Leather goods and footwear exporters have faced export order cancellation of $200 million, while the crushed leather exporters have seen another $53 million cancellation
Exporters involved in crushed leather and leather goods business have suffered financial losses worth above $250 million as the trade with major global economies including China faced disruption due to the Coronavirus outbreak.
Leather goods and footwear exporters have faced export order cancellation of $200 million, while the crushed leather exporters have seen another $53 million cancellation due to the outbreak of the infectious virus.
China is the major destination for processed leather as nearly 50% of the country’s crushed leather is exported to the second largest economy in the world.
On the other hand, most of the raw materials and accessories for the billion-dollar industry are imported from China for their competitive prices. Leather goods and footwear exporters cannot import those from China, as the country is yet to resume their factory activities even partially, industry people have said.
“Export-import with China totally stopped and business of the country’s leather sector came to a halt since January. As of March, the sector counted losses to the tune of about Tk450 crore,” Shaheen Ahmed, Chairman of the Bangladesh Tanners Association (BTA), told Dhaka Tribune.
According to the BTA data, the sector could not ship over 250 containers of processed leather to China, causing them to count huge losses.
On the other hand, Md Saiful Islam, President of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh said after the outbreak of the virus, the global brands and retailers cancelled import orders worth around $200 million from the country.
Exporters were facing the hardest time as the global economy witnessed headwinds caused by global lockdowns to halt coronavirus, he said, adding that a economic rescue plan from the government could only save the billion-dollar industry in this crisis period.
Besides the shipment cancellations, there remained huge amount of unsold crushed leather piled up at different tanneries, industry people said.
“Our prime export destination is China which imports over 50% crushed leather from Bangladesh. After the outbreak of coronavirus in January, the export and import with China came to near zero,” Md Shakawat Ullah, Proprietor of M/S, Salma Tannery, said.
"As a result, huge amount of unsold leather now piled up in different factories, while we cannot import raw materials and accessories needed for producing finished leather goods and footwear products," he added.
Due to shortage of accessories, leather goods production for local market was also being hampered, said Shakawat.
According to the sector people, there is a local market of about Tk1,000 crore during the Eid-ul-Fitr. The demand for the festival could not be met due to a lack of raw materials for leather goods, they said.
Since the sector suffered huge losses and was going through severe cash crunch, the government should provide financial supports and stimulus package to help the industry going, said Ahmed.
Besides, the sector people urged the government to defer the utility service bills including gas and electricity for at least one year. If it was ensured, it would help reduce liquidity crisis to some extent, they added.
Meanwhile, they also called for stimulus package to mitigate the huge trade losses they faced so far for the trade disruption due to the pandemic COVID.
“Prime Minister Sheikh Hasina announced bailout package of Tk5,000 crore for the export- oriented industry to pay wages of factory workers. We appreciate the initiative,” said Saiful Islam.
Beyond the workers’ wages, there were huge trade losses. To combat the trade losses, we needed stimulus package too, said Islam.
We were very optimistic that prime minister would consider the demands for the sake of the industry, he added.
According to Export Promotion Bureau (EPB) data, in July-February period of the current fiscal year, the country earned $632 million from exporting leather and leather goods, which was $695 million in the same period last year.