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The untapped potential of Bangladesh's leather and leather goods exports is being held back by non-compliance with international standards, absence of environmental certifications, declining rawhide quality, and a fragmented, inefficient supply chain, industry experts said on Sunday.
They called for consistent policy support and a comprehensive roadmap to transform the leather sector into a major export pillar, with the goal of increasing Bangladesh's share in the projected $530 billion global leather market by 2027 from its current level of less than 1.0 per cent.
The experts made the call at a focus group discussion on 'Sustainable Export Growth in Post-LDC Era: Strategies for the Leather Sector' organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium in the capital.
Adilur Rahman Khan, Adviser, Ministry of Industries, spoke at the event as the chief guest while Md Hafizur Rahman, Administrator of the FBCCI, and Md Saiful Islam, Chairman, Bangladesh Small and Cottage Industries Corporation (BSCIC), were present as special guests.
Syed Nasim Manzur, president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), presented the keynote paper virtually at the event, chaired by DCCI President Taskeen Ahmed.
Adilur Rahman Khan said international certification is crucial for the competitiveness of the leather sector as the buyers offer lower price to the exporters who lack environmental certification.
"At present, we have only three Leather Working Group (LWG) certified tanneries, a stark contrast to 253 in India, 200 in China, and 44 in Pakistan," he said.
Recognising these realities, the Ministry of Industries is working to create a supportive policy environment that can enable long-term transformation, adviser said.
He also said Bangladesh's leather industry must move beyond competing solely on price to capture a larger share of the $420 billion global leather goods market.
He requested the tannery owners to establish their own effluent treatment plants (ETPs), noting that the government now allows this.
He added that the government will play a catalytic role by creating a broad ecosystem along with the industry players, private investors and development partners.
In his keynote paper, Syed Nasim Manzur, who is also the Managing Director of Apex Footwear Limited, said the prices of rawhides have fallen by 50 per cent globally over the past 25 years, despite a stable global cattle population, mainly due to declining hide quality.
Cow leather in Bangladesh is best suited for ladies' dress and shoes, as well as leather goods, but lacks the thickness for lifestyle leathers and the size required for upholstery, he said.
He identified the absence of a functional CETP in Savar as a critical problem and said that global certification for sustainable leather production --particularly from the Leather Working Group (LWG) -- is critical for exports.
"If Bangladesh can establish environmentally responsible, LWG-certified tanneries, its leather exports could potentially double," he said.
Syed Nasim Manzur pointed out that most tanneries relocated to Savar are grappling with low or no orders at viable prices, resulting in poor cash flow, unpaid suppliers, and stalled bank investments, trapping the industry in a vicious cycle that demands.
Additionally, local exporters are forced to sell around 65 percent of their tanned leather to middlemen and importers in China, who offer prices nearly 60 percent lower than what brands and end-buyers in developed countries would pay, he added.
Emphasising the urgent need for a financial resolution, he proposed introducing a safe exit strategy for sick and critically ill tanneries and suggested that bad loans be written off according to regulations to prevent good loans from turning into bad debts.
The leather industry has become a football tossed among multiple ministries -- industries, commerce, environment, and agriculture -- making it difficult to ensure accountability and policy predictability, he said.
To address this, he said, the sector should be consolidated under a single ministry, as the involvement of multiple agencies makes it difficult for industries to predict regulatory policies.
He said the leather sector will face challenges, such as the loss of Duty-Free, Quota-Free market access and the end of WTO flexibilities, after graduating from the LDCs.
However, the graduation will create some opportunities like enhancing country image, higher investment confidence, and market diversification, he added.
"With incentives and policy support similar to those provided to the readymade garment sector, the leather industry will be able to export leather worth $5 billion annually by 2030 which is currently $1.2 to 1.6 billion."
FBCCI administrator Md Hafizur Rahman said the image crisis is an issue impacting the FDI flow to the leather sector.
"If the industry players can maintain the ESG compliance, it will be easier to get LWG certificates and it will help attract FDI, because we have a lot of low cost raw materials here," he said.
Hafizur Rahman also said leather sector and other promising export-oriented industries should get the same treatment as the RMG is having now, and hoped that in the next budget government will allow all to have the facility of bonded warehouses.
Md Saiful Islam described the issue of CETP as most important in the leather sector and said the capacity of the CETP installed in Savar is currently 14,000 cubic metres and the demand during the peak season is 32,000 to 35,000 cubic metres.
"A technical team is working to increase the capacity of the CETP, so it can be increased up to 20,000 to 25,000 cubic metres, he said.
"After LDC graduation, all the sectors will face some challenges, but we should not be panic. Rather, we should be well-prepared in advance so that we can grab the opportunities that come with becoming a middle-income country," said Dr Nazneen Kawshar Chowdhury, Additional Secretary, Ministry of Commerce.
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