08.11.2012
Leatherworking, footwear industries freeload off Belarus gold, forex reserves
MINSK, 8 November (BelTA) – The leatherworking and footwear industries of Belarus freeload off the gold and foreign exchange reserves of the country while they are supposed to earn foreign currency. President of Belarus Alexander Lukashenko made the statement at the government session held on 8 November to discuss the development of the leatherworking and footwear industries.
The head of state underlined that the development of the leatherworking and footwear industries was of much importance for the successful operation of the national economy. The operation of these enterprises is mutually related and should rely on locally available renewable raw materials. However, both economic and technological problems have been piling up in this area in the last few years.
“The best untreated raw materials were exported. Between 2000 and 2010 the export of untreated hides was tripled. You left waste and scrapped parts from primary processing for yourselves,” remarked Alexander Lukashenko. In his words, in 2010 as the government was justifying the introduction of measures to prohibit the export of the raw materials, promises were made to reroute the raw materials to Belarusian enterprises. “How much Belarusian feedstock and intermediate products was used for footwear production as a result? Only 40%. The rest (over 50%) is still exported to Italy, Poland, India, and even Ukraine. The domestic footwear industry lacks sufficient leather supply of sufficient quality,” stressed the President. As a result, high-quality leather is imported to make leather goods. In other words, Belarusian leather exports of a higher quality are imported to the country. Although the manufacturing cycle can be and should be established in the country, thus reducing foreign currency spending, Alexander Lukashenko is convinced.
“Footwear manufacturers have chosen to do the easiest thing. They have started importing more intermediate products such as sewed footwear tops with zippers and other accessories with bundled soles. The domestic footwear production has been reduced to one technological operation in essence – the gluing of the sole. With this know-how, so to say, widespread, the enterprises are losing their technological level, professional qualification, and are shedding workers,” said Alexander Lukashenko.
The state of affairs in the footwear industry is not that bad from the point of view of government agencies. “Footwear enterprises work and even at a profit, people get paid. What else should we do? But we should take a look at the profitability and the salaries,” remarked the President.
According to the data voiced by the head of state, in the last ten years the domestic footwear production in Belarus dropped from 16 million to 13 million pairs per annum. Meanwhile, the annual footwear import rose by more than ten times to 10 million pairs worth over $200 million in US dollar terms. “We are losing our own market. We give money away to strangers. The key reasons are the poor quality and the lack of choice of Belarusian footwear,” stressed Alexander Lukashenko.
The President pointed out the large share of imported components in the prime cost of Belarus-made footwear. “Our footwear industry beats all the import consumption records. Imported components account for 71% of the prime cost of products made by Luch Company, nearly 70% of the prime cost of Belwest products, nearly 70% at San Marco, and more than half at Krasny Oktyabr. In other words, the things we make are nearly imports”. As a result, footwear industries demonstrate a foreign trade deficit. Since 2006 it has risen by nearly 5.5 times to about $40 million.
“Virtually an entire branch of the economy freeloads off the state gold and foreign exchange reserves while everyone must bring foreign currency into the country,” said Alexander Lukashenko as he described the operation of the Belarusian leatherworking and footwear industries. The President reminded that he had instructed the Council of Ministers to take the necessary decisions to fix the situation. The President said he wanted reports about what concrete measures had been taken already to reverse the negative trends. He warned all the participants of the government session that problems in industry-specific policies should not be restricted to a government agency. Government officials should primarily think about nationwide effects.
Alexander Lukashenko also pointed out that the leatherworking and footwear industries will have to work in new conditions of Belarus’ integration in the Customs Union, the Single Economic Space, and taking into account Russia’s accession to the World Trade Organization.
Alexander Lukashenko underlined once again that he had repeatedly pointed out drawbacks in the operation of leatherworking and footwear industries. “This is why today I am interested in how the government has heard the reproach voiced by the President, what has been done and what is suggested to be done for tomorrow. It is abnormal that we pride ourselves on the well-developed agriculture and the huge output of meat while we cannot provide sufficient raw hides for the footwear industry,” said Alexander Lukashenko.
