Kamruzzaman Bablu :
The alarming declining trend of Bangladesh’s export earnings from goods of finished leather and footwear leather suffered a huge drop by over 12 percent in the last fiscal year (FY) for which manufacturers blame several causes especially the forced relocation of the centre the tanning industry.
According to Export Promotion Bureau (EPB) data, of the total earnings from leather in FY18, leather products earned $336.8 million- a year-on-year fall of 27 percent- even if leather footwear bucked the down trend, growing by over 5 percent to $565.6 million in the last FY.
“The majority of factories are yet to resume manufacturing since the relocation,” Md. Shaheen Ahamed, Chairman of the Bangladesh Tanners Association (BTA), told the New Nation.
“So far only 110 tanneries have restarted production. As a result of that the production rate is low that caused export earnings lower.”
Shaheen said buyers have reacted negetively by switching to other sources of leather and leather products due to the non-compliance issues at Savar Leather Industrial Park, where the Central Effluent Treatment Plants are yet to become operational.
“I cannot give you any information about the issue because of I’m not concern now” Avijit Chowdhury, Director General of Export Promotion Bureau under the Commerce Ministry, told the New Nation on Monday.
Sources said, leather sector, the second largest export earner after apparel products, contributed $1.08 billion or just fewer than 3 percent of the total national exports of $36.66 billion in FY 2017-18.
According to EPB data, however, Bangladesh earned $1.23 billion from the sector in the FY 2016-17.
That strong performance had even prompted Prime Minister Sheikh Hasina to announce leather as the Product of the Year for 2017, saying the government would “boost this industry to reach its full potential”.
Since then, however, the industry’s manufacturing base has been hollowed out with the relocation of the tanneries from Hazaribagh in Old Dhaka.
The move was made by forced in April last year when, following a High Court order, the government cut power and gas connections to the tanneries to compel the owners to relocate to Savar Leather Industrial Park at the north of the capital.
Manufacturers are also blaming the industry’s recent slump on the rise in popularity of rexine- a strong-coated cloth that imitates leather and is especially useful for upholstery and bookbinding.
“Rexine and synthetic products are grabbing the market of leather products as they cost less,” MA Majed, an adviser to Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association, said.
Majed, who is also the Executive Director (marketing) of Apex Tannery, said the prices of the leather processed in Bangladesh is also falling due to the degraded condition of raw hides of slaughtered animals.
In the last FY, export earnings from processed leather dropped by 21 percent from $232.6 million to $183 million.
“Quality leather is a prerequisite for quality products in order to earn more,” he said. “To improve the leather quality, the government should introduce designated slaughtering houses in the major cities to ensure proper skinning of the slaughtered animals.”
Meanwhile, Shaheen Ahamed said the industry is being further hit by the failure of entrepreneurs to secure bank loans due to an administrative delay.
“The tannery owners have to provide their land registration documents as security to get loans [but] those relocated to the Savar Leather Industrial Park are yet to receive their documents from the government,” he said.
A tannery owner, requesting anonymity, said the government is yet to keep its promise to give this sector a boost after the relocation.
“It has been over one and a half years, but the tannery owners have not received the land registration documents,” he complained.
“The government has given no proper direction since the relocation last year. The leather sector has hardly been benefited from their special attention.”
Sector sources said leather export earnings would rise again when all the tanneries at Savar become fully operational.
They said that in order to realize the full potential of the industry, the government would have to ensure unhindered utility services and finish installing the Central Effluent Treatment Plants.
In addition, the industry sees the potential to expand into the US market due to the country’s looming trade war with China.
US President Donald Trump has signaled his intention to slap a 25 percent tariff on a number of Chinese products entering its markets, in response to alleged intellectual property theft. China also quickly announced its own plans to put tariffs on US goods.
“If the US officially imposes the 25 percent tariff, entry of Chinese leather products to its markets might decrease and create opportunities for Bangladeshi leather goods,” said BTA leader Shaheen Ahamed.
“We can grab more market share in the US by taking the advantage of the US-China trade war, but our government will have to take proper steps in tapping that opportunity.”
