An Overview of LEATHER & LEATHER GOODS INDUSTRY, BANGLADESH

Origin of the Report

We, the student of Institute of Business administration (IBA-JU) are required to submit this report on countrys potential industrial sector Leather & leather goods Industry. According to our course agenda this project is a pre requisite of completing the required credit by the institution. As we were not required to collect any information from primary sources we did not head for any corporations in this industry to acquire necessary informations to prepare this report. Most of the information provided in the report is from secondary sources; like electronic print media, internet, company annual reports and other journals. The purpose of this report is to provide a thorough idea about the leather industry in context to the Bangladesh scenario; its possible future, growth perspective, hindrance etc. Therefore this report scrutinized some external factors like: competitor analysis, world leather goods market and showed the situation of Bangladesh in this industrial estate. The report submission time was almost 2 weeks which we spent efficiently in scrutinizing all the possible informations of Leather industry to come up with a professional report on it.

Background of the Report

Leather is one of the oldest industries in Bangladesh and at the same time one of the most potential one. It has a profound history in this south Asian territory which was laid by RP Saha; a profound industrialists. Bangladesh earns more than 8.0 billion taka - 11 per cent of all the export earnings by exporting leather and leather goods. The leather industries are mostly situated in the densely populated residential area surrounded by slums, where people are living ignorantly in one of the worst polluted areas in the world.

Leather footwear accounted for 28% of export earnings from leather and leather products in 2007-08, while the share of leather and other leather products were 68% and 4% respectively. Thus notwithstanding its small size, leather industry in Bangladesh seems to have undergone significant transformation during the past two decades from a low value

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addition tanning activity to a producer of leather footwear and leather goods along with high value added crust and finished leather.

China & India are the two market giants in this leather industry with its huge number of domestic clients. Their low cost labours and high potential growth with some modern amenity support make them stay way ahead of Bangladesh in terms of export. Still Bangladesh intakes some competitive advantage in regards to better quality hides and skin just because of the climate nature of this territory.

The key export market of this leather goods are European and some middle east countries. But he lack with deficiency in the local market because of turbulent use of low quality rexin in this market. After the independence this industry went through several changes and the latest change came from the government with direct order of transforming the whole industry from Hazaribagh residential area to a modern Savar industrialized area. Still the whole process is a undergoing one.

This uprising industry needs better strategic plan and necessary stimulus from government to better survive in the world competitive market and earn some substantial foreign currency.

Scope

The study is about leather industry in Bangladesh and it has wide operations whole over the country. So the overall scope of the report should be around the operating areas of this industry and also beyond the borders as this industry has export market throughout different parts of the world. But my scope was limited because of the time constraints and relying only on secondary sources of data for information collect. So my scope was only concentrated in the domestic market of this industry.

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Methodology

The report has been prepared based on data collected from secondary sources. It was not possible to rely on primary sources as obtaining data from this source requires lot of trouble and selected authority permission and we were not also instructed by our respected faculty to search for any primary data. Secondary information came mainly from websites; annual report of several tanneries, various book articles regarding leather industry, various brochures published by the company.

Limitation of the study

While preparing the report, always; there are some different difficulties and limitations have to face. Such as

Time was a major constraint in preparing the report. The duration was only two weeks. It was too limited to cover all the corporate performance area.

Several information regarding on-going projects could not be used to analyze further the competitive positioning of leather industry as they were mostly confidential.

As the time was too little I could not get any information from their competitors (foreign) which made my report lacks in some major areas.

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LEATHER is one of the most prospective industries in Bangladesh. Leather and its products are major export items for Bangladesh. It has enough scope for both vertical and horizontal expansion in terms of economic return and social benefits. Due to the global recession, our exports earnings have fallen but we shall recover from this slump within a short time.

Leather is a durable and flexible material created via the tanning of putrescible animal rawhide and skin, i.e. the conversion of raw hide or skin, a putrescible material, into leather, a stable material, and finishing it so that it can be used in the manufacture of a wide range of consumer products.

