Realising export potential of leather and plastic sectors

Ferdaus Ara Begum | Published: August 13, 2018 21:37:35 | Updated: August 13, 2018 21:40:54

Bangladesh has launched a concerted effort to diversify its exports to reduce overdependence of the economy on the ready-made garments (RMG) sector. Leather and plastic sectors are among the few thrust/priority sectors for increasing their share in export portfolio. Presently, leather sector contributes about 2.0 per cent to the industrial production and 0.6 per cent to the country's Gross Domestic Product (GDP) by employing about 0.3 million people directly or indirectly. Plastic articles were the fastest growing among the top 10 export categories in Bangladesh during 2016-17, up by 8.6 per cent from 2016 to 2017.

Export earnings from leather and plastic products have the potential to increase to US$ 5.0 billion and US$ 0.9 billion respectively by 2021.   This growth will greatly depend on one condition. The leather and plastic sectors must adhere to the evolving sustainability requirements of the global brands.

Realising the need for Bangladesh's production houses to meet the sustainability requirements of global brands for unconstrained export growth, a study conducted by the Finance Competitiveness and Innovation Global practice of the World Bank Group assessed the environmental performance of plastic and leather sectors in the country.  The study focused on mapping the key sustainability requirements of the global brands, and identifying actions to align Bangladesh's production houses to these requirements. The findings provide inputs to the recommendations for policy advocacy that support the growth of the leather and plastic sectors.

Global brands are setting up ambitious targets beyond the adherence to local laws and legislations to reduce the negative environmental and social impacts of entire supply chains. International brands are adopting 'sustainable procurement practices' across each node of the production value chains.

The current environmental performance of the plastic and leather sectors indicates the need for (a) enabling regulatory framework by the policy makers, and (b) private sector adopting various initiatives for better environmental performance of the sector, for adhering to the global brand requirement. Some of the options worthy of implementation include: 

n Enabling regulatory framework, such as (a) plastic waste management rules; (b) regulations limiting the ground water abstraction; (c) regulations governing the manufacture, storage and import of hazardous chemicals, which require maintaining 'material safety data sheet' for all the listed hazardous chemicals, or as identified under the set criteria; (d) guidelines for the disposal of industrial solid waste.

n Implementation of resource-efficient systems for reducing water and energy consumption. Renewable energy (RE) options such as solar rooftop systems or biomass gasification could also be explored to reduce the dependency on the grid electricity.

n Incentivising the use of RE sources, such as accelerated depreciation, tax holiday, capital subsidy, viability gap funding etc are some of the worthwhile options that can be considered. With improved environmental performance, the leather sector companies can pursue global certifications, such as LWG, to access high value markets.

n Formalising the plastic waste management sector, which has the potential for growth of the offshoot industry - recycled PET resin manufacturing.

The key sustainability requirements of the global brands should be elaborated and the interventions for Bangladesh's leather and plastic sectors should be identified. All the stakeholders should urgently meet for this purpose. The session with stakeholders from diverse institutional settings will facilitate the streamlining and finalisation of implementation-worthy recommendations. The dialogue sessions will also provide fact-based and research-based recommendations, which, if implemented, can contribute towards sustainable growth of the sectors.

Ferdaus Ara Begum is CEO of Business Initiative Leading Development (BUILD), a joint collaboration of DCCI, MCCI and CCCI.

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