Duty issue divides Pakistan tanners and leather goods manufacturers
The Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has reiterated its demand for a 20% export duty on semi-finished and finished leather. The duty was requested by the chairman of PLGMEA, Fawad Ijaz Khan to the federal finance minister Shaukat Aziz; at a meeting between the two on July 26.
Ijaz Khan said that, because most quality leather was exported, garment manufacturers were unable to secure the raw materials they needed to make better apparel from the local market. Comparing the domestic leather goods manufacturing situation with that of China, he said 39% of all leather finished in Pakistan were currently being exported, as opposed to 7% in China. China's exports also comprised 93 % value added goods, as opposed to the 61 % of Pakistan, Ijaz Khan said.
However, the Pakistan Tanners Association (PTA) (Central) opposed to the proposal.
In a statement, PTA chairman Masood A Shaikh said the government already allowed the duty-free import of finished leather from any country and that this could easily be utilised by the leather garment manufacturers.
Mr Masood suggested that manufacturers preferred purchasing locally made finished leather because of long-term credit agreements, which are not possible with imported leather. According to the PTA chairman, 15 out of the 20 leading Pakistani leather goods exporters have their own tanneries, and were also against the levy of export duty on finished leather.
In another statement, the Chairman of PTA (Northern Zone), Agha Saiddain lodged a strong protest over the proposal floated by the chairman of PLGMEA to impose export duty on finished leather. The PTA termed the PLGMEA proposals as illogical, irrational and against the country's interest.
Agha Saiddain pointed out that export of leather garments declined in Hong Kong, China, South Korea, Turkey, and Italy but none of their garment producers demanded of their governments to levy duty on finished leather. Despite the fact that prices of Sheep Napa, raw materials for leather garments, have dropped by 40 to 50 % all over the world- including Pakistan, the export of leather garment is generally on the downside. This is a global trend which has got nothing to do with Pakistani market alone, he added.
He pointed out that per square feet leather when converted into leather garment is exported at $0.93 whereas per square feet export price of finished leather is $1.56 per square feet This means that the leather garment industry was not adding value as compared to finished leather industry.
