Alert Sign Dear reader, online ads enable us to deliver the journalism you value. Please support us by taking a moment to turn off Adblock on Dawn.com.

Alert Sign Dear reader, please upgrade to the latest version of IE to have a better reading experience

.

Growth needs a helping hand

February 06, 2017

Email

Pakistan’s furniture industry remains an essentially fragmented, traditional cottage operation — with a negligible presence in the $250bn world trade — because of supply chain obstacles: obsolete technology, unskilled workers, unavailability of cheaper raw materials, shortage of furniture designers, vanishing traditional Shisham (Indian Rosewood) resource, etc.

The government’s failure to hold the manufacturers’ hand and provide them access to credit for upgrading technology and new raw materials — used for mass production for export markets, train labour, help find markets for products, and prevent the influx of cheaper Chinese furniture in the domestic market, isn’t helping the industry either.

Consequently, Pakistan is losing its edge in traditional, carved, solid wood furniture, in the domestic market because of its high price, and in the foreign markets due to poor quality and design. Little wonder then that the country’s furniture exports, which mainly comprise traditional solid wood items, have declined from $18m in 2007 to $6m during the last financial year, and are plunging. Furniture exports were over 9pc down to $2.29m during the first half of the present year from $2.50m during the corresponding period last fiscal year.


“At the moment, the furniture industry is focused more on the domestic market which is expanding very fast” says Kashif Ashfaq, chairman of the Pakistan Furniture Council


“It is very unfortunate that the government doesn’t even recognise furniture-making as an industry,” lamented Kashif Ashfaq, chairman of the Pakistan Furniture Council, a non-profit private platform created by several major furniture makers by pooling small amounts of their money to promote Pakistani furniture through the organisation of exhibitions and road shows at home and abroad.

“At the moment, the furniture industry is focused more on the domestic market which is expanding very fast on the back of growing consumer spending and a booming housing and construction sector, along with a huge jump in remittances sent by the Pakistanis working abroad in the recent years,” he said. “Besides, the industry isn’t prepared to handle large export orders. We don’t have the capacity or backup… Exports will follow once we create mass production facilities,” Kashif said.

Humanyun Laiq, former chairman of the All Pakistan Furniture Exporters Association, contended that the question of boosting exports did not arise without moving into cheaper, modern furniture production. “The problem with us is that we are stuck with Chinioti style traditional furniture. We neither thought of moving away from Shisham into other materials nor tried to re-grow it or find an alternate wood. So now we are losing whatever small export market we had with the disappearance of our only solid wood resource,” he argued.

Furniture, Kashif pointed out, is one sector where a country could increase its exports manifold in little time. China, for example, was nowhere on the scene in the early 1990s but emerged as the 9th largest furniture exporter in 2000. It is now a top exporter with market share of about two-fifth or $94bn. Malaysia too, grew fast to raise its furniture exports to over $1.5bn with its companies graduating from original equipment manufacturers (OEMs) to original brand manufacturers (OBMs) to original design manufacturers (ODMs).

“Others have done this. We can also do it. But we need government support in getting easier access to technology, raw materials, trained labour and credit,” he stressed. He said the government needed to put in place a plan to create and develop a sustainable, low cost source of wood raw materials, eradicate illegal timber trade, train designers and labour, organise single-country road shows to market local products in key export markets like the Gulf states, the US, the European Union and Japan.

The PFC chairman pointed out that it would take a longer time to compete internationally in the modern, mass furniture segment. But, he said, Pakistan could still earn a lot of foreign exchange by creating a high-end ‘niche’ market for its traditional and ethnic furniture. “Our industry has no contact with any global brand or store, which is essential to boost exports. The foreign customers of Pakistani furniture mostly comprise of overseas Pakistanis living in the US, Canada, the UK and the Middle East.”

Wood furniture making mostly remains a cottage operation in Chiniot, Gujrat, Lahore, Peshawar and Karachi outside the documented economy. But a few small furniture companies in the organised sector have expanded their production by acquiring technology to produce quality, cheaper modern items — mainly for the Rs7bn domestic market but also for exports.

Many such manufacturers however complain of rising cost of doing business owing to high price of electricity, low labour productivity and use of costly imported and local solid wood and alternate raw materials. This makes products expensive and uncompetitive against imported Chinese furniture in the local market.

“If we are able to protect our local market against cheaper imports and encourage our local industry, we can create a supply chain required to boost our overseas sales at a later point,” argued Humanyun.

In the absence of an official policy supporting the furniture industry, the PFC is working on a plan to set up common display centres and model units, with the help of Italy, for encouraging small producers to adopt new technologies and boost their local and overseas sales.

“We are doing our bit. But the industry will not grow unless the government decides to hold its hand and help remove obstacles in the supply chain,” Kashif concluded.

Published in Dawn, Business & Finance weekly, February 6th, 2017