Bangladesh’s leather industry, once regarded as one of the country’s most promising sectors for export diversification and industrial growth, is increasingly at risk of losing momentum due to policy inertia, environmental compliance failures, weak infrastructure, and limited institutional support, experts and industry leaders warned at a policy dialogue on Saturday.
The concerns were raised at a discussion titled “Is the Future of Bangladesh’s Leather Industry Losing Its Momentum?”, held under the “Ajker Agenda” series organized by the Power and Participation Research Centre (PPRC).
Moderated by PPRC Executive Chairman and former caretaker government adviser Dr Hossain Zillur Rahman, the dialogue brought together policymakers, economists, bankers, and industry leaders to assess why an industry with nearly 80% value-addition potential continues to struggle under what many described as prolonged policy neglect.
The panel included Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD); Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters’ Association (BFLLFEA); Md Nurul Amin, chairman of Bangladesh Krishi Bank; and Shaheen Ahmed, president of the Bangladesh Tanners Association, among others.
Participants noted that Bangladesh’s leather industry remains strategically important, with the capacity to generate higher export earnings, create employment, and reduce overdependence on the ready-made garments sector.
However, despite possessing strong backward linkages and substantial domestic raw material availability, the sector has failed to realize its full potential due to a combination of structural bottlenecks.
The discussion focused on several longstanding challenges, including environmental compliance deficits, inadequate infrastructure, weak institutional coordination, declining global competitiveness, restricted access to finance, and insufficient progress in product diversification and value addition.
Speakers argued that unless immediate corrective measures are taken, Bangladesh risks further losing ground to competitor countries such as Vietnam, which has rapidly expanded its footprint in the global leather and footwear market through coordinated industrial policies and investor-friendly frameworks.
Bangladesh Finished Leather, Leathergoods and Footwear Exporters’ Association (BFLLFEA) Chairman Md Tipu Sultan said the promised environmental facilities that prompted the relocation of tanneries from Hazaribagh to Hemayetpur remain incomplete.
According to him, the failure to establish fully functional environmental facilities has undermined confidence among international buyers and damaged the sector’s reputation abroad.
“The environmental facilities that were the main reason behind the shifting from Hazaribagh to Hemayetpur are yet to be given to us,” Tipu Sultan said.
“Because of this, we have also lost customers. Other small industries that are related to us are also incurring losses alongside us. This has made it increasingly difficult for smaller industry owners to expand their production.”
Industry stakeholders noted that the relocation of tanneries was originally intended to modernize the sector and address long-standing environmental concerns. Yet, unresolved operational deficiencies—particularly surrounding the Central Effluent Treatment Plant (CETP)—continue to hamper compliance with international environmental standards.
Speakers warned that continued failure to ensure credible compliance systems could result in Bangladesh losing access to premium global markets, where sustainability standards are becoming increasingly stringent.
Expanding the discussion beyond infrastructure, Nasir Khan identified what he described as deeper regulatory and business-environment barriers constraining the sector.
He pointed to complex licensing procedures, tax-related harassment, ineffective incentive structures, and low levels of value addition as key impediments preventing businesses from scaling operations.
Drawing comparisons with Vietnam, Khan argued that Bangladesh has yet to develop the institutional and policy ecosystem necessary to attract sustained foreign investment and compete effectively in international leather exports.
He also criticized the country’s taxation structure, claiming it discourages multinational companies from maintaining long-term operations.
“The tax system of our country is designed in such a way that, in most cases, it drives out large companies unless they can make substantial profits here,” he said.
“That is why Uniqlo had to leave.”
Echoing concerns over competitiveness, Professor Mustafizur Rahman, distinguished fellow at CPD, warned that Bangladesh’s leather exports could face additional pressure from evolving environmental regulations in key export destinations.
He specifically highlighted the implications of the Carbon Border Adjustment Mechanism (CBAM), a climate-related trade policy increasingly shaping global commerce and stressed the urgency of preparation.
“Bangladesh must prepare for CBAM, as failure to meet new environmental standards could weaken the competitiveness of our exports,” he said.
He observed that although Bangladesh once possessed considerable promise in the leather sector, that potential appears to be fading due to delayed reforms and insufficient readiness for changing global market expectations.
Beyond export competitiveness, speakers also highlighted persistent inefficiencies within the domestic leather value chain, particularly the widespread deterioration of animal hides after Eid-ul-Azha.
Professor Abdus Sattar Mondal emphasized that poor preservation and storage practices continue to generate major economic losses.
“We should aim to reduce leather waste by at least 50% within the next year and identify where losses are occurring,” he said, stressing the importance of stronger supply-chain monitoring.
Supporting this concern, Mosaddequl Haque noted that animal hides are still frequently discarded along roadsides, even in affluent neighborhoods, due to inadequate preservation practices.
“Hides must be salted immediately after slaughter to preserve their quality and prevent unnecessary losses,” he said.
Industry insiders argued that improving post-slaughter handling could significantly increase leather quality and help preserve the commercial value of raw hides—an issue repeatedly raised but inadequately addressed over the years.
Bangladesh Krishi Bank Chairman Md Nurul Amin urged stronger state intervention to improve hide collection, preservation, and industrial management. He also proposed transferring CETP management from BSCIC to BIDA or BEPZA and appointing a competent operator to improve environmental governance.
He further called for easing restrictions on the sale of Hazaribagh tannery land and ensuring effective use of the Tk 100,000 crore Bangladesh Bank stimulus package, alongside a dedicated financial support scheme for the leather sector.
According to him, a broader transformation plan, developed through consultation with industry stakeholders and technical experts, is now essential for the sector’s survival and future growth.
Concluding the discussion, Dr Hossain Zillur Rahman cautioned against fragmented policy responses, noting that while tannery relocation was intended to protect the Buriganga River, pollution has continued to affect both the Buriganga and Dhaleshwari.
“Our one-dimensional good intentions may not end up bringing good in the end,” he said, stressing the need for an integrated approach balancing environmental sustainability, industrial competitiveness, institutional capacity, and economic realities.
For many at the discussion, the message was clear: unless Bangladesh urgently addresses the structural weaknesses holding back its leather sector, an industry once seen as a major pillar of export diversification may continue to lose relevance in an increasingly competitive global marketplace.
