Leather industry needs centralised processing facility: BASF MD

Exports have been stagnant at $1.196b for the past five years

LAHORE: The leather industry has much more potential than it is currently delivering as it needs a centralised processing facility with government assistance to make tanneries cost effective and help them compete with regional rivals for a better export share, says Faisal Akhtar, Managing Director of Badische Anilin Und Soda Fabrik (BASF) Pakistan.

“Like other industries, leather manufacturers have also been hurt by energy shortages and the global economic slowdown, but regional states have managed to increase their exports,” said Akhtar while talking to The Express Tribune. “Our exports are stagnant for the last five years.”

BASF is a 150-year-old German company having presence in almost all key economies in the world. In Pakistan, the company has been working for the last 46 years and it mainly provides chemical solutions to different industries like leather, textile, agriculture, cosmetics, construction and others.

Its chemical solutions are research based and cater to the changing demand by making product processing cost competitive than traditional methods. The company’s global revenue for 2014 stood at €74.33 billion.

“We are a meat-loving nation and with much greater number of livestock available in all seasons, it makes raw material for the leather industry available at affordable rates,” Akhtar said.

However, he pointed out that high cost of energy, power and gas shortages, water scarcity and the need to comply with global environmental standards for getting export orders made the production process quite costly. Apart from this, the government is not giving attention to the leather industry like the way it is paying heed to the demands of textile manufacturers.

Leather processing is a water-intensive process and many tanneries face water scarcity. In addition to this, it needs continuous energy for heating and cooling purposes.

“Chemicals innovated by our company make this process much easier; it consumes much less quantity of water and same is the case with energy. It also helps in reducing environmental hazards - the most important thing a global buyer demands,” Akhtar said.

Most of the customers of BASF Pakistan are exporting their products and have to meet international standards to make inroads into European and other overseas markets.

“They face pressure from the buyer to meet the standards and supply goods within the agreed time frame, and this is where our solutions are giving us an edge,” Akhtar boasted.

However, he stressed, a lot of challenges should be addressed by the government as well as the tanneries to give a boost to the industry.

According to the Pakistan Tanners Association (PTA), leather exports from the country currently hover around $1.196 billion - a figure where these are stuck for the past five years.

Global recession cannot be blamed for the stagnant shipments as regional nations have been able to give a push to their exports.

Leather exports of China have increased 19%, India has enjoyed a 63% rise whereas Bangladesh has managed to increase exports by 73.58% in the past five years, according to the PTA.

Pakistan’s leather industry is looking at the government for better infrastructure, improved law and order situation and most importantly cheap and uninterrupted energy supply. “If the industry gets all these facilities in coming years, exports could easily cross $2 billion,” Akhtar said.

Published in The Express Tribune, February 6^th, 2016.

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