The leather industries are differentiated by the manufacturing importance of the raw materials used to make the wares. In the leather industry, the skin and rawhide is commercial valuable product. It is an intermediate industrial product, with applications in downstream sectors of the consumer goods industry.

Leather industry is an old manufacturing sub-sector in Bangladesh with a long heritage of over five decades. This is an agro based bi-product industry integrated with locally available indigenous raw materials (hides and skins) having tremendous potentials for export development and sustained growth along a considerably long duration of time length.

Sub-segments of this industry are -

1. Finished Leather 2. Leather Goods

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In the year 1940, a person named R.P Saha has set the first leather industry of Bangladesh near Narayangonj area. It was later shifted to Hazaribag area of Dhaka. During the period before Partition of Bengal (1947), almost all the raw hides and skins available in East Bengal were exported to west Bengal, particularly to Calcutta and processed there. Development of tannery industry in former East Pakistan started after the partition with an influx of tanners displaced from India and subsequently, with the establishment of subsidiaries of some companies of the then West Pakistan.

In Bangladesh, most of the industries are export oriented and about 95% of leather and leather products such as shoes, slippers, leather jackets, hand gloves, bags, purses, wallets, and belts in the form of crushed leather, finished leather, leather garments, and footwear are marketed abroad. Value addition in these exports averages 25% local and 75% foreign. About 150 modern tannery units are now in Dhaka city.

Bangladesh produces approximately 100-150 million sq feet of raw hides and skins, about 85% of which is exported in crust and finished form. The rest is used for producing leather goods to cater to the domestic market.

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There are over a 150 of leather factories in Bangladesh, which produce huge amount of leather products in a year. Among them Apex Tannery Ltd. Bata Shoe Awal Leather Complex, ABC Leather, Model Trade International, Bengal Leather Complex Ltd., Chowdhury Leather & Com. Ltd., Crescent Tannery Ltd., Helena Enterprise Ltd., H & H Leather Industry Ltd., Janata Tanning Industries Ltd., Kalam Brothers Tannery Ltd., Kid Leather Industry Ltd., Karim Leathers Limited., Ruma leathers Limited., Dhaka Hide & Skin lmited Lexco Limited etc

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1. The labour-intensive leather industry is well suited to Bangladesh having cheap and abundant labour. 2. Bangladesh has a domestic supply of good quality raw material, as hides and skins are a by-product of large livestock industry. 3. Adequate government support in the form of tax holidays, duty free imports of raw materials and machinery for export-oriented leather market. 4. The industry lacks domestic technology and expertise and local support industries such as chemicals are still under-developed.

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The leather industry in Bangladesh is well established and is an important foreign exchange earner. The industry is entirely in the private sector which has proved to be fully capable of handling it. Out of the total 207 tanneries of Bangladesh, 186 are located haphazardly in Dhaka area where 84 per cent of the total supply of hides and skins are processed In a highly congested area of only 70 acres of land. The unplanned tanneries at Hazaribagh do not have supporting infrastructure facilities. No tannery in the area has effluent treatment facilities, posing a grave threat to environment. The industry, however, still is the process of shifting in a new and modernized area in savar. Though this was being provisioned by government for last 5 years still some industries could not make it to their because of financial constraint and other strategic issues.

Over 50 manufacturers are producing various leather items such as footwear, travel goods, suitcases, briefcases, fashion accessories, belts, wallets, hand bags, case holders etc. for overseas export. Most of the small tanneries are family owned and operated as cottage type industries. Many of them are established as proprietorship or partnership. The larger tanneries are basically public or private limited companies. Only a few tanneries have proper accounting practices and financial controls in place to define their profitability and financial condition.

The principal raw materials for this industry are cowhides and goat skin. The annual domestic supply of hides and skins is around 200 million square feet, consisting of 63.98% Cowhides, 32.74% goat skin, 1.09% Sheep skin and 2.219% buffalo hides. Local Consumption of leather is around one fifth of the total output and the rest 80% is exported in the form of Crust leather (75%), and finished leather (20%), Footwear and leather goods (5%). Though there has been some appreciable improvement in animal husbandry and butcher's techniques in Bangladesh in recent times, it may

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take quite some time to reach the international standard. The Black Bengal and other variants of goat skin from Bangladesh enjoy an excellent reputation for quality worldwide. At present, the leather sector accounts for 3-4 per cent of total export earnings.

