Photo : Messenger
The leather industry in Bangladesh has substantial potential for contributing to foreign exchange earnings, supported by good quality leather and cost-effective labour. However, this potential is not fully realized due to challenges posed by syndicates and insufficient processing according to international standards.
Economists and stakeholders in the sector emphasise that Bangladesh produces raw leather domestically, which forms the basis of its leather industry. To capitalise on this, there is a need to enhance preservation and processing techniques to meet global standards. This includes ensuring a proper working environment for labourers involved in the industry.
By addressing these issues and overcoming the influence of syndicates, the leather industry could significantly boost Bangladesh's economy through increased exports and foreign exchange earnings. This sector has the resources and capabilities to thrive with strategic reforms and investments in quality control and labor welfare.
Shaheen Ahmed, Chairman of the Bangladesh Tanners Association (BTA), expressed concerns to The Daily Messenger regarding the current state of the leather industry following Eid-ul-Azha, where 80 to 85 lakh hides were collected from animal sacrifices. Despite this volume, he lamented that tannery owners are unable to achieve desired prices due to non-compliance issues related to pollution control and inadequate working conditions. Consequently, products are being sold at significantly low prices, leading to financial losses across the sector. Ahmed emphasised that compliance remains the foremost obstacle faced by the industry.
Anwar Hossain, proprietor of MS Kamal & Sons in Posta, attributed the challenges faced by the sector to syndicates centered around China. He stressed the necessity of attracting European buyers to sustain Bangladesh's leather industry, underscoring the importance of adhering to international production standards as pivotal for its preservation.
Subhash Kumar, manager at Shahadat & Company in Posta, Dhaka, emphasised the urgent need for government intervention to revive Bangladesh's leather industry. He stressed that the lack of government action has allowed China-centric syndicates to dominate the sector, adversely affecting local businesses. Kumar highlighted the critical importance of diversifying markets and attracting European buyers to counterbalance the overwhelming influence of China.
He expressed frustration over the current situation where Bangladesh has become overly reliant on China, which controls the market dynamics by manipulating prices and causing financial losses to local traders. Kumar urged the government to take proactive steps to explore new markets and restore the viability of the leather industry, which he believes holds significant potential if supported by effective policies and international market strategies.
According to a study conducted by the Bangladesh Small and Cottage Industries Corporation (BSCIC), several critical issues are hindering the development of the country's leather industry. These include inadequate capacity of the Central Effluent Treatment Plant (CETP) in the tannery estate of Savar, insufficient understanding of compliance standards among tannery owners, mismanagement of solid waste, and poor indoor environmental quality in tanneries.
One of the major challenges highlighted in the study is the dependency on imported chemicals required for processing raw leather. These chemicals are essential but their cost is significantly inflated due to additional levies imposed by the revenue department. As a result, the overall production cost of leather products, such as goat leather priced at Tk 100, is doubled or more after processing with these imported chemicals.
Shaheen Ahmed, Chairman of Bangladesh Tanners Association (BTA), emphasised the financial impact of these challenges on the industry. Despite the raw material being relatively affordable, the high costs associated with processing chemicals significantly affect the final price of leather products in the market. This situation underscores the need for comprehensive reforms and government support to address these systemic issues and enhance the competitiveness of Bangladesh's leather industry on the global stage.
The challenges facing Bangladesh's leather industry extend beyond the cost of chemicals used in processing raw leather. According to Shaheen Ahmed, these chemicals, essential for processing leather, incur an additional 35 percent duty when imported. Consequently, a raw skin valued at Tk 1000 ends up costing Tk 2500 after processing.
Ahmed also pointed out that the tariff structure in Bangladesh poses significant challenges to business operations in the leather industry. High import duties contribute to inflated production costs, making it difficult for local leather products to compete globally. He emphasised that establishing backward linkages within the country's industrial infrastructure could reduce reliance on imported chemicals and lower production costs.
Meanwhile, economist Mahfuz Kabir highlighted another critical issue affecting Bangladesh's leather exports. He noted that the country's leather products struggle to gain recognition from international organisations like the Leather Working Group (LWG). This lack of accreditation hampers Bangladesh's ability to access higher-value markets in Europe, forcing exporters to sell their products at lower prices in markets like China.
Mahfuz Kabir, speaking to The Daily Messenger, highlighted the critical issue facing Bangladesh's leather industry regarding international recognition and compliance with environmental standards. According to Kabir, the Leather Working Group (LWG) does not recognise Bangladesh's leather industry due to non-compliance with environmental regulations. This lack of recognition severely restricts Bangladesh's ability to export its leather products to developed countries.
Kabir emphasised that without LWG recognition, Bangladeshi leather products struggle to command competitive prices in the international market. As a result, the country often resorts to importing leather from abroad to meet its production needs, which limits the potential for value addition within the domestic industry.
He underscored the importance of obtaining LWG certification, stating that it would facilitate easier access to international markets and enable Bangladesh to fetch higher prices for its leather products. Currently, only a small percentage (7 per cent) of Bangladesh's leather undergoes value addition processes like wet blue, crust, and finish leather production. The majority of exports consist of leather goods (33 per cent), leather shoes (41 per cent), and non-leather footwear.
Messenger/Fameema
