Home Business Leather export falls in Q1 over tannery relocation hazards

Leather export falls in Q1 over tannery relocation hazards

Export Promotion Bureau (EPB) data shows that the export of leather and leather products fell significantly in the first four months (July–October) of the current financial year (FY2017–18). The sector registered a slightly negative growth rate of 0.02 per cent that resulted in earnings of USD 428.44 million.Industry experts say environmental pollution in hide processing, increasing lead time due to Chittagong port congestion, shortage of skilled workers and lack of product variety are reasons behind the negative growth.Bangladesh Tanners’ Association (BTA) chairman Shaheen Ahamed told The Independent that the export fell after leather factories moved to the Savar Tannery Complex as utility and infrastructure services there are not up to the mark.When asked about the reason, Sheheen Ahmed, who is also managing director of Kohinoor Tanneries Ltd, said: “Around 65,000 people used to work in the tanneries in Hazaribagh before we shifted all the factories to Savar. As a result, many people have lost their jobs. This has hit the export of leather goods.”He also said that among the 150 factories, only 50 per cent have begun operations at the Savar Leather Industrial Park. “The waste disposal system there is not functioning well. Moreover, roads go under water if there is even a little bit of rain,” he added.Explaining the opportunities before this sector, Sheheen Ahmed said owing to the availability of raw materials, 350 million sq ft of leather is produced annually in Bangladesh. Of this amount, 20–25 per cent goes to meet domestic demand, while the rest is exported.There is a huge domestic demand for leather goods in Bangladesh, he noted.About future prospects, Sheheen Ahmed said: “Leather has been declared the ‘Product of the Year’ this year. Now, the industry is coming out of the shadows and has become an important contributor to the country’s export products. We need government policy support and infrastructure facilities to achieve the target of USD 5 billion by 2021.”Saiful Islam, president of the Leather Goods and Footwear Manufacturers’ & Exporters’ of Bangladesh (LFMEAB), said the government has an overall export target of USD 60 billion, of which USD 5 billion is expected from the export of leather and related products. “We’re highlighting the benefits of investment in this sector as well as the growth prospects in the longer term. Bangladesh has the most liberalised foreign investment climate. There seems a general desire that the country’s leather sector should grow at an exponential rate,” he added.Bangladesh has already established itself as the second largest readymade garments (RMG) manufacturer; it is one of the fastest growing centres for leather and leather product sourcing.About investment prospects, Saiful Islam said China is a big concern for most of the global brands and sourcing diversification was necessary. Given these factors, if investors decide to move to a cost-competitive manufacturing base, Bangladesh would be the most lucrative option.He also said the leather sector is the country’s second largest export earner, mopping up over USD 1.3 billion and employing about one million people directly and indirectly.

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