ISLAMABAD, Feb 10: The government is considering reducing cost of production of leather products by decreasing prices of utilities to enhance exports.

Official sources told Dawn on Saturday that the government had plans to increase export of leather products through quality and improved productivity, and by rationalising tariffs and import of chemicals.

It was also said that modernisation of livestock farming on scientific pattern was needed for better growth of the sector.

Pakistan's exports of leather to European countries were declining owing to shifting of tanning industries to China, South Korea and other Asian countries. Exports to the US, the main market for leather apparels, have declined by over nine per cent.

The cost of production is very high in Pakistan as compared to its competitors -- China and India. The high cost of various inputs, specially utilities and taxes, make the country's products uncompetitive in the international market.

Pakistan, being a developing country, faces barriers i.e. the use of sanitary and 'phytosanitary' standards by the developed countries.

EU countries are demanding that leather goods should carry certification marks of the International Standard Organisation (ISO) regarding a pollution-free environment at the factory where products are manufactured.

In this behalf, joint proposals from the Higher Education Commission (HEC) and the Pakistan Institute of Development Economics (PIDE), said that survival of leather industry lies in the adoption of quality standards and in obtaining international certification of ISO-14000, ISO,9000, ISO-17025, SA-8000.

According to a survey, only 15 per cent workers are qualified and experienced in leather and leather garments industries while 85 per cent are employed without proper experience.

Finishing recipes are prepared by uneducated technicians having no knowledge of relationship between binders and top coats.

Exported leather goods during storage and transportation develop problems, like spew, because of chemical reaction.

The HEC and the PIDE believed that there should be three to six-month courses for managers and supervisors to equip them with appropriate knowledge for rectification of the problem.

The leather industry is also facing the problem of non-availability of raw material for finished goods.

At present, a lot of companies are exporting leather in the form of wet blue semi-tanned leather to avoid effluent treatment problems which is a tremendous waste.

The government in this behalf was informed that it was of paramount importance that valued-added finished goods of leather are exported and that the government bans export of hides and semi-tanned leather or there should be a 25 per cent duty on export of semi- finished and finished leather.

Leather shoes are in high demand all over the world, but Pakistan was unable to get its proper share due to high duties imposed on raw material which has made shoe industry uncompetitive in the international market, restricting growth of footwear industry in Pakistan on the one hand and causing a loss of export markets available in Indonesia, Philippines, Malaysia and Thailand.

In this behalf, the government was proposed that duties on tannery and machines, spares and raw material be reduced or import of tannery machines and spare parts should be made duty-free.

Good quality leather is mostly exported and is not available for high value-added leather garments and leather producers. Leather garments in Pakistan are made from low grade and medium grade leather. These garments face stiff competition from Chinese and Indian products.

Unless good quality leather is made available to value-added sectors, these sectors will continue to suffer and lose their market shares in global markets for leather garments and leather products.

The government was proposed to deal with this issue by imposing a 20-25 per cent export duty on finished leather.

This would ensure availability of good quality leather produced locally.

The government was also recommended to revive the old rates of rebate as incentive to increase exports.

The government had reduced the rate of rebate on leather products for exports. But they are unable to reduce the cost of production and maintain standard of their goods in international markets. The margin of profit has considerably reduced due to shortage of raw hides.

Pakistani exporters are also facing difficulties in getting refunds from the income tax collectorate because of inordinate delays in giving refunds to exporters and because SROs issued by the CBR from time to time are not honoured.

The government was advised to direct the income tax collectorate accordingly.

The leather industry was advised to improve quality of leather through introduction of new processes and just in time production methods.

Also, there was a need to introduce new machines that are not only more efficient but also safer to use, and help in shortening the process cycle.

Research in application of new chemicals was also proposed to develop cleaner and environment- friendly technologies which will help reduce overall processing cost.