POST TIME: 9 July, 2018 12:51:54 AM
Leather exports dip as Savar facilities found wanting

Leather exports dip as Savar facilities found wanting

Exports of leather and leather products fell significantly in the financial year 2017–18 (July–June) compared to the previous fiscal year (2016–17) due to forced relocation of tanneries to the Savar Tannery Complex, which is not yet fully functional, say tannery owners.

According to the Export Promotion Bureau (EPB), the sector registered a slightly negative growth of 12.03 per cent, resulting in earnings of USD 1.08 billion in the financial year 2017–18. This figure was $1.23 billion during the same period in the 2016–17 fiscal year.

Shaheen Ahmed, chairman of the Bangladesh Tanners’ Association (BTA) and Managing Director of Kohinoor Tanneries Limited, told The Independent that exports fell significantly after a long time because of a couple of reasons such as, out of nearly 222 tanneries, only 155 have been shifted to the Savar Tannery Complex and most of the factories there were not compliant, thus discouraging foreign investors from investing in the Savar leather industrial park.

Central Effluent Treatment Plant (CETP) and the related drainage system are yet to be fully ready. “We cannot capture the foreign markets and buyers order because the CETP is not fully functional yet,” he said.

Exploring the opportunities, he said a huge opportunity lay in the American market at this juncture due to the ongoing trade war between China and the US. The US government has signalled an imposition of 25 per cent tariff on a number of Chinese products entering the US market. If that happens, Bangladesh could easily clutch the opportunity to supply leather products to the US market.

“But we could not grab the opportunity because of a non-functional CETP,” he added.

Explaining other reasons, he said, the solid waste disposal system was not functioning there at the industrial park. Meanwhile, around 108 factories out of 155 factories have gone into operations in Savar.

Talking about the infrastructural problems, he said, the roads go under water if there is even a bit of rain. The pipes that have been installed as part of the drainage system are inadequate to serve 155 tanneries. The pipes and motors of CETP are also found damaged, he added.

The under construction infrastructure was causing problems as well, he added.

Shakawat Ullah, general secretary of the Bangladesh Tanners’ Association (BTA) and owner of Salma Tannery told The Independent that Bangladesh Small and Cottage Industries Corporation (BSCIC) is yet to complete the land registration for plot owners in the Savar Leather Industrial Park. As a result, they are unable to take loans from banks because they cannot produce those documents.

When asked the reason, he said that BSCIC had not been able to determine the price of land yet; as a result, the registration process was being delayed.

About the production capacity, he said, “We process both crust and finished leather of about 5-6 lakh square feet per month.”

When asked, Shaheen Ahmed said import duties on chemicals used for protecting raw hide have increased, affecting the export of crust leather. Crust leather has experienced a negative growth rate of 21.28 per cent in the fiscal year 2017–18.

Ahmed, also the managing director of Kohinoor Tanneries Ltd, said: “Around 70,000-80,000 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 exports of leather goods.”

Describing the opportunities before this sector, Ahmed said since raw materials were available, 350 million sq. ft of leather is produced annually in Bangladesh. Of this, 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.

Regarding future prospects, Ahmed said: “Leather was declared the ‘Product of the Year’ last year. We need government policy support and infrastructure facilities to achieve the target of USD 5 billion by 2021.”

Only leather footwear registered a slight positive growth rate of 5.33 per cent, resulting in earnings of USD 565.60 million. This figure was USD 536.96 million during the same period in the 2016-17 financial year.