The News – International, Pakistan – May 17, 2014
By By our correspondent
5/18/2014
KARACHI: Commercial banks are not providing subsidised refinance to leather garment exporters, said Pakistan Leather Garments Manufacturers & Exporters Association (PLGMEA) Chairman Fawad Ijaz Khan.
Banks want exporters to obtain finance on current mark up rates of 14-15 per cent. This situation was creating liquidity problems for leather garment exporters and inflating their already high costs, he added in a statement issued Saturday.
Khan elaborated that leather garment exporters were mostly small and medium entrepreneurs (SMEs) and were unable to obtain export refinance at SBP set mark up rate of 7.5 per cent even after providing securities to the banks.
The banks were forcing exporters to use costly current finance. High product cost was already causing problems for exporters. Leather garment exporters had booked orders but high costs of inputs were creating hurdles in their growth.
The genuine exports of leather garments grew in range of 10-15 per cent from July 2014 to March 2014, and exporters required additional funding. They were not getting export refinance according to their entitled limits.
The leather garments exporters were already finding it difficult to compete with exporters from China and India and this additional burden of current financing rate would drive them out of the world markets.
