Identifier
Created
Classification
Origin
08ISLAMABAD3281
2008-10-15 11:13:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Islamabad
Cable title:
PAKISTANI CARPET EXPORTS DOWN AS LUXURY SPENDING ABROAD
how-toVZCZCXRO6091 RR RUEHLH RUEHPW DE RUEHIL #3281 2891113 ZNR UUUUU ZZH R 151113Z OCT 08 FM AMEMBASSY ISLAMABAD TO RUEHC/SECSTATE WASHDC 9300 INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC RUEHC/DEPT OF LABOR WASHDC RUCPDOC/DEPT OF COMMERCE WASHINGTON DC RHEHNSC/NSC WASHINGTON DC RUEAIIA/CIA WASHINGTON DC RUEKJCS/SECDEF WASHINGTON DC RUEHNE/AMEMBASSY NEW DELHI 3887 RUEHLO/AMEMBASSY LONDON 8877 RUEHML/AMEMBASSY MANILA 3034 RUEHKP/AMCONSUL KARACHI 0454 RUEHLH/AMCONSUL LAHORE 6194 RUEHPW/AMCONSUL PESHAWAR 5028
UNCLAS ISLAMABAD 003281
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PGOV ETRD ECON EINV EAID ELAB PK
SUBJECT: PAKISTANI CARPET EXPORTS DOWN AS LUXURY SPENDING ABROAD
SLUMPS
UNCLAS ISLAMABAD 003281
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PGOV ETRD ECON EINV EAID ELAB PK
SUBJECT: PAKISTANI CARPET EXPORTS DOWN AS LUXURY SPENDING ABROAD
SLUMPS
1. (U) Summary. According to media reports and State Bank of
Pakistan (SBP) data, Pakistan's handmade carpet exports have
declined by 10 percent in August 2008 over August 2007, continuing a
downward trend in the sector's exports. Pakistan exported USD 16.1
million worth of rugs, carpets and mats worldwide during August,
compared to USD 17.9 million in August 2007, a decline of USD 1.8
million. Carpets, mats and rugs make up 0.8 percent of Pakistan's
exports. Overall, Pakistan ranks fourth among the carpet exporters
in terms of value, and second in terms of volume. End Summary.
2. (U) According to media reports, based on data released by the SBP
in mid-September, Pakistan's carpet exports have declined by 10
percent in August 2008 over August 2007, continuing a downward trend
in the sector's exports. Pakistan exported USD 16.1 million worth
of rugs, carpets and mats worldwide during August, compared to USD
17.9 million in August 2007, a decline of USD 1.8 million. During
the 2006-07 fiscal year, overall exports declined 7.7 percent from
USD 259.7 million to USD 239.7 million. Carpets, mats and rugs make
up 0.8 percent of Pakistan's exports (compared to August 2004 when
the sector comprised 1.8 percent of exports). Of six leading carpet
suppliers in the world - Iran, China, India, Pakistan, Nepal and
Turkey - Pakistan ranks fourth in terms of value, and second in
terms of volume. The carpet industry employs an estimated 1.5
million people in Pakistan. Historically, a majority of carpet
industry workers have been Afghan refugees living in Pakistan and
average wages have been reported to be PKR 2,500 per square foot of
woven carpet. However, since much of the industry is informal,
labor and turnover estimates may not be accurate.
3. (U) Badshah Butt, a major carpet exporter in Lahore, told EconOff
that in the industry, labor costs comprise 70 percent of production
costs and materials comprise 30 percent. Both areas have been
subject to inflation and cost increases in recent months, thus
raising the price of Pakistani carpets on the international market
and making them less competitive. According to Butt, the economic
woes in the U.S. have also led to a weak market for carpets. He
said that since carpets are a luxury item, not a necessity like food
or clothing, economic downturns always have an immediate slow-down
effect on sales.
4. (U) The chairman of the World Hand-Made Carpet Organization in
Pakistan, Akhtar Nazir Khan, told EconOff that hand-made carpets
from Pakistan made up 3.5 percent of the floor covering market in
the U.S. but that they were working on expanding their market in the
U.S. Khan confirmed that the economic troubles in the U.S. have
negatively impacted sales there, especially in mid-range products,
however high end sales were still doing reasonably well.
5. (U) Handmade carpets in particular are a cottage industry which
provides a major source of income particularly among the rural poor.
Production does not require large amounts of capital or
infrastructure, and the skill can be fairly easily acquired.
Because the carpets can be made in the home, women can be employed
in carpet-making, even in very conservative areas where women are
prevented from working outside the home. However, for the same
reason, it is easy to employ children which raises concerns in the
sector of child labor. Because of the informal nature of the
sector, no official estimates exist, however 2005 estimates by the
International Labor Organization state that there were perhaps
200,000 children employed in carpet-weaving in Pakistan.
