Chairman of the Pakistan Leather Garments Manufacturers’ and Exporters’ Association (PLGMEA) Fawad Ijaz Khan, has presented proposals for the Federal Budget 2005-2006. The PLGMEA stated that the leather garments industry had been besieged with problems for the last three years. And that the association has compiled the proposals to enable its members to avert the threats that exist in today’s international markets, especially from low-priced Chinese exports. The PLGMEA has emphasised cost reduction measures for leather garment exporters to enable them to compete effectively in international markets.

It is suggested that a 6% Research & Development allowance should be offered to leather garment exporters, similar to the scheme introduced by the government for textile garment exporters as the high cost of production and research and development is said to be one of the main hurdles to boosting exports.

“The future of the leather garment industry is on product differentiation and not price differentiation. The Government must provide incentives to our exporters to undertake R & D activities to improve the product quality. This is the only measure to make them competitive in international markets.”

Mr. Fawad also urged the CBR to withdraw sales Tax SRO 415(I) /2005 dated May 12, 2005 disallowing a sales tax refund on stocks held by exporters, stating that this will create liquidity problems for exporters as they normally purchase goods in bulk for consumption over a longer period of time.

He also suggested that plant, machinery and equipment as well as spares should be exempted from import duty to encourage investment and modernisation.

Another request was that all types of imported leathers, shearling leather and leather waste should be exempt from sales tax.