Industry is “struggling for survival”
Fawad Ijaz Khan, chairman of the Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) has condemned the Federal Bureau of Revenue’s (FBR) decision to cut the duty drawback rate on exports of leather garments from 3.22% to between 2.38% and 1.59%, depending on the type of garment. He stated that that the industry was already “struggling for survival” and that implementing varying rates would further reduce competitiveness. "Our main competitors, India and China, have one rate for leather garments and our exporters are already disadvantaged and high cost compared with exporters from these countries," he said.
He added that the association had not been satisfied with the previous higher rate and rather than cutting rates, the government should have increased duty drawback to 5.41% in order to safeguard the future of the industry.
Although exports of leather garments declined 23% in the period June 2006 to July 2007, recent figures have shown a slight improvement, however, Mr Fawad fears that the reduction in duty drawback rates will again negatively affect exports and lead to further declines.