According to Bangladesh Export Promotion Bureau (EPB), contribution of leather sector to total GDP was 0.32% in 2005.

The relocation of tanneries from Hazaribagh to Savar is being delayed due to the owners' reluctance to move. Tannery owners are yet to lay down the foundation stone for their factories, blaming the holdup on the failure to reach a consensus with the government regarding compensation and bank loans. Tannery owners are demanding 1000 crore compensation, a readymade CETP and soft loans to proceed with their re-allocation. Their statement is they would have to build new infrastructures and repair machinery that would be damaged during relocation. The government proposed sharing costs for the CETP installations, which will require more than Tk 300 crore. But the Industrialist say that they are supposed to get that by free from government according to a deal made in 2003. Besides re-allocating the whole industry to a new zone the recent industry ministry implies its node over installing a CETP (central effluent treatment plant). He also urge that Bangladesh would have loose its significant leather goods export if the re-allocation would not have been made within few years and install an CETP immediately as because global leather importers are demanding environment friendly production besides looking at the quality of goods.

Additionally, the industrialists are demanding another 200 acres of land in the proposed leather estate at Savar for building dumping yards and labor barrack for the workers. Though the re allocation was supposed to be done 10 years ago by a verdict by the Court at 2001 yet the process is under progression. The government,

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to accommodate the tanneries, began work on the leather estate more than five years ago. The estate, which cost Tk 545 crore, remains unused and empty. And by this time the tanneries located in Hazaribagh, Dhanmondi, Basila, Kamrangirchar and the surrounding areas continue to inflict its emissions upon the long-suffering residents of the western part of the city.

At present leather and leather products are exported to about 53 countries of the world. The major importing countries are: Italy, Brazil, Germany, Singapore, China and the USA. EPB sources report that export earnings from leather goods was US$ 287.78 million in 2004-2005, out of which, about 80% are from leather and the rest is from finished leather goods.

Export Earning from leather goods

200 150 US Million 100 50 0

The above graph exhibits that the export growth rate of Bangladesh leather sector declined initially in the year 1998-1999 because there was economic recession in Bangladesh due to massive flood. During this period (from 1998 to 2005), the growth rate was highest in 2000-2001 (16.32%).

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In the year 2002-2003 export growth rate was negative because of the global economic recession as a consequence of the War in Iraq, the Twin Tower (9/11) incident, rise of international terrorism, fundamentalist orientations, etc. Export growth rate for the year 2004-2005 was 8.22%. Foreign investment to the industrial leather sector of Bangladesh has been very limited. Till March 2010, the total foreign investment in the industrial leather sector was $116.12 million, which is only 1.33 per cent of the total foreign direct investment into the country.

The leather industry with over Taka 160 billion annual export earnings is the countrys third biggest foreign exchange earner after the RMG and the frozen food sectors. Local and foreign experts believe that this sector could replicate the successes of the Readymade Garment (RMG) sector if the government and genuine entrepreneurs join hands for effective cooperation and develop the sector with a comprehensive strategic plan. Leather industry is growing all over the world both in market potentials and in installed capacity. For Bangladesh, export earning only from leather was US$ 160 million in 2010- 2011 and it is expected to reach US$ 235 million in 2015-2020 as the demand for quality raw material for finished leather goods is increasing in developed countries. The size of the global footwear market is enormous as well. A thorough analysis of the historic data shows that factors like demographic composition, depth and reach of urbanization and distribution of wealth have consistently shaped the growth of the footwear industry. Though till now Bangladesh has shown poor performance in the leather goods sector, it has a good growth potential if entrepreneurs can avail modern technology to diversify their products and designs according to international market trends and apply modern tools for marketing & promotion. Realizing this sectors growth potential, Bangladesh Government has reiterated its decision to treat the industry as one of the thrust sectors and reduce interest rates

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for industrial credit to this sector to seven percent (7%). The government has already decided to develop a leather industrial area at Savar, outside Dhaka where tanneries from Dhaka would be shifted to free the Hazaribagh area and the river Buriganga in general, where most of the tanneries are concentrated, of pollution.

