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

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The role of intermediaries (sourcing agents, brokers, importers, wholesalers, retailers, etc.) complicates the controllability of the chain. Even though each actor is responsible for his/her own part, complication creeps in with the increasing number of actors in the supply chain because materials get increasingly mixed and harder to control and track. Forest Stewardship Council (FSC) certification FSC has introduced an international labelling scheme for forest products made from FSCcertified raw material (see www.fsc.org). It is widely held as the most environmentally credible of such schemes, and it is strongly supported by the NGO community lead by the World Wide Fund for Nature (WWF). Companies wishing to use the FSC product label must have an FSC chain-of-custody certificate. There were 6,600 FSC-accredited chain-of-custody certificates in 83 countries in August 2007. This is a relatively small number considering the size of the forest products sector and the complexity of wood flows. Consumers have been very slow to realise any benefit from certified products, and their willingness to pay a premium has remained low. As more and more forests are now being certified, the supply of certified wood is increasing along the production chain gradually. Also, the public procurement rules of the major importing countries and of the biggest international retailers are stipulating the use of certified wood. The pressures on certification for downstream industries – such as furniture making – will thus become more evident. Among the FSC labels, around 500 are awarded to furniture manufacturers, so the FSC has not yet been widely adopted in the sector. This is partly explained by the fact that furniture makers seldom own or manage forests, but rather buy their raw materials as primary processed or semi-finished products from other wood processors. The numbers of certificates among their suppliers (producers of sawn wood, panels, wood manufactures) has increased sharply during the past years. Consequently, the number of FSC-labelled products is potentially rising in furniture trade too. FSC sets minimum requirements for the content of wood in labelled products in its revised chain-of-custody standard dated October 2004 (quote): “The minimum content of wood coming from FSC-certified forests must be “at least 10% of the total material for the product group” AND the FSC material together with post-consumer material is at least 70% of the total material.” The FSC recognises the use of claims and labels both on- and off-product. The on-product labels should show the FSC logo with the actual content of the FSC-certified wood (Figure 2.6). The labels must include descriptive statements to explain the meaning of the FSC logo and to disclaim responsibility for other attributes of the product. Figure 2.6 Example of FSC label and on-product claim 71% Minimum 34 International Trade Centre
At least 70% of the wood used in making this product line comes from well-managed forests independently certified according to the rules of the Forest Stewardship Council. As additional information, the labels may also provide a more detailed list of ingredients and their proportions. In all cases, the labels must state the minimum percentages of FSC-certified material as a percentage of the total wood used in the batch manufacturing process. Eco-labelling Eco-labelling is a voluntary method for the certification and labelling of environmental performance. It identifies the overall environmental preference of a product on the basis of lifecycle considerations. An impartial third party awards eco-label after the product has been determined to meet specific environmental criteria. There are many different voluntary (and mandatory) environmental performance labels and declarations. These include those in: • European Union (Flower) • Nordic countries (Swan) • Germany (Blue Angel) • Austria • Netherlands (Milieukeur) • Spain (AENOR Medio Ambiente) • France (NF Environnement) • United States (Green Seal) • Canada (Environmental Choice) • Japan (Eco Mark) The criteria for furniture in the various eco-labelling schemes have common elements. Wood must be either certified or its origin must be indicated otherwise. The product must not contain or release more than a specified amount of formaldehyde. The manufacturer must guarantee that functionally compatible replacement for wearing parts is available for five years. 2.1.10 Issues faced by manufacturers/exporters The following issues were brought forward in the course of the survey: Sheesham is not easily available Sheesham (rosewood) is getting extinct. It is being cut in a large amount, but on the other hand not grown on a large-scale to overcome this scarcity. “The goldmine of Pakistan is being wasted”. Its prices are going high, have become two to four times expensive. There are people who are illegally exporting wood. Illegal wood import has also started since the launch industry has shifted to Dubai. However, there is no big issue regarding its import. Latest technology is not being used At least 98% of manufacturers are using traditional methods. The latest technology is not being used at all. One manufacturer demanded that “imported machinery be made available to us at the same rates”. The factory owner should be given the facility to purchase second-hand machinery. The government should come forward, reduce rates and make the imported machinery easily available for them. International Trade Centre 35
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 and 12: Executive summary This study sets t
Page 13 and 14: the extent possible maintain or imp
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: Figure 2.5 Simplified example on ch
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
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 and 104:
The lessons learnt here could be re
Page 105 and 106:
6 Conclusion and recommendations 6.
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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