. So the situation of gas mmbtu is $9-12.8 in Pakistan, India $6.5, Bangladesh $7.4 cents and Vietnam $9.8 mmbtu. Similarly, the interest rate on Export Refinance in Pakistan is highest of 22 percent, lowest in India 2.8-3 percent, Vietnam 4.5 percent and Bangladesh 5 percent.

Due to these harsh measures, Pakistan’s exporting sector is leading towards a total collapse. "This is our duty to tell you the truth and inform you about ground reality that we are leading towards total collapse," Saiddain said.

The chairman PTA questioned how can the export sector grow in such an uncompetitive atmosphere? Where will MOC enhance exports to $100 Billion? ‘The business community is well aware of your clarity of mind and vision but this time people are confused’, he added.

In South Asia according Moody’s Survey Pakistan is the most vulnerable to balance of payment crises having the lowest level of exports of 10.50 percent of GDP. With an increase of minimum wages from Rs 25000 to Rs 32000 per month, increase in electricity and gas tariff with ERF at 22 percent the government has put collective burden on average industry having 600 workers Rs18 crore per annum presuming that the profitability of industry can absorb Rs18 crore and even then industry will sustain.

"Despite these harsh measures FBR is very active in serving show cause notices to PTA members causing further depression and disappointment. Most of these notices are based on misunderstanding but it causes wastage of time and money to our members."

Saiddain mentioned that none in the leather industry is making such huge profits to absorb this sudden landslide burden without allowing any relief to take this burden. "Unfortunately, deindustrialization, unemployment, and law and order situation is the future. The PTA we decline in exports is not attributed to your tenure as Federal Minister of Commerce."

The PTA requested Minister Ijaz take some time to discuss these matters with the association and save the sector from total disaster.