CHINA
China is today globally the undisputed leader in footwear manufacturing and also has a highly developed components and accessories industry. This development was favoured by the opening up of the Chinese economy, which enabled the influx of Taiwanese investment amounting to billions of dollars as well as the transfer of Taiwanese know-how in this sector.

The North-South migration of various industries, which began from the industrialised USA and West European countries to the newly industrialised countries such as Japan, Taiwan and Hong Kong continued with the rise of labour costs in those countries to the new cheap labour countries like China, Indonesia, Thailand, Vietnam and India. In this respect China was certainly favoured by foreign investors because of its political stability, reliability, infrastructure, qualified and cheap labour forces and big local market.

INDIA
Like China, the leather and leather goods sector of India has benefited the most from a long-term development policy. Obviously it capitalises on its natural advantages of abundant raw materials, plentiful and low-cost labour, a large pool of skilled and trained human resources, a strong artisan shoe-making tradition as well as an immense domestic market. Certainly India remains far behind China because it has in the last decade been more reluctant to open its market and liberalise the economy.

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STRENGTH
Leather Can be treated as renewable resource. Availability of integrated production chain from raw materials to tanneries and leather goods. AVailability of a large rather inexpensive workforce relative to other comparable manufacturing societies. Reputation of Banglaesh's premium grain leather Price advantage of Bangladeshi Leather In International market Durability of leather products. Favourable business environment with existance of EPZ Reduced interest rate for industrial credit to leather sector to 7% since it is considered as thurst sector by the government.

WEAKNESS
Insufficient research and development facilities. Inadequate Knowledge on pro active marketing of local leather entreprise. Lack of initiative in arranging events to promote locally produce leather. Limited access to financial institutions. Unavialbility of chemicals and accesories locally and no provision for local chemical industry. Poor demand in domestic market. Inability to come up with innovative and trendy products. Absence of Vertical integration (forward and backward linkage) Lack of professional training institutes to improve skills of workers at all levels. Challenge of international brand image.

OPPORTUNITY
Increasing global demand for leather products. High potential for quality raw materials and maximum value addition inside the country. Availability of Cheap labor force inside the country. GSP (Genaralized system of preferences) facilities to exporters. Duty free access in major markets. Potential footwear market in middle east and southern Africa. Opportunity in establishing by product industry based on solid and liquid wate tannery and slaughter house. Unlike resin and other synthtic and artificial fibre elemnets, leather products are hygenic and most importantly environment freindly and bio degradable. Promise of setting up ETP with allocation of a substantial modern industrial place in savar by the government.

THREAT
Delay in introducing integrated government policy for the development of leather industry. Leather sector growth was stagnant in some years because of political instabilities leading to apathy international investment communities. Political instability of bangladesh, poor governance at all levels including corporate governance. Intensive competition for gaining market because of strong competitors like: china, India and pakistan. Huge dependency on high priced imported chemical and accesories. Limited product diversification compared to competing countries like: China, India and Pakistan. Availability of low priced imported homogeneous products made of rexin and other artificial fibres. Illegal export of raw hides and skins to india and neighbouring countries is creating scarcity of raw materials for local production. Insufficient measure to address the environemnt pollution, helathy and safety issues by the tanneries.

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FINANCIAL PERFORMANCE

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Footwear

The leather manufacturing process is divided into three fundamental sub -processes:

Preparatory stages, Tanning and crusting.

Preparatory stages
In this stage the hide/skin is prepared for tanning. Preparatory stages may include: preservation, soaking, liming, unhairing, fleshing, splitting, reliming, deliming, bating, degreasing, frizing, bleaching, pickling and depickling.

