Hope for rebound fades fast for many Old Dhaka shoemakers

Mohammad Iqbal Hossain (45) came to Dhaka from Bhairab in Kishoreganj in 1988 in search of a livelihood. He joined a shoe factory at Siddique Bazar in Old Dhaka as a worker. Over time, he grew into a skilled shoemaker.

In 2001, Iqbal set up a small shoe factory at a rented house in Siddique Bazar with a capital of Tk60,000 and five workers. The factory was gradually getting bigger, defying various odds and his monthly turnover reached Tk25-30 lakh up until the Covid-19 outbreak in early 2020.  

Before he was forced to suspend production in November last year, around 40 workers were employed in his factory, Iqbal told The Business Standard. 

"The business was in a slowdown because of an uneven competition with imported shoes following an increase in import duty on Chinese raw materials in 2013. I suffered further losses after my factory caught fire just prior to the Covid outbreak.

"Even after that, I resumed my business borrowing Tk10 lakh from a bank and another Tk20 lakh from my relatives. But, unable to bear the losses induced by the pandemic over the past two years, I was forced to close the factory completely in November last year," he said.

He further said that in the past they used to buy some raw materials on credit and also were selling products to various retailers on credit. "But the raw material suppliers stopped sales on account amid the pandemic while we could not recover dues from our buyers as many of them have left the business without making the repayment. Now I have got about Tk40 lakh stuck in the market."

Hundreds of small and medium shoe manufacturers in Old Dhaka have suffered the same fate as Iqbal owing to the adverse impact of the coronavirus.

According to the Dhaka Small Footwear Industry Owners' Association, there are about 5,000 small and medium shoe factories in Old Dhaka but at least half of them are now shuttered.

Mohammad Kajal, who had a small factory in Siddique Bazar with 12 artisans, shut down the factory in late 2020. He is now working as a labourer at a shoe factory in his hometown Kishoreganj to make ends meet. 

"A large segment of the people I used to sell to have left the business without being able to deal with corona-induced losses, who owe me Tk7 lakh. It is no longer possible to recover that money. On the other hand, I owe around Tk10 lakh to suppliers of raw materials. They are constantly calling me [on phone] for money but I find no way to repay them."

About 2-3 lakh people were employed in this footwear clustre in Old Dhaka, but around half of them have lost their jobs and shifted to other professions during the past two years of the pandemic.

One such individual is Abdur Rahman. He had been working in a shoe factory in Old Dhaka for 10 years. He moved to his hometown Kishoreganj during the first spell of Covid-induced lockdown in mid-2020.

Because the factory has been closed ever since, he is currently working as an agricultural worker in his village, Abdur Rahman told TBS.

The rise of shoemakers

According to cognizant people, Biharis started making shoes in the Dakshin Maishandi area of Old Dhaka after the partition of India in 1947.

After local artisans learned the work from them, the business was spread to various areas including Bangshal, Siddique Bazar, Alubazar, Malitola Lane, Suritola Lane, Lutfar Rahman Lane, Abdul Halim Lane, Osmangani Lane, Tikatuli, Aga Sadek Road etc.

The industry underwent a lot of expansion in the 80s. After the Biharis left the country following the independence of Bangladesh, Bangladeshi workers kept these factories running and became the owners of them.

Some 5-10% of the raw materials used in this cluster of shoe industry is leather sourced from domestic sources, while the rest of the raw materials such as rexine, rubber, pasting, various chemicals, PU adhesives, heels, insole boards, latex, solution/glue, yarn, soles, stickers, colours, etc are imported from abroad, principally China.

The machines used in these factories are sewing machine, bob machine, dice machine, hunter, hammer, power knife machine, scale, mirror, pencil, etc.

Factory owners and artisans claim the handmade footwear produced in these factories are better than foreign products in terms of quality.

Almost all of the factory owners in the area once used to work as labourers and then artisans. They themselves train new workers. In this way workers become skilled artisans. At present, about 70% of the factory owners and workers here are from Bhairab in Kishoreganj and Narsingdi.

A large portion of the products produced in these factories are sold to reputed companies – such as Bata, Apex, Bay, Jennys – and large footwear shops all over the country.

Pricey raw materials

According to industry insiders, prices of raw materials imported from China have almost doubled during the pandemic.

Mohammad Babu who has been selling raw materials such as soles and heels in Siddique Bazar for 12 years told TBS that before the Covid outbreak he could buy one kilogram of chemical for Tk95-100 but the price now stands at Tk200-230.

Harun-Ur-Rashid, president of the Bangladesh Rexine and Shoe Material Merchants Association, told TBS that sales have dropped by almost 50% amid the pandemic, and that most of the traders are in trouble as many factory owners are not being able to repay their dues.

Mentioning that import tariff on Chinese raw materials has increased to as high as 92%, which was 30-40% before 2013, he said readymade shoes imported from China are, however, subject to only 42% import duty.

Indian traders can import the same product from China paying 45% tax, he added.

Harun-ur-Rashid has demanded the government reduce taxes on raw material imports and increase tariffs on foreign shoe imports to stabilise the domestic market and keep local entrepreneurs afloat.

Calls for govt assistance

Mohammad Bappi Sarkar, general secretary to the Dhaka Small Footwear Industry Owners' Association, said, "50% of our shoes are sold in three months before and after Eid-ul-Fitr but we could see expected sales in the last four Eid festivals due to the coronavirus-induced lockdowns. We also did not get any incentive from the government."

He urged the government to take measures to help the affected shoe manufacturers survive.

"We urge the government to come up with immediate financial assistance, technical training, easy-term and low-cost bank loans, installation of modern machinery etc."

He also asked for increasing tariffs on shoe imports.

Asked about the matter, Mafizur Rahman, managing director of the SME Foundation, told TBS that they will initially assess the footwear industry in Old Dhaka and then will officially provide them with advanced training and state-of-the-art equipment.

"Also, if we get the opportunity to pay incentives in the future, then the footwear industry of Old Dhaka will definitely get priority," he said.