The head of state underlined that the development of the leatherworking and footwear industries was of much importance for the successful operation of the national economy. The operation of these enterprises is mutually related and should rely on locally available renewable raw materials. However, both economic and technological problems have been piling up in this area in the last few years.
“The best untreated raw materials were exported. Between 2000 and 2010 the export of untreated hides was tripled. You left waste and scrapped parts from primary processing for yourselves,” remarked Alexander Lukashenko. In his words, in 2010 as the government was justifying the introduction of measures to prohibit the export of the raw materials, promises were made to reroute the raw materials to Belarusian enterprises. “How much Belarusian feedstock and intermediate products was used for footwear production as a result? Only 40%. The rest (over 50%) is still exported to Italy, Poland, India, and even Ukraine. The domestic footwear industry lacks sufficient leather supply of sufficient quality,” stressed the President. As a result, high-quality leather is imported to make leather goods. In other words, Belarusian leather exports of a higher quality are imported to the country. Although the manufacturing cycle can be and should be established in the country, thus reducing foreign currency spending, Alexander Lukashenko is convinced.
“Footwear manufacturers have chosen to do the easiest thing. They have started importing more intermediate products such as sewed footwear tops with zippers and other accessories with bundled soles. The domestic footwear production has been reduced to one technological operation in essence – the gluing of the sole. With this know-how, so to say, widespread, the enterprises are losing their technological level, professional qualification, and are shedding workers,” said Alexander Lukashenko.
The state of affairs in the footwear industry is not that bad from the point of view of government agencies. “Footwear enterprises work and even at a profit, people get paid. What else should we do? But we should take a look at the profitability and the salaries,” remarked the President.
According to the data voiced by the head of state, in the last ten years the domestic footwear production in Belarus dropped from 16 million to 13 million pairs per annum. Meanwhile, the annual footwear import rose by more than ten times to 10 million pairs worth over $200 million in US dollar terms. “We are losing our own market. We give money away to strangers. The key reasons are the poor quality and the lack of choice of Belarusian footwear,” stressed Alexander Lukashenko.
The President pointed out the large share of imported components in the prime cost of Belarus-made footwear. “Our footwear industry beats all the import consumption records. Imported components account for 71% of the prime cost of products made by Luch Company, nearly 70% of the prime cost of Belwest products, nearly 70% at San Marco, and more than half at Krasny Oktyabr. In other words, the things we make are nearly imports”. As a result, footwear industries demonstrate a foreign trade deficit. Since 2006 it has risen by nearly 5.5 times to about $40 million.
“Virtually an entire branch of the economy freeloads off the state gold and foreign exchange reserves while everyone must bring foreign currency into the country,” said Alexander Lukashenko as he described the operation of the Belarusian leatherworking and footwear industries. The President reminded that he had instructed the Council of Ministers to take the necessary decisions to fix the situation. The President said he wanted reports about what concrete measures had been taken already to reverse the negative trends. He warned all the participants of the government session that problems in industry-specific policies should not be restricted to a government agency. Government officials should primarily think about nationwide effects.
Alexander Lukashenko also pointed out that the leatherworking and footwear industries will have to work in new conditions of Belarus’ integration in the Customs Union, the Single Economic Space, and taking into account Russia’s accession to the World Trade Organization.
Alexander Lukashenko underlined once again that he had repeatedly pointed out drawbacks in the operation of leatherworking and footwear industries. “This is why today I am interested in how the government has heard the reproach voiced by the President, what has been done and what is suggested to be done for tomorrow. It is abnormal that we pride ourselves on the well-developed agriculture and the huge output of meat while we cannot provide sufficient raw hides for the footwear industry,” said Alexander Lukashenko.