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26 April, 2019 09:39:35 AM

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Leather sector investment sluggish as demand falls

Sharif Ahmed, Dhaka
Leather sector investment sluggish as demand falls

The leather industry has been struggling to get new investments because the demand for leather products has gone down in the global market due to the US-China trade war and lack of vigilance of the tannery situation in the country, according to industry insiders.

According to the Export Promotion Bureau (EPB), the sector registered a negative growth of 9.08 percent, resulting in earnings of USD 771.69 million in FY2018-19 (July-March). This figure was USD 848.79 million during the same period in FY2017-18.  

Shaheen Ahmed, chairman of the Bangladesh Tanners’ Association (BTA), told The Independent that the demand for leather products in the world market went down due to sluggish economic conditions in the biggest importers of leather products.     

Bangladesh exports leather products to South Korea, China, and the European Union, among others.

But they have started using artificial leather products, which are more affordable, said Ahmed. He said that leather prices went up in the world market and renowned global leather manufacturers started producing artificial leather products to address the global demand since 2013. “Because of continuous negative growth for a long period, we are losing both foreign and local investment,” he added.

“China used to take rawhide from us to make raw materials by doing further processing. The US government has signaled an imposition of 25 percent tariff on a number of Chinese products, including leather, entering the US market. Eventually, this has affected us badly, since China has stopped taking rawhide from us,” he said.

Shaheen Ahmed further said that 155 factories had been shifted to Savar. Among them, 125 factories are running. However, 25 tanneries are yet to start their operations fully, but processing only crust leather.

He said that the sector was not getting the advantage of a central effluent treatment plant (CETP) and struggling hard to achieve the global standard in terms of compliance issues. A Chinese contractor was given the responsibility and work order to build a CETP and dumping yard, but the work has not been completed yet, he added.

A sub-power station with a 10MW generation capacity was built in the Savar Tannery Complex, he noted. The station would be able to generate a maximum of 5MW of power from the sludge to operate the CETP once the project is completed, he said. The power can also be used for production work, he added.

BTA members said that administrative buildings and fire brigade stations have been completely constructed in the project area. Also, drains, deep tube wells, water delivery pipelines, culverts, electricity lines and gas lines have already been laid.

“So, the situation would change and we would see positive growth if the CETP is ready and fully functional,” said Shaheen.

Only leather footwear registered a slightly positive growth rate of 7.86 percent, resulting in earnings of USD 458.76 million. This figure was USD 425.34 million during the same period in FY2017-18. The government has already declared this sector as the “Product of the Year-2017”.

HM

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Editor : M. Shamsur Rahman

Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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