Govt preparing national plan to boost value addition in leather sector
We have the employment capacity for it, and we have every reason to want foreign currency, Commerce Minister Khandakar Abdul Muktadir says.
The government is preparing a national plan for the leather sector and will shortly announce it, aiming to increase value addition, improve compliance and make the industry more competitive globally, Commerce Minister Khandakar Abdul Muktadir said today (3 September).
Bangladesh must move beyond exporting semi-processed leather and produce more finished leather goods to unlock the sector's foreign-exchange potential, he said at a policy dialogue on transforming the leather sector held at BRAC Centre Inn in Dhaka.
"We have the employment capacity for it, and we have every reason to want foreign currency," said Muktadir, also the minister for industries, and textiles and jute.
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The minister said Bangladesh will seek full duty-free access to the Japanese market for leather and non-leather products, noting that Japan has placed leather in its main negotiation category. South Korea already provides zero-duty access, he added.
The government will also simplify customs and bond-related processes and work to attract Spanish and Italian investment to the tannery estate, said the minister.
He said a design and skills institute near Hemayetpur, jointly managed with industry and an international partner, is expected to begin operating in 2027.
Selim Raihan, executive director of Sanem, and economics professor at the University of Dhaka, said the sector's potential is not in doubt, but coordination gaps among ministries, weak monitoring and unstreamlined incentive structures prevent it from being realised.
According to a policy paper by the South Asian Network on Economic Modeling (Sanem) more than 65% of Bangladesh's hides and skins are exported as low-value crust leather, while processed leather accounts for only 6.8% of the sector's export earnings.
Countries such as China, Vietnam and Italy import Bangladeshi leather and add value before exporting finished products, leaving a significant portion of potential value outside Bangladesh, said the policy paper presented at the event.
The study identified environmental compliance, weak coordination among government agencies, inadequate monitoring, skills shortages, limited product diversification and difficulties in obtaining international certifications as major barriers to growth.
It said the Savar CETP treats 25,000 cubic metres of effluent a day, well below the requirement, while around 20,000 cubic metres of untreated wastewater is dumped daily into the Dhaleshwari River.
Syed Nasim Manzur, president of the Footwear, Leathergoods and Accessories Exporters Association (FLAXA), said the industry needs to shift towards finished products and strengthen backward linkages.
Bangladesh could import raw hides for processing just as it imports cotton for its textile industry, he said, adding that a comprehensive strategy and targeted roadmap could make a $5 billion export target achievable.
According to FLAXA, Bangladesh's footwear, leather and leather-goods exports rose 5.38% year on year to $1.76 billion in FY2025-26. Footwear accounted for about $1.22 billion, while leather products brought in $400.4 million.
Australian Deputy High Commissioner Clinton Pobke said reforms may not benefit every individual business but are firmly in the national interest, adding that decisions over the next two years will determine whether Bangladesh captures more value at home.
