An Assignment on

“Bangladesh Leather industry status, prospects

& challenges”

Submitted to

Dr. M. Abu Eusuf

Submitted by
Ashique Bin Iqbal
MDS-3
R/N-1703122

Date-24.11.2018
 Bangladesh Leather Industry Status, Prospects & Challenges

Bangladesh's leather industry is the second largest exporter of the emerging market
after the ap-parel industry. The majority of exports in the 2016/17 financial year (July 1st
2016 to June 31st 2017) were USD 537 million on leather shoes (USD 495 million in the
previous year), followed by leather goods with USD 464 million (388 million). The export
of leather footwear rose again by 9 per cent in the second half of 2017, leather goods
were at the same level as in the same period of the previous year.
By contrast, leather exports reached USD 233 million in 2016/17 (USD 279 million), down
29 per-cent in the second half of 2017. The main reason is lower demand for leather in
China. Instead, it is increasingly being processed in Bangladesh into finished products for
domestic and foreign customers.

Leather industry status

Bangladesh’s export earnings from leather suffered a huge drop of over 12% in the last fiscal
year, with manufacturers blaming the forced relocation of the center of the country’s tanning
industry. Of the total earnings from leather in FY18, the Export Promotion Bureau (EPB)
calculated that leather products earned $336.8 million - a year-on-year fall of 27% - even if
leather footwear bucked the downward trend, growing by over 5% to $565.6 million in the last
fiscal year. The leather sector, the second largest export earner after apparel products,
contributed $1.08 billion - or just under 3% - of the total national exports of $36.66 billion in
fiscal year 2017-18.According to Export Promotion Bureau (EPB) data, however, Bangladesh
earned $1.23 billion from the sector in the FY 2016-17.That strong performance had even
prompted Prime Minister Sheikh Hasina to announce leather as the Product of the Year for
2017, saying the government would “boost this industry to reach its full potential”. Since then,
however, the industry’s manufacturing base has been hollowed out with the relocation of the
tanneries from Hazaribagh in Old Dhaka. The move was forced through in April last year when,
following a High Court order, the government cut power and gas connections to the tanneries
to compel the owners to relocate to the purpose-built Savar Leather Industrial Park to the north
of the capital. “So far only 110 tanneries have restarted production (and) because of that, the
production rate is low and that is why export earnings were lower.”

Prospects of Bangladesh leather industry:

The global LLGs market expanded from $75bn in 2000 to $167bn in 2015 – indicating growing
demand around the world and, thus, lucrative prospects for exporting countries. During the
same period, Banlgadesh’s exports expanded by about $1bn (from $200 million to $1.2 billion).
Compare that with China’s expansion of $46bn, India’s $5.4bn, and Indonesia’s $2.7bn in
leather exports. In 2015, Vietnam’s leather and leather goods exports reached almost $8bn --
up from a very negligible amount in 2000. These countries were able to cash in on growing
opportunities by investing to further develop their domestic LLG industries. At present
Bangladesh exports leather shoes, travel bags, wallets, belts and finished leather. The RMM
Leather Industries was the first Bangladeshi company to receive an international award for
production of eco-friendly leather. According to the EPB, Bangladesh earned US$ 1.29 billion
from exports of leather, leather goods and footwear in the 2013-2014 fiscal years; now a new
possibility has opened up for the Bangladesh leather industry with the China’s focus shift away
from the leather sector. The LGFMEA said at least 51 foreign companies have so far expressed
interest in establishing joint-venture footwear units in Bangladesh.

Challenges of Bangladesh leather industry

Like RMG or Jute industries, Footwear is not so long history of reputation in world market for
Bangladesh perspective. This is due to lack of technology, skilled manpower, good processing
plants, and communication. Following barriers and challenges are to faces footwear industries to
grownup:

Technologies: Technology is the first and foremost important thing to build world standard
footwear processing plant. Now a day there is a number of technologies to process the footwear
like Auto CAD, Automatic machines etc.. So we should adopt the new technologies to build our
processing plants. We could communicate with European and North American countries for
modern technologies.

Skilled Manpower: Skilled manpower is other important parameters for manufacturing of

footwear. Educated, hardworking, creative and innovative minded young generations are the
good sources of skilled manpower. They should trained first about the footwear technologies. In
our country, there is only one leather technology college. To compete globally we should build
more leather technologies related institutes in our country to make our people skilled in leather
technology.

Global market reputation: There are some countries in the world that have global market
reputation for footwear. Italy, France, Germany, USA, Japan and some other European countries
have the global reputation for their footwear. They achieved this global reputation for their
modern technology, processing plants and product related skilled man powers. So to get global
reputation, we should take proper private and govt. initiatives in the field of leather technology.

Branding: Branding is the most important aspect to get the global market reputation in footwear
sector. Nike, Rebook, Hushpuppy and some other is world famous reputation in footwear. So we
should take proper steps to develop world famous brand by ensuring attractive design, price and
quality.

Political instability: To ensure said factors, political stability is must. Without political stability
no one can ensure those factors to develop our footwear industries. Our current political situation
is not friendly for developing our footwear industries. So our national leaders should show the
good behave for better stability of our country to encourage for investing foreign invest in our
footwear sectors. Foreign investors are only investing when they found political stability in our
country.
 Power and Utilities: Power and utilities are the first requirement to grow any industries. Like
other industries, footwear industry also needs the power and utilities facilities for processing,
manufacturing of footwear. So our govt. should take necessary steps to provide the power and
utilizes for footwear industry.

Conclusion:
The Government of Bangladesh has identified the leather sector as one with considerable
growth and investment potential ranked fifth in the export earning sector. Currently
Bangladesh produces and exports quality bovine and ovine, caprine (buffalo and cow; sheep
and goat) leathers that have a good international reputation for fine textured skins. However,
the entire leather sector meets only 0.5% of the world’s leather trade worth US$75 billion.
There are about 113 tanneries in Bangladesh that produce 180 million square feet of hides and
skins per year. In addition there are about 30 modern shoe manufacturing plants engaged in
the production of high-quality footwear, with over 2500 smaller footwear manufacturers also
present in the sector. There are around 100 small-to-medium leather goods manufacturers, and
a small number of niche larger manufacturers. The sector directly employs approximately
558000 people. Most of the tanneries do not have proper effluent plants and generate 20
000m3 tannery effluent and 232 tones solid waste per day. Tannery liquid and solid wastes are
a potential pollutant but also have a potential value. Specific technologies to convert wastes are
required. These vary from crude and simple to highly sophisticated and complex. A proposed
new leather park is expected to bring a clear transformation to the leather industry with a
marked increase in production, product diversification and new product lines with increased
sustainability of the sector. Sustainable and cleaner production will be a key issue for the
development without placing burdens on the environment