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Tanning Process
Raw animal skins go through several steps during the tanning process. Depending on the type of hide used and the desired end-product, the steps taken during tanning can vary greatly. Tanneries use to collect hides from the haat, situated around the country. After collecting, preparing hides begins by curing them with salt. Curing is employed to prevent putrefaction of the protein substance (collagen) from bacterial infection during the time lag that might occur from procuring the hide to when it is processed. Curing removes excess water from the hides and skins using a difference in osmotic pressure.

The moisture content of hides and skins get greatly reduced. In wet-salting, the hides are heavily salted, then pressed into packs for about 30 days. In brine-curing the hides are agitated in a salt water bath for about 16 hours. Generally speaking, methods employed for curing make the chance of bacterial growth greatly unfavourable. Curing can also be done by preserving the hides and skins at a very low temperature.

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In a process known as soaking, the hides are then soaked in clean water to remove the salt and increase the moisture so that the hide or skin can be further treated. After soaking, the soaked hides and skins are taken for the next operation where these are treated with milk of lime with or without the addition of "sharpening agents" like sodium sulfide, cyanides, amines etc. The weakening of hair is dependent on the breakdown of the disulfide link of the amino acid called Cystine, which is the characteristic of the keratin class of protein which gives strength to hair and wools. The hydrogen atoms supplied by the sharpening agent reduce the Cystine molecular link to Cysteine, and the covalent disulfide bond links are ruptured. This weakens the keratin. To some extent, the weakening produced by sharpening also contributes to "unhairing," as the hairs break down.

The majority of hair is then removed using a machine, with remaining hair being removed by hand using a dull knife, a process known as scudding. Depending on the end use of the leather, hides may be treated with enzymes to soften them in a process called "bating." But before bating, the pH of the collagen is brought down to a lower level so that enzymes may act on it. This process is known as "de-liming."

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Once bating is complete, the hides and skins are treated with a mixture of common salt and Sulphuric Acid, in case a mineral tanning is to be done. This is done to bring down the pH of collagen to a very low level so as to facilitate the penetration of mineral tanning agent into the substance. This process is known as "pickling." The common salt (sodium chloride) penetrates the hide twice as fast as the acid and checks the ill effect of sudden drop of pH.

Tanning can be performed with either vegetable or mineral methods that we have mentioned before. Before tanning, the skins are unhaired, degreased, desalted and soaked in water over a period of 6 hours to 2 days. To prevent damage of the skin by bacterial growth during the soaking period, biocides, such as pentachlorophenol, are used.

Vegetable tanning uses tannin. The tannin is a class of polyphenol astringent chemical that occurs naturally in the bark and leaves of many plants. Tannins bind to the collagen proteins in the hide and coat them causing them to become less watersoluble, and more resistant to bacterial attack. The process also causes the hide to become more flexible. The primary barks used in modern times are chestnut, oak, tanoak, hemlock, quebracho, mangrove, wattle and myrobalan. Hides are stretched on frames and immersed for several weeks in vats of increasing concentrations of tannin. Vegetable tanned hide is flexible and is used for luggage and furniture.

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Mineral tanning usually uses chromium in the form of Basic Chromium Sulfate (BCS) or Chromasol B. It is employed after picking. Once the desired level of penetration of chrome into the substance is achieved, the pH of the material is raised again to facilitate the process. This is known as "basification". In the raw state chrome tanned skins are blue and therefore referred to as "wet blue." Chrome tanning is faster than vegetable tanning and produces stretchable and long-lasting leather which is excellent for use in handbags and garments. But for the harmful effects of the Chrome, some tanneries are now using both vegetable and chrome tanning altogether to prevent the toxication- that we came to know from few of the tannery owners.

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Depending on the desired product, the hides then go through a dying process, which also involves adding moisture back into the skin. Hides which have been vegetable tanned are bleached and them soaked with oils, soaps, greases and waxes to make them more pliable. Rolling leather means running the skins through a machine that works to firm the leather to make it stronger. After the rolling process has finished, leathers are stretched, where they dry out in a heat controlled room. Through such dyeing and finishing, the raw leather becomes suitable for exporting. This was the finishing for exporting processed leather to foreign countries.

