December 19, 2006	Tuesday	Ziqa'ad 27, 1427

KARACHI, Dec 18: Leather garment exporters seek incentives matching with those of China and India to arrest the rapidly falling exports, which have even resulted in closure of some leading export houses during the last couple of years.

The exporters listed several factors--such as high mark-up rates, electricity and fuel prices and other government levies, including EOBI and Sessi--as contributing towards high cost of production and demanded some long-term and short-term measures to ensure a level- playing field.

Talking to Dawn from Sialkot Chairman Pakistan Leather Garments Manufacturers and Exporters Association (Plgmea) Ahmed Zulfiqar Hayat sought immediate approval of the Research and Development (R&D) support for the leather garment exporters as well as permission to import duty- free accessories to the extent of five per cent of exports’ fob value.

Presently, both the local industry and exporters have the same tariff for electricity consumption. Therefore, the exporters may be provided 20 per cent subsidy on their electricity bills, he suggested.

Technically qualified experts from the role model countries like Korea and China may be hired to improve the production efficiency and quality of local leather garments. The expenses involved in hiring the services of these experts may be borne by the government directly through Export Development Fund (EDF) or any other funding, he added.

The Plgmea chief also demanded cut in withholding tax on leather garment exports from one per cent to 0.5 per cent for a period of two years. The industry is also seeking exemption from payment of EOBI and Sessi levies for a period of one year.

To cut the cost of production the leather garment exporters also want the government to share up to 75 per cent of designing cost and 50 per cent cut in mark-up rate of export refinance.

He suggested that the exporters should be divided into three or four categories on the basis of their performance. By doing so, the incentives should be given on the basis of export performance, which will help to create an export culture in the country and also trigger competition amongst the exporters.

For long-term measures Mr. Zulfiqar Hayat asked the government to arrange 200 acres of land in the vicinity of airports in Karachi and Sialkot for leather garment units. The government should not only develop the land but also construct factories and give them to the exporters on easy terms.

The Plgmea chief stressed the need for uninterrupted supply of utilities such as power, gas and water so that production was not hindered at any given time owing to frequent shortages or breakdown of services of the utility companies.

He was critical of the unilateral decision of slashing down of duty drawback on leather garment exports from 5.17 per cent 3.22 per cent and said it proved to be a death blow to the leather garment industry.

Mr Hayat assured that if the rate of mark-up is brought down to 4 per cent and duty drawback is revived to 5.17 per cent it will resurrect the dying industry and enable it to capture more foreign markets and enhance exports in a short period.