Leather sector can benefit from Vietnam’s footwear industry

Leather sector can benefit from Vietnam’s footwear industry

KARACHI: Pakistan's 2nd prime export-oriented leather sector can get more benefit from the footwear industry of Vietnam, which needs a very large number of finished leather for its shoe exports worth $4.9 billion.

Vietnam exports mainly textile footwear and this category represents 47 percent in total footwear exports followed by leather footwear, with a share of 35 percent to $2.93 billion.

Senior executive member of Pakistan Tanners Association (PTA), Agha Saiddain said, "We are striving our best to capture more and more share of our finished leather exports to Vietnam besides Indonesia".

Both countries have state of the art tanneries and large shoe factories besides gloves manufacturers in Vietnam and Indonesia.

The PTA exporters in past years by holding business meetings with their counterparts in Vietnam and Jakarta have obtained sizeable export orders.

Pakistan's export of leather to Vietnam was around $28.60 million, which is hardly above 1.09 percent of the total leather export of Vietnam.

Visa is not an issue if genuine Pakistani exporters of leather want to visit Vietnam.

It is imperative that trade commissioners at Pakistan Embassy in these countries should hold meetings with local associations and tanner associations in order to chalk out a detailed programme for our business visit.

In Indonesia the tanneries are producing only 35 percent of the requirements of the leather for manufacturing sectors and therefore there is a big scope of selling semi finished and fully finished leathers from Pakistan.

Saiddain said to save leather industry from economic disaster due to undue taxation and high cost of doing business we need relief from Customs and other departments.

The bilateral trade turnover between Vietnam and Pakistan has considerably increased in the recent years. From total amount of $10 million in 1999, the trade turnover increased to $1,090 million in 2016.

There are still great potentials for Vietnam and Pakistan to further enhance the multifaceted cooperation, such as in the areas of trade and investment, IT and software industry, agriculture, culture and education.

The government should launch comparison of incentives allowed to leather industry of China, India and Bangladesh, besides leather sector may be allowed export refinance at more than 5 percent.

Like in India the government may announce investment grant at around Rs 70 million for technology up-gradation, expansion and capacity building.

It is suggested that exporter with 80 percent exports may be considered 100 percent exporter.

Since the shipping lines have either abandoned or curtailed their vessels through Karachi as such vessels for imported goods are not frequently available like in past.

Due to these reasons we have to keep inventories of imported goods for more than 6 months and previously inventory for 3 months was sufficient for tanneries to operate smoothly

The inventory carrying cost has direct impact on liquidity of units who are already under financial crunch.

Perishable goods like raw and skins get destroyed during long arrival time and this has further added to our difficulties.

According to Lefaso, Vietnam's Customs, footwear exports in 2017 are estimated to reach more than $15 billion.

The United States continued to be the most important destination for 'Made in Vietnam' footwear. China is second largest market accounting for more than 8 percent of total footwear exports.