According to experts, non-compliant factories are the main reason behind slowing down the growth of the leather industry in Bangladesh.
Despite having proper raw materials available, the huge potential of this sector is being unutilized.
They also said that the leather products produced in Bangladesh get comparatively lower prices in the international market and it is impossible to ensure a fair price without compliance development.
On Tuesday, speakers said this at a webinar jointly organized by The Asia Foundation, Economic Reporters Forum (ERF), and Research and Policy Integration for Development (RAPID).
The speakers at the event said that the country can potentially earn $10 billion in export earnings from leather and leather goods by 2030.
For this, the Ministry of Industry, the Ministry of Forests and Environment, and the Ministry of Labour need to work together to ensure compliance in this sector and form an independent leather sector development authority, the speakers recommended.
The Research and Policy Integration for Development has conducted a study on the effects of the pandemic on the tannery industry of Bangladesh.
Dr M Abu Eusuf, professor of Dhaka University and executive director of the Rapid presented the keynote in the webinar.
At the webinar, he said Bangladesh is making positive progress in the macroeconomy despite various obstacles.
“But now it is not just growth or per capita income that needs to be improved. The only reason for the lagging in the sector is the lack of compliance,” he added.
He also said that the leather sector has the most opportunities for value addition.
“While it is possible to add value up to 25% to 30% in the garment sector, in the leather sector, it can be up to 50% -60%,” he added.
He also said that for this reason, development in compliance is important as Bangladesh is getting 30% to 40% lower prices.
“We have already identified the problems in the leather sector and now the initiatives need to be taken in order to solve them,” he added.
He also said that the sector needs proper and efficient initiatives in solid waste management, open space waste management and CETP.
“Entrepreneurs from this sector need more policy support than financial support,” he also added.
He also said that the sector did not get the expected benefits from the incentive packages during the pandemic.
The leather sector has a bank loan of Tk8,000 crore and they have to pay interest of Tk800 crore per annum which factories could not repay on time.
Syed Nasim Manzur, managing director of Apex Footwear, said the global supply chain had collapsed in the wake of the pandemic and the ongoing Russia-Ukraine war.
“At such times, there is an opportunity to increase our share in the global market,” he said.
He said raw leather exports have declined by 79% since independence but the exports of finished leather have increased by 80%.
“This means that we cannot use our own raw leather because the policies taken in this sector have not been implemented properly,” he added.
He called for lifting the ban on the red zone from Hazaribagh, saying it was impossible for the Industry Ministry alone to take the leather sector forward without coordination from the Labour Ministry, Environment Ministry, and the Commerce Ministry.
In her speech as the chief guest, Zakia Sultana, secretary of the Industry Ministry said that the leather sector has extreme potential with a possibility of $10-$12 billion in export earnings.
“It is possible only if quality can be ensured through proper maintenance and monitoring.”
“We confirmed the chemical of 109 nozzles of ETP and we could not clear only one module,” she added.
She also said that the ETP compliance is much better than before and will be better in the future.
Kazi Shakhawat Hossain, additional secretary of the Industry Ministry, AKM Ashraf Uddin, executive director of BLF, and Mizanur Rahman, vice-president of the Bangladesh Tanners Association also spoke at the event.
Kazi Faisal Bin Seraj, country representative of the Asia Foundation put welcome remarks at the event while Sharmeen Rinvy, president of the ERF, was the session chair and SM Rashidul Islam, general secretary of the ERF, moderated the event.