The Furniture Sector in Pakistan: Export performance and ... - TRTA i

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Tariff protection Imported furniture were subjected to an import duty of 28% in mid 1990s but gradually this has been reduced to less than 5% to meet the impending AFTA (ASEAN Free Trade Area). Financial incentives The financial incentives provided to the furniture industry are very good and have been cited as one of the main reasons for the rapid expansion of the furniture industry in Malaysia. Schemes such as the pioneer status, reinvestment allowance, infrastructure and training allowance, etc. have been fully exploited by the furniture manufacturers, especially by the foreign investors like Taiwan, Singapore, etc. However, the incentives for research and development (R and D) and design activities are still insignificant, which explains the lack of such activities within the industry. Common service facilities Common service facilities such as kiln-drying capacity, finishing and design centres, etc. have been established in furniture villages to encourage the growth of the furniture industry is this vicinity. Networking The rapid expansion of the manufacturing base has been attributed to the extensive networking or sub-contracting activities prevailing in the industry. Such a practice enables economies of scale and spread of overhead, which provides cost competitiveness. Export promotion Due to dependence on rubber wood, the foreign perception of the Malaysian industry has persistently been that of low-end products. Experience has shown that export promotion support has to be specifically targeted at furniture, not to be combined with other products. The international furniture fairs organised in Malaysia have been highly useful for getting foreign orders. The size of the industry and the quality of its products are sufficient to attract foreign buyers or sourcing agents to come to the country. A critical mass is needed. 94 International Trade Centre
6 Conclusion and recommendations 6.1 Recommendations for parties involved 6.1.1 Individual companies While training certainly is a crucial effort that improves the companies’ abilities on a wide range of business fundamentals, it cannot be recommended in isolation from other development steps. Typically, additional training is expected to be financed form the outside, i.e. government funds or technical assistance from ITC, UNIDO, ILO or similar international bodies. No public funding for training has been promised for furniture industry as it lacks a priority status in Pakistan. Repetition with “Solutions” chapter earlier in this report cannot be avoided. The reader is suggested to reflect on the solutions on company level given in the previous chapters. A brief checklist of main points is repeated here: • Optimise the use of the highest-valued raw material and introduce new wood species (imported) to fill the shortening supply of traditional species. • Start a kiln-drying side business on joint venture or a contract-kiln operator basis. This helps avoiding cracking of furniture in the final destinations, which causes irrevocable damage to the reputation of Pakistani furniture. • Establish a “Human Resource Development Fund”, catering for the collective training needs across industry clusters. Invite foreign training staff and designers through this funding mechanism. • Develop the traditional designs and allow the influences of foreign designs more freely. Fuse Pakistan and foreign best design details into a new flavour. • Prepare for investing in compressor-spraying gun based painting and lacquering to improve final quality. • Seek participation in training courses abroad e.g. on finishing, sanding techniques. • Propose in unison the establishment of a Furniture Market Information System, with the purpose of permanent provision of commercial information to the furniture firms. • Demand vocally for better Export Promotion Services. Examples can be found from more successful furniture exporting countries. For example, Malaysia’s experiences have been transferred to other countries already. 6.1.2 Relevant associations • Lobby for the potential benefits of wooden furniture industry clustering, supplier networking and component outsourcing as building blocks for competitiveness. • Develop and raise funds for implementing industry-wide training programmes on furniture manufacturing processes, management skills, design and skilled worker training programs, etc. through human resource development funds and other resources. International Trade Centre 95
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The Furniture Sector in Pakistan
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Acknowledgements The report was pre
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Abbreviations AFTA AHEC AKTRIN APFE
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Table of contents Acknowledgements
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Box 3.1 Multilateral discipline of
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Executive summary This study sets t
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the extent possible maintain or imp
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1 Background and objectives 1.1 EC
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2 Furniture sector in Pakistan 2.1
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On the buyer’s side, there are gl
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According to the websites of import
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Global demand for furniture in main
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suppliers, both domestic and other
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Table 2.3 Pakistani furniture expor
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Figure 2.4 Distribution structure f
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freight rates have increased and do
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Price The prices of local machinery
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Indonesia has also announced a ban
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industry itself should support effo
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various counterparts, the supplier
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Box 2.7 UK Timber Trade Federation
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Figure 2.5 Simplified example on ch
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At least 70% of the wood used in ma
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Scope of joint ventures There exist
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• With FAO’s Forest Products an
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The contact information of many of
Page 53 and 54: Box 2.10 USAID initiative in the fu
Page 55 and 56: Opportunities Major opportunities m
Page 57 and 58: pressure on the price. There appear
Page 59 and 60: Pakistan does not export this furni
Page 61 and 62: 3.1.3 Functional scope The function
Page 63 and 64: Current status of efforts to libera
Page 65 and 66: 3.2.2 Information flow-upwards, i.e
Page 67 and 68: Commission (EC/EU) has established
Page 69 and 70: Figure 3.3 Relevant intensity of WT
Page 71 and 72: Box 3.2 Regional Trade Agreements (
Page 73 and 74: Trade Related Aspects of Intellectu
Page 75 and 76: Agreement on the application of san
Page 77 and 78: country or materially retards the e
Page 79 and 80: Relevance of the furniture sector T
Page 81 and 82: 3.4.2 Other countries’ access to
Page 83 and 84: Table 3.2 Top 10 buyers of the Paki
Page 85 and 86: Arabian market. Here again, there i
Page 87 and 88: • Material from China is being us
Page 89 and 90: 4.2 Obstacles and shortcomings - im
Page 91 and 92: Raw material recovery Raw material
Page 93 and 94: • Consistent policy for supportin
Page 95 and 96: A short-term but maybe a costly mea
Page 97 and 98: 5 Export services in Pakistan 5.1 E
Page 99 and 100: 5.1.3 Federation of Pakistan Chambe
Page 101 and 102: • Pakistan International Freight
Page 103: The lessons learnt here could be re
Page 107 and 108: 6.2 Critical success factors • A
Page 109 and 110: 6.4 Global value chains 6.4.1 Poten
Page 111 and 112: Benefits All timber tends to be air
Page 113 and 114: • Optimise cutting; • Calculati
Page 115 and 116: 6.6.5 If we had US$100,000: A techn
Page 117 and 118: • To modernise such a laboratory,
Page 119 and 120: Annexes Annex A — Sources of info
Page 121 and 122: • Federmobili information on the
Page 123 and 124: • National Home Furnishings Assoc
Page 125 and 126: International Trade Centre 115
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