Global brands and buyers of leather products have an eye on Bangladesh to source leather products as manufacturers have started producing high-end products. Speaking to the Dhaka Tribune’s Ibrahim Hossain Ovi, Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) President Md Saiful Islam discusses the importance of having a long-term policy to help traders tap into this opportunity of expanding our presence in the global market
The government has declared leather and leather goods as the ‘Product of the Year’ in Bangladesh for 2017. How much has the sector achieved from this recognition?
This declaration has created a buzz among leather goods manufacturers, not to mention the fact that it has drawn the attention of buyers on Bangladesh.
The aim of making such a move is to diversify export products. Leather goods could bring better business opportunities for Bangladesh as the leather industry here is entirely independent – all the raw materials are locally produced and value addition is 100%. We can say our leather products are 100% made in Bangladesh.
This declaration has opened new avenues of business for Bangladesh. We have created a road map to take full advantage of this opportunity and enhance our export. Bangladesh will be the next global sourcing hub for leather goods.
What are the challenges that the leather sector currently faces?
In the past, the expenditure used to be a big challenge for us. Now, the interest rate has come down to single digit, but it is still higher than what our competitors have to pay, which is 4% to 5% on an average.
The Bangladesh Bank has Export Development Fund, but it is not accessible by all businesses. Our government should offer a long-term trade loan at 5% interest rate for the leather sector.
The government policy at present is short-term and is not specific. We have no way of knowing what the corporate tax will be in the next fiscal year, which hinders our business and investment plans. The government should formulate a long-term policy for this industry to attract investment from both home and abroad.
Will the relocation of Hazaribagh tanneries to Savar affect the industry?
Certainly. In the Bangladesh Leather Footwear and Leather Goods International Sourcing Show (BLLISS) held in Dhaka on November 19, we showed how Bangladesh was becoming environment-friendly in manufacturing leather goods.
We can bank on the Savar Leather Industrial Park to brand Bangladesh as an environmentally sustainable sourcing hub. It is not just the government’s responsibility, the trade body has its own share of responsibility to brand Bangladesh to the global buyers. With joint efforts of the government and the leather industry leaders, we can promote our leather industry out in the world.
What is the achievement of BLLISS?
The BLLISS 2017 was the first event of its kind, and it was aimed at promoting Bangladesh into a global sourcing hub to buyers, global retailers and international sourcing agents brought under the same roof.
Through this show, we have sent our a message to international brands, buyers, retailers and investors that Bangladesh is now making quality and value-added products that can meet global demands.
We plan to make this show an annual event so a network between the buyers and the manufacturers can be established.
What are the steps that you are going to take to diversify the products?
No matter how much you invest in an industry, it will not flourish if the manufacturers do not embrace innovation. With this in mind, we have set up Centre of Excellence For Leather Skills Bangladesh Limited (COEL), which is aimed at training leather workers to help them develop special skill set.
On top of that, we are working to create new designs as well as training designers. As of October, about 15,000 mid-level workers have been received these trainings.
We are also working on setting up a lab of international standards to provide testing facilities for basic chemicals within a shorter period of time. Our focus is on testing, designing and training to reach our target.
What should the government and people in the leather sector do to attain the $5 billion export target by 2021?
For the current fiscal year, the government has set the target to earn $1.38 billion. As a part of this industry, I am hopeful that we will be able to exceed the expectations and earn $1.40 billion.
Bangladesh has the capacity to meet $5-billion export target as it has 105 purpose-made compliant manufacturing factories, while there are more manufacturers who are just generally compliant.
What the sector needs is to reduce lead time of export, which depends on port capacity in handling loading and unloading of export goods. Inefficiency in the ports adversely affect the trade. To reduce the lead time, the government has to increase efficiency of port management and purchase more equipment. Export has been continuing to grow, but the equipment at the ports remains the same.
Customs inspection should also be expedited. If these issues are addressed properly, export earnings from leather goods will certainly rise in the years to come.
How do you plan to ensure compliance in the tannery estate?
As per the government directive, all tanneries have been relocated from Hazaribagh to Savar Leather Industrial Park to make the industry compliant and environment-friendly. However, the environment compliance is not ensured as the CETP is not fully operational. As a result, tanners cannot discharge 100% chemical-free water, and solid waste is being dumped in open space.
The tannery estate has yet to be 100% environment-friendly. As a manufacturers’ organisation, we plan to put pressure on the tanners – we will not buy leather from them unless they ensure 100% compliance in terms of environment.
If they fail to make significant progress in the compliance issues, we will take strict actions, which could even include importing leather from other countries.
What is the sector doing for the betterment of its workers?
In accordance with Prime Minister Sheikh Hasina’s declaration, we have created a road map for the leather industry which also includes the workers’ welfare. As a social responsibility, we are providing schooling facilities to our workers’ families, and all our workers are covered by health insurance. We also run regular check-ups to ensure that all our workers are healthy and safe from hazardous chemicals.