The alarming declining trend of Bangladesh’s export earnings from goods of finished leather and footwear leather suffered a huge drop by over 12 percent in the last fiscal year (FY) for which manufacturers blame several causes especially the forced relocation of the centre the tanning industry.
According to Export Promotion Bureau (EPB) data, of the total earnings from leather in FY18, leather products earned $336.8 million- a year-on-year fall of 27 percent- even if leather footwear bucked the down trend, growing by over 5 percent to $565.6 million in the last FY.
“The majority of factories are yet to resume manufacturing since the relocation,” Md. Shaheen Ahamed, Chairman of the Bangladesh Tanners Association (BTA), told the New Nation.
“So far only 110 tanneries have restarted production. As a result of that the production rate is low that caused export earnings lower.”
Shaheen said buyers have reacted negetively by switching to other sources of leather and leather products due to the non-compliance issues at Savar Leather Industrial Park, where the Central Effluent Treatment Plants are yet to become operational.
“I cannot give you any information about the issue because of I’m not concern now” Avijit Chowdhury, Director General of Export Promotion Bureau under the Commerce Ministry, told the New Nation on Monday.
Sources said, leather sector, the second largest export earner after apparel products, contributed $1.08 billion or just fewer than 3 percent of the total national exports of $36.66 billion in FY 2017-18.
According to EPB data, however, Bangladesh earned $1.23 billion from the sector in the FY 2016-17.
That strong performance had even prompted Prime Minister Sheikh Hasina to announce leather as the Product of the Year for 2017, saying the government would “boost this industry to reach its full potential”.
Since then, however, the industry’s manufacturing base has been hollowed out with the relocation of the tanneries from Hazaribagh in Old Dhaka.
The move was made by forced in April last year when, following a High Court order, the government cut power and gas connections to the tanneries to compel the owners to relocate to Savar Leather Industrial Park at the north of the capital.
Manufacturers are also blaming the industry’s recent slump on the rise in popularity of rexine- a strong-coated cloth that imitates leather and is especially useful for upholstery and bookbinding.
“Rexine and synthetic products are grabbing the market of leather products as they cost less,” MA Majed, an adviser to Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association, said.
Majed, who is also the Executive Director (marketing) of Apex Tannery, said the prices of the leather processed in Bangladesh is also falling due to the degraded condition of raw hides of slaughtered animals.
In the last FY, export earnings from processed leather dropped by 21 percent from $232.6 million to $183 million.
“Quality leather is a prerequisite for quality products in order to earn more,” he said. “To improve the leather quality, the government should introduce designated slaughtering houses in the major cities to ensure proper skinning of the slaughtered animals.”
Meanwhile, Shaheen Ahamed said the industry is being further hit by the failure of entrepreneurs to secure bank loans due to an administrative delay.
“The tannery owners have to provide their land registration documents as security to get loans [but] those relocated to the Savar Leather Industrial Park are yet to receive their documents from the government,” he said.
A tannery owner, requesting anonymity, said the government is yet to keep its promise to give this sector a boost after the relocation.
“It has been over one and a half years, but the tannery owners have not received the land registration documents,” he complained.
“The government has given no proper direction since the relocation last year. The leather sector has hardly been benefited from their special attention.”
Sector sources said leather export earnings would rise again when all the tanneries at Savar become fully operational.
They said that in order to realize the full potential of the industry, the government would have to ensure unhindered utility services and finish installing the Central Effluent Treatment Plants.
In addition, the industry sees the potential to expand into the US market due to the country’s looming trade war with China.
US President Donald Trump has signaled his intention to slap a 25 percent tariff on a number of Chinese products entering its markets, in response to alleged intellectual property theft. China also quickly announced its own plans to put tariffs on US goods.
“If the US officially imposes the 25 percent tariff, entry of Chinese leather products to its markets might decrease and create opportunities for Bangladeshi leather goods,” said BTA leader Shaheen Ahamed.
“We can grab more market share in the US by taking the advantage of the US-China trade war, but our government will have to take proper steps in tapping that opportunity.”