The Bangladesh export-oriented leather and leather goods problems may be characterised by:

Lack of an integrated comprehensive policy with proper inputs by all the stakeholders such as exporters, government, suppliers and buyers;

A small number of factories that have been set-up by mainly inexperienced entrepreneurs and ever eager machinery suppliers, who have used the myth of the buyback agreements to push their machine sales. These factories by and large have been unable to get off the ground despite considerable investment in machinery and infrastructure;

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Other than three or four exporters most of the factories are not engaged in regular production and exports. A total lack of adequately trained and skilled human resources for production as well as for managerial personnel in the leather footwear industry. No training institute or facilities for skill development. No support industry in terms of linkage factories such as lasts, cutting dies etc., so there is a high import dependence thereby reducing price competitiveness as well as increasing lead times. Low awareness amongst international buyers as not enough factories are working in the industry. Poor representation in major international product fairs and shows. No design, product development or product testing capability in the country. No awareness of international quality standards such as Eco- labelling and packaging. Occupational standards and environmental management requirements and their growing importance to foreign buyers. Insufficient co-operation & co-ordination between various regulators, policy makers and stakeholders of the industry. In some cases duplication of efforts by various agencies especially donors are occurring. Lack of a suitable enabling environment in the customs facilities of the country at time of import of raw materials, due to harassment and delays in clearance . Inadequate working capital finance as most banks insist on Master L/C and back to back L/C procedures for import. Unfortunately in today's highly competitive market most buyers no longer operate on L/C. Our competitors

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offer much easier payment terms such as open account, D/A basis delivery, etc.; No easy access to the local market for exporters, making them highly vulnerable to the perils of stock lots and cancellations. In China as well as India up to 50% of the total output can be sold onto the local market, whilst still enjoying exporter status. In contrast, in Bangladesh local sales are taxed at such high rates of duty which makes the price too high for the mass market. Discrepancy in the import policy where the import duty on finished shoes and on shoe components and accessories is almost the same, therefore there is no advantage for manufacturers. Today the local shoe industry is being severely threatened by cheap imports that are being smuggled and dumped from neighbouring countries such as Myanmar and India.

Overwhelming dominance of the Far East i.e. China

Bangladesh should, however, look upon this not only just as a threat but also as an opportunity as a lot of buyers feel over-dependent on China and are looking for reliable alternative suppliers. These fears often manifest themselves in the form of quota restrictions, anti-dumping duties or tariff barriers on products from the Far East, which can be an opportunity for us. So it is imperative to become aware of the global situation and use it to our advantage. Furthermore Bangladesh can learn from the Chinese model where appropriate, for example by studying how they have developed their components industry, or by identifying segments or market niches where they are not predominant, e.g., leather moccasins. Chinese government policy in terms of duty exemptions, tax breaks, foreign exchange benefits and even infrastructural support, such as low cost housing for migrant labour and training facilities, should serve as a blue print for a country like Bangladesh.

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Challenge of international brand image

The importance of brand image is an area where all the parties involved, producers, exporters, government, political parties need to sit down and address. Bangladesh has already been saddled with a very poor world image that has now been beamed all over the world by satellite TV and the Internet. If Bangladesh cannot find a way to agree on a long-term strategy to repair, improve and transform this image the country may never succeed. But international experiences show that countries like Bangladesh should be optimistic.

Growing influence of buyers on makers

The growing influence of buyers on manufacturers indicates that these is a growing to become more responsive to buyers and that it is absolutely necessary to work more as partners rather than adversaries. The enabling environment mentioned above is vital for success. To achieve this, however, exporters, producers and policy makers must work together to study how this can be supported and accelerated.

Increasing importance of supermarkets and clothing stores

The increasing importance of supermarkets and clothing stores as a major sales channel means once again the need for faster response capability, shorter lead times and greater a synergistic opportunity for Bangladesh through its garments base. The critical need is to build up the necessary human resources as well, such as designers, pattern cutters etc. which given the high level of unemployment amongst our educated youth, should be very feasible.