Ninety-nine percent of handmade carpets made in Pakistan are
exported, and the U.S. is the largest export market, followed by
Europe. The income from one carpet can sustain a poor family for an
entire year. The bulk of Pakistan's carpet exports are handmade
carpets.
6. (U) Comment: Although only a small portion of Pakistan's overall
exports, carpets are arguably a product for which Pakistan is best
known. As the U.S. and world economic crisis continues to unfold, a
reduction in luxury spending is inevitable and Pakistan will likely
face continued declines in their carpet sales. Post continues to
work with non-governmental organizations and the Government of
Pakistan to address domestic labor concerns. End comment.
FEIERSTEIN
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: PGOV ETRD ECON EINV EAID ELAB PK
SUBJECT: PAKISTANI CARPET EXPORTS DOWN AS LUXURY SPENDING ABROAD
SLUMPS
1. (U) Summary. According to media reports and State Bank of
Pakistan (SBP) data, Pakistan's handmade carpet exports have
declined by 10 percent in August 2008 over August 2007, continuing a
downward trend in the sector's exports. Pakistan exported USD 16.1
million worth of rugs, carpets and mats worldwide during August,
compared to USD 17.9 million in August 2007, a decline of USD 1.8
million. Carpets, mats and rugs make up 0.8 percent of Pakistan's
exports. Overall, Pakistan ranks fourth among the carpet exporters
in terms of value, and second in terms of volume. End Summary.
2. (U) According to media reports, based on data released by the SBP
in mid-September, Pakistan's carpet exports have declined by 10
percent in August 2008 over August 2007, continuing a downward trend
in the sector's exports. Pakistan exported USD 16.1 million worth
of rugs, carpets and mats worldwide during August, compared to USD
17.9 million in August 2007, a decline of USD 1.8 million. During
the 2006-07 fiscal year, overall exports declined 7.7 percent from
USD 259.7 million to USD 239.7 million. Carpets, mats and rugs make
up 0.8 percent of Pakistan's exports (compared to August 2004 when
the sector comprised 1.8 percent of exports). Of six leading carpet
suppliers in the world - Iran, China, India, Pakistan, Nepal and
Turkey - Pakistan ranks fourth in terms of value, and second in
terms of volume. The carpet industry employs an estimated 1.5
million people in Pakistan. Historically, a majority of carpet
industry workers have been Afghan refugees living in Pakistan and
average wages have been reported to be PKR 2,500 per square foot of
woven carpet. However, since much of the industry is informal,
labor and turnover estimates may not be accurate.
3. (U) Badshah Butt, a major carpet exporter in Lahore, told EconOff
that in the industry, labor costs comprise 70 percent of production
costs and materials comprise 30 percent. Both areas have been
subject to inflation and cost increases in recent months, thus
raising the price of Pakistani carpets on the international market
and making them less competitive. According to Butt, the economic
woes in the U.S. have also led to a weak market for carpets. He
said that since carpets are a luxury item, not a necessity like food
or clothing, economic downturns always have an immediate slow-down
effect on sales.
4. (U) The chairman of the World Hand-Made Carpet Organization in
Pakistan, Akhtar Nazir Khan, told EconOff that hand-made carpets
from Pakistan made up 3.5 percent of the floor covering market in
the U.S. but that they were working on expanding their market in the
U.S. Khan confirmed that the economic troubles in the U.S. have
negatively impacted sales there, especially in mid-range products,
however high end sales were still doing reasonably well.
5. (U) Handmade carpets in particular are a cottage industry which
provides a major source of income particularly among the rural poor.
Production does not require large amounts of capital or
infrastructure, and the skill can be fairly easily acquired.
Because the carpets can be made in the home, women can be employed
in carpet-making, even in very conservative areas where women are
prevented from working outside the home. However, for the same
reason, it is easy to employ children which raises concerns in the
sector of child labor. Because of the informal nature of the
sector, no official estimates exist, however 2005 estimates by the
International Labor Organization state that there were perhaps
200,000 children employed in carpet-weaving in Pakistan.
Ninety-nine percent of handmade carpets made in Pakistan are
exported, and the U.S. is the largest export market, followed by
Europe. The income from one carpet can sustain a poor family for an
entire year. The bulk of Pakistan's carpet exports are handmade
carpets.
6. (U) Comment: Although only a small portion of Pakistan's overall
exports, carpets are arguably a product for which Pakistan is best
known. As the U.S. and world economic crisis continues to unfold, a
reduction in luxury spending is inevitable and Pakistan will likely
face continued declines in their carpet sales. Post continues to
work with non-governmental organizations and the Government of
Pakistan to address domestic labor concerns. End comment.
FEIERSTEIN