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

advocated the concept of “Furniture Village” that resembles such cluster activities in Italy,
Malaysia, etc. USAID’s nascent support to the establishment of two Furniture Villages will
have to resolve the raw material glut faced by the furniture industry. US hardwoods are
extensively being imported and remanufactured for exports by, e.g. the Chinese and
Vietnamese furniture factories. A similar concept may be adopted in Pakistan, possibly
complemented with Malaysian tropical hardwood supplies. But embarking on this new strategy
would force the industry to reinvent itself.
Obstacles in the value chain
The industry acknowledges that its main obstacles in fact range over the whole supply chain.
Unsustainable wood resource handling, improper wood seasoning, static design and lacking
production innovations happen in the up-stream of the chain. These contribute to the
downstream problems, such as drain of skilled workforce to other sectors, sub-standard
technology, finishing and packaging. Further down the line, this is bound to lead into sales to
sub-optimal markets at discounted prices. It does not help either that the furniture firms
consider the common export services provided by the Trade Development Authority of
Pakistan (TDAP) (previously the Export Promotion Bureau (EPB)) and the Small and Medium
Enterprise Development Authority (SMEDA) largely inadequate and that they are relatively
unknown to most of them.
WTO agreements’ implications on furniture
The production structure of the furniture industry has undergone a significant change. Factories
from dozens of countries now participate in the different stages of global furniture value
chains, manufacturing components and ready-to-assemble (RTA) components for finished
furniture for globally outsourcing buyers’ groups and retailer chains.
The agreements of the World Trade Organization (WTO) are about providing equal
opportunities – they do not provide guarantees nor do they provide all the conditions for
participation in the global economy for any sector of industry. Pakistani furniture makers see
opening up of trade impacting both exports and imports. The country has remained a producer
of finished furniture of slowly modernizing traditional designs. As a result of the WTO
agreements, market access for the Pakistani furniture in industrial countries has improved as
tariffs have come down. Furthermore, there is now protection available to Pakistan against any
discriminatory treatment in the trading partners’ markets. On the other hand, new tougher
requirements for producing domestic furniture according to stricter standards and more
elaborate designs are being progressively adopted.
Recommendations
A brighter future for the furniture industry would necessitate a holistic approach. Some of the
most important elements of that approach are the following:
Sustainable raw materials
A determined plan is needed to create and develop a sustainable source of wood raw materials.
Forestry/reforestation programs should ensure a stable source of low cost raw materials, and to
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