Sector people seek benign BB policy
Tanners are in a fix on procuring rawhide of sacrificial animals as unsold processed leather, order cancellations and dearth of liquid money have virtually handicapped the sector people.
The outlook of the export market, particularly China, for processed leather looks further bleak owing to the rampaging effect of the new virus.
According to the Bangladesh Tanners Association (BTA), about 35% processed leather of the last Eid-ul-Azha remained unsold, while the payments of a huge amount of shipped leather are being delayed by foreign buyers due to the pandemic.
As a result, tanners are suffering from a cash crunch at a time when they need liquid money badly to procure raw hides of sacrificial animals during the upcoming Eid, likely on August 1.
“After the relocation process of tanneries from Hazaribagh to Savar started in 2017, the leather industry has been in a bad position. This is because of delays in implementation of the relocation process and absence of a functional CETP,” Md. Mizanur Rahman, treasurer of the BTA, told Dhaka Tribune.
“This year the Covid-19 pandemic added salt to the wound as it has disrupted the supply chain and declined demands for crushed leather especially from China, the largest export destination for local leather, “ added Rahman, also the executive director of Samota Leather Complex.
According to the sector people, they have witnessed order cancellations worth $200 million due to the covid-19.
Meanwhile, export earnings from the sector declined sharply by 21.79% to $798 million in FY20, against $1 billion in the previous fiscal year.
Processed leather exports declined by 40.28% to $98.31 million against $164.62 million in the same period a year ago.
How to overcome the situation
“During the Eid, over 50% raw hide are collected. Tanners need a huge amount of money to buy rawhide from merchants at retail levels. But they are in troubles this year due to a lack of adequate funds”, Md. Shakawat Ullah, the BTA General Secretary, said.
This year the businessmen in the sector needed more funds than other times as the sector was going through a tough time due to the Covid pandemic, added Shakawat.
In providing fresh funds, banks typically adjust the previous year’s dues and provide fresh funds based on that.
“But this year, we earnestly request the Bangladesh Bank (BB) to order banks not to adjust previous year’s dues,” suggested Shakawat.
On top of that, the government should provide funds from its declared stimulus packages so that the sector could overcome the fund crisis and made a turnaround, said the business leader.
CETP completion to attract buyers
“Over the non-compliance issues, a good number of buyers stopped buying leather and leather goods from Bangladesh. To bring the buyers back and restore confidence, we need to become environmentally compliant,” Md. Shaheen Ahamed, Chairman of BTA, said.
For exporting leather and leather goods, the sector needs certification and accreditation from organizations such as Leather Working Group (LWG). In this regard, CETP and dumping stations of solid waste are crucial.
Setting prices for raw hides still in dilemma
Tanners had not yet got rawhide purchase prices from the commerce ministry, as last year's chaotic situation had largely been responsible for price fall, seeking anonymity, a leader of the BTA said.
To avert untoward incidents, the government must handle it realistically and set a price for rawhide soon, he urged.