KARACHI: Despite a decrease in market share, the leather sector is still enjoying the second position in industrial exports ranking of the country after the textile sector, said former Pakistan Tanners Association (PTA) chairman Agha Saiddain.
Talking to Daily Times, Saiddain said the leather sector fetched $0.981 billion during fiscal year 2015-16 as against $1.049 billion during 2011-12.
Saiddain said, “If we compare performance and growth of this sector to leading leather producing countries such as China, India and Bangladesh, we have not been able to retain our market share for various reasons despite having the best quality leather.
“In China, India and Bangladesh, their respective governments have introduced various incentive schemes such as export support fund, subsidy on import of machinery for balancing, modernising and upgradation. Our economic managers raise their budgetary shortfalls through borrowings from the International Monetary Fund or through issuance of sukuk, Euro and dollar bonds. Our economic managers lack patience and depend on instant borrowings. If they extend support to leather industry in shape of export support fund our exports can grow,” Saiddain maintained.
Giving details of decline in leather exports, he said the government had approved Leather Export Promotion Council (LEPC) in the Strategic Trade Policy Framework (STPF) 2012-15 and 2015-18, but implementation is yet to be made.
He added, “Our economic managers need to understand one thing that consumer in other counties are buying our product, not taxes. We cannot tax foreign citizens. On every international airport there is a counter for VAT/Tax Refund and these taxes are refunded simply by showing boarding pass and passport.”
However, there are many kinds of taxes on our exports which are not refundable such as EDS, withholding tax, stamp duty tax, EOBI, surcharges on electricity such as NJS, EQS, provincial infrastructure tax etc. “In India, Bangladesh and China, all these taxes are refunded. Our economic manager build foreign exchange reserves through borrowing and pay heavy interest rate up to 8.26 percent on the borrowings but they are not ready to give relief to the exporters in the country,” he lamented.
“The second major problem our exporters are facing is high cost of doing business. Thirdly, the duty drawback rates in Bangladesh, India, China and Pakistan are 12.5%, 5.8%, 7.5% and 2.38%, respectively, as such we lack level playing field with these countries,” he added.
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