Challenge of the liberalisation of international trade transactions

This means that Bangladesh will have to reinvent existing system of import through Master L/C, back to back L/C etc. all of which are time consuming and expensive. In these days of shorter and shorter lead times and constant pressure on margins, buyers are no longer willing to tie up funds in advances on letters of credit for several

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months, so that they can then be used to finance L/C's to suppliers on deferred terms. This procedure was relevant when the garment industry had just started in Bangladesh and the buyers were also the suppliers of all the trims. But today buyers just want to buy; they do not want to get involved in the logistics of sourcing raw materials etc. The supply function is totally independent from the buying function. Therefore if Bangladesh insists on these points its potential buyers will merely say that they do not need to deal with all this if they buy from China, India, Thailand, Indonesia or Eastern Europe and so that is where they will go.

National Political Measures

Introducing measures to create a national political consensus so that under all political circumstance the export-oriented sector remains unaffected. Introducing a sound law and order situation so that all export oriented activities can take place without interruption or hindrance. Trade Unions leader should be included in all relevant seminars and discussions so that a consensus can be achieved;

Development Political Measures

Introducing financial incentives and other necessary supporting policies to raise productivity, improve quality and make this sector globally competitive; Supporting the establishment of linkage industries such as lasts, cutting dies etc. to reduce high import dependence and promote price competitiveness; Enabling duty free imports of rawhides and skins as well as wet blue and finished leather for leather footwear exporters; Introducing measures to enable adaptation of new and modern technology such as modern soling through joint ventures and international collaborations;

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Introducing financing and other incentives to increase local investment in this sector; Introducing attractive incentives and non-bureaucratic and user friendly operating policies to promote foreign investment in this sector.

Marketing Support Measures

Supporting diversification of export products; Supporting a marketing campaign especially in Canada, USA, EU, and Japan to promote the image "MADE IN BANGLADESH"; Supporting sellers-buyers meetings; Ensuring consumer safety and international standard of packaging to improve marketing of leather and leather goods; Rationalised tariffs and access to the local market for exporters should be allowed so that this sector does not suffer from stock lots and cancellations; Eliminate discrepancy in the import policy to support value addition and reduce import; i.e., increase import duty on finished shoes for a limited period, reduce duty on import of shoe accessories and components; Taking the initiative to make producers and exporters aware of international quality standards, Eco- labelling and packaging, occupational standards and environmental management requirements and their growing importance to foreign market; Supporting quality management and improvement, export documentation, and assistance in the cases of difficulties ensuring payment from abroad; Supporting efforts for market diversification, i.e. expanding market in the countries other than USA, EU, Japan and Canada;

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Financial Measures
Ensuring direct fiscal incentives in the form of export cash subsidies, import license benefits against export performance, tax- free export earnings, reduced airfreight costs, duty drawback, etc. to promote export; Introducing export credit guarantee schemes to retain export earnings as foreign exchange; Providing financial supports for the backward linkage industries of this sector; Exempting tax and VAT from export of this sector much like what to done with Ready Made Garments (RMG); Exempting VAT, which is at present 15%, on import of sewing machine needles and parts; Introduce open account facilities or easier import terms in place of L/C should be introduced to promote export in this sector; Developing and introducing new and innovative payment terms for buyers to retain competitive advantage; Adjusting national currency carefully to other currencies, especially that of the international competitors' or introducing dual exchange rate to support export of this sector; Providing long-term tax holiday to encourage local and foreign investment in this sector;

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An Overview of LEATHER & LEATHER GOODS INDUSTRY, BANGLADESH

1. Market Report, Fashion Trends and Forecasts up to 2008, Steve Lee, Sam 4/2008 2. Export from Bangladesh 1993-2008, Export Promotion Bureau, Dhaka. 3. Annual Report; quarter 2009, 2010. a. Apex Tannery b. Bata Show c. Samata Leather d. Legacy footwear e. Apex Adhelchi footwear 4. www.dsebd.org 5. World Bank report; Bangladesh Growth & Export Competitiveness 6. The hindubusinessline.com 7. National Dailies of Bangladesh.

Managerial Communication

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