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

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4 Obstacles and shortcomings to export 4.1 Obstacles and shortcomings – exporters’ opinions The comments presented in this part are based on the interviews conducted by AAL of furniture manufacturer/exporters, participants present in the workshop and comments of the President of APFEA. 4.1.1 Obstacles At company level • Raw material is diseased; its cost is high and it is of sub standard. As a result, low quality of furniture is produced. Companies have to suffer severe loss (PKR 2 million annually). • Quality of labour is deteriorating, as they do not get proper training. Consequently, the quality of work produced is low. (PKR 1 million loss is incurred annually which results in losing customers). • Sheesham (rosewood) getting expensive and extinct. This wood is very important, there’s no replacement. As a result, sales are affected and importing is done at a large scale in order to meet this need. It costs four times more. • Transportation rates are increasing. Where previously a company would have sent 4 containers, it ends up sending only two. Diesel/petrol rates have also increased. • Lack of space is a problem. Because of small area, less pieces of furniture are produced. There’s 40% loss and as a result all opportunities are lost. If more material is produced, it is wasted because there is no space for its storage At country level • Government departments follow red tapism, blackmailing, bribery, corruption, taxation and have lengthy procedures for exporters. Companies as a result are affected badly. (There is a loss of PKR 5 million) • No proper guidance is given to companies regarding financial incentives given by the government. The attitude of banks is very bad and they have cumbersome procedures for loans. As a result, companies have no knowledge and they fail to make use of finance facilities. In addition, the government is not providing any subsidy. • No incentives given by the government to make use of the latest technology. As a result, all companies are using traditional methods and the quality of furniture is much below the level of global furniture, especially for “Seasoning” which requires latest machinery, but unfortunately the natural method is used, which is very time-consuming. Some exporters use the wood that has moisture in it. This results in bad piece of furniture in the end. Sometimes due to moisture, it breaks down even after delivery, which ruins the image of Pakistani furniture industry. 76 International Trade Centre
• Material from China is being used commonly. The government itself is promoting this trend. Local market is decreasing, while no efforts are being made by the government to improve this situation. • Customs examination done is very severe, whereby furniture is broken/torn for inspection. As a result all material has to be made again. A huge loss is incurred on the companies. Some companies give money and get their material cleared from the Customs. In this process, even the poor quality material reaches foreign buyers and the image of the whole industry is destroyed. • Image of Pakistan is very bad in the furniture market. Foreign firms don’t rust Pakistani companies because the latter use illegal ways. Poor quality of furniture is made and as a result, they end up getting fewer orders. • Problem in basic utilities. Load-shedding is a major problem. Furthermore, gas rates are on the rise. 4.1.2 Shortcomings At company level • Focus on HR training: Companies have never given attention to this front. Training HR would have a very positive impact on not only the quality of product but also each worker would get paid according to his capabilities. • Work on job security of their workforce. In order to remove discontent of labour force, companies should give them all possible rights • Focus on improving quality of raw material. Currently, the quality of material is not good. A lot of time and efforts are taken to search for good quality wood. In this way, order does not reach on time and the buyer has to face a lot of dissatisfaction even before receiving the shipment. At country level • Reconciliation of export policies: The government has shown no interest in this sector. Every company is suffering in a different manner. End result: loss of million of dollars. • Qualified individuals should be given full chance to stay in Pakistan by opening all kinds of opportunities rather than creating an atmosphere for them to shift abroad • There should be one-window operation to reduce the delay in the finalisation of settlements • The government should monitor the market. It should check material and give attention to prices. Raw material (wood, boards, etc.) should be available at reasonable prices. As a result, good quality and cheap material would be available for exporters. • The government should penalise exporters producing poor quality furniture. This would help in eliminating exporters producing low quality furniture and the image of Pakistani companies would improve. International Trade Centre 77
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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
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
Page 83 and 84: Table 3.2 Top 10 buyers of the Paki
Page 85: Arabian market. Here again, there i
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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