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

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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 2 International Trade Centre
the extent possible maintain or improve ecological conditions, enhance the community income and employment, etc. Enforcement of the rule of law and good governance on timber cutting and trade Eradicate illegal and rent-seeking behaviours of Forestry Department officials, if such misconduct is proven. Product quality The quality of furniture is determined by professionalism in the handling of raw materials, production techniques and manufacturing process. Due to insufficient skills and facilities, as well as the lack of quality standards and agencies conducting inspections, quality is bound to suffer. Design Creation of easily accessible design libraries in each major furniture cluster of the country would disseminate effectively new designs. The items collected could include trend reports, contemporary design books, consumer magazines, mail-order catalogues, trade publications, raw material samples, etc. Training programs and exchange of foreign designers can be an integral part of this design upgrading. Human resources Even if labour force is adequate in numbers, lack of technical capabilities can hinder competitiveness. Public support to vocational training for workers in factories is recommendable, in order to reduce direct training expenses of enterprises, and to allow managers to professionally grow with their businesses. Market information Access to information on market characteristics (for example trends in distribution, retail success stories, new furniture marketing concepts) and market access (tariff and non-tariff barriers) is often too difficult. It would thus be useful to centralize this information for regular distribution at the furniture association level. Marketing activities The furniture industry should focus on marketing activities in key markets (the United States, Japan, the European Union, and the Gulf). A concerted action should include exhibitions; websites; international trade fairs; in-depth market analyses, etc. Special encouragement may be warranted for importers and retailers groups to visit Pakistani factories or permanent exhibition halls. International Trade Centre 3
Page 1 and 2: The Furniture Sector in Pakistan
Page 3 and 4: Acknowledgements The report was pre
Page 5 and 6: Abbreviations AFTA AHEC AKTRIN APFE
Page 7 and 8: Table of contents Acknowledgements
Page 9 and 10: Box 3.1 Multilateral discipline of
Page 11: Executive summary This study sets t
Page 15 and 16: 1 Background and objectives 1.1 EC
Page 17 and 18: 2 Furniture sector in Pakistan 2.1
Page 19 and 20: On the buyer’s side, there are gl
Page 21 and 22: According to the websites of import
Page 23 and 24: Global demand for furniture in main
Page 25 and 26: suppliers, both domestic and other
Page 27 and 28: Table 2.3 Pakistani furniture expor
Page 29 and 30: Figure 2.4 Distribution structure f
Page 31 and 32: freight rates have increased and do
Page 33 and 34: Price The prices of local machinery
Page 35 and 36: Indonesia has also announced a ban
Page 37 and 38: industry itself should support effo
Page 39 and 40: various counterparts, the supplier
Page 41 and 42: Box 2.7 UK Timber Trade Federation
Page 43 and 44: Figure 2.5 Simplified example on ch
Page 45 and 46: At least 70% of the wood used in ma
Page 47 and 48: Scope of joint ventures There exist
Page 49 and 50: • With FAO’s Forest Products an
Page 51 and 52: 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
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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
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4.2 Obstacles and shortcomings - im
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Raw material recovery Raw material
Page 93 and 94:
• Consistent policy for supportin
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A short-term but maybe a costly mea
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5 Export services in Pakistan 5.1 E
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5.1.3 Federation of Pakistan Chambe
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• Pakistan International Freight
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The lessons learnt here could be re
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6 Conclusion and recommendations 6.
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6.2 Critical success factors • A
Page 109 and 110:
6.4 Global value chains 6.4.1 Poten
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Benefits All timber tends to be air
Page 113 and 114:
• Optimise cutting; • Calculati
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6.6.5 If we had US$100,000: A techn
Page 117 and 118:
• To modernise such a laboratory,
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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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