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

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Exporters Imported value 2004 (US$ million) Share in Pakistan's imports (%) Growth in value 2003-04 (%) Thailand .177 3 64 Korea, Rep. of Korea .167 3 88 * A freakish figure, recording massive percentage increase but the absolute figure is not much. Source: ITC calculations based on COMTRADE statistics There is not much of a threat at present to the furniture industry. Whether, liberalization of trade has posed a threat to the furniture industry of Pakistan? There is prima facie not much of a threat to this industry at present though the industry’s sources have a negative perception of the situation. Our tariff rates are relatively high. Further, Pakistan’s bound rates are much higher than the applied tariff rates. In appropriate cases the affected industries can always approach the National Tariff Commission which provides an institutional mechanism for trade remedial action. However, these rates are likely to come down after an accord, if any, on NAMA (Non-Agricultural Market Access) under DDA. The malpractice of under invoicing and misdecaration have to be, however, checked to ensure such types of imports, having unfair competitive advantage, do not pose a threat to the domestic furniture industry. One can not hope for a closed economy in a globalized world. In the world of liberalized trade one can not expect a closed economy and should not be upset about the flow of imports. However, the rate of growth in imports should be a matter of some concern as it constitutes a potential threat indicating a need for working on price competitiveness, quality enhancement of our products and stopping malpractices regarding valuation of imports. The Government of Pakistan should also seriously consider the demand of local manufacturers to decrease the import duties on the raw material including chipboard, adhesive, wood, foam and other related items to compete the foreign items at home. 3.4.3 Pakistan’s access to other/new markets (Opportunities) Improved market access Sustained growth in export earnings has taken place. In the first year, when the WTO regime became operational, export earnings amounted to US$3.142 millions. Thereafter there has been a sustained growth and the values of exports for the year 2004-05 are US$12.3 millions. Though, it can not be claimed that WTO is the only factor underlying this growth yet it can be assumed that the liberalized WTO regime has made a contribution to better export performance. A study of tariff structures in various countries have shown that at present a large number of countries have either lower tariff rates or even zero tariff. The WTO regime has indeed improved market access for our furniture industry. Information as to tariff rates in markets of our ten major buyers would help us to appreciate the extent of opportunities available to Pakistan. A table setting out relevant details about various export destinations of the Pakistan’s furniture products is accordingly given below. Countries in the table are shown according to their share in the Pakistan’s furniture export. 72 International Trade Centre
Table 3.2 Top 10 buyers of the Pakistani furniture - Tariffs and share of exports Importers/ buyers Exported value 2005 (US$ million) Applied tariff (%) Share in Pakistan's exports (%) United States of America 2.0 0% 16% United Kingdom 1.97 0% 16% UAE 1.86 5% 15% Afghanistan 1.29 Not available 10% Italy 1.0 0% 8% Saudi Arabia .398 5% 3% South Africa .370 20% 3% Cyprus .336 0% 3% Germany .302 0% 2% Canada .267 0% 2% Source: ITC calculations based on COMTRADE statistics Market Access is not a problem for Pakistan for furniture products. Statistics in the table above show that the market access is not a problem as such for the Pakistani furniture. The main constraint experienced by Pakistan is that of supply side lack of capacity. Under the WTO liberalized import regime, Pakistani exporters need to concentrate on the markets like OECD countries particularly the EU, where applied tariff is 0%. Although EU is one of the largest furniture importing markets in the world, yet Pakistan’s market share there is less than 1%. Only 30% of the Pakistani exports are destined for EU (Source: ITC Product Map). It would be worthwhile to make efforts to increase flow of exports to the EU. This, of course, would require a radical change in the strategy particularly in terms of range of products and design that are in demand by the EU buyers. We must learn to produce what is liked and required abroad and at competitive prices. 3.4.4 Third parties’/countries’ access to other markets (Threats/competition) Competition/potential There is great potential for increasing exports. Pakistani furniture exports represent at best a nominal share in the world exports, but there is a great potential to improve. After the conclusion of Uruguay round and consequential enhancement in the quantum and quality of liberalization, Pakistan has been enjoying better market access. Elimination of quantitative restrictions and reduction in tariffs should prove exceedingly helpful. Under these circumstances Pakistan should seek the benefits of its cheap production factors e.g. lower wages, and cheaper raw material. If the raw materials or furniture parts are required for a finished product, importers in Pakistan should be facilitated by undertaking greater promotional and facilitation efforts on the part of the TDAP. The tariff applied for imports of furniture parts and accessories is comparatively high i.e. 25%. Mechanism should be adopted International Trade Centre 73
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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
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: 3.4.2 Other countries’ access to
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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