RMG-like support can boost annual leather shipment to $5b by 2030: Exporters

Highlights:

• Exports can even reach $10b by 2035
• Semi-operational CETP hampering export growth
• Absence of international certifications makes products less competitive
• Tannery owners not paying utility bills on time causes systematic strains

Bangladesh's leather industry could achieve an annual export target of $5 billion by 2030, potentially doubling to $10 billion by 2035, provided it receives financial incentives and policy support similar to those extended to the ready-made garments (RMG) sector, according to exporters. 

This ambitious projection was put forth by Syed Nasim Manzur, president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, during a focus group discussion organised by the Dhaka Chamber of Commerce and Industry (DCCI) in Dhaka today (25 May).

Nasim, who also serves as the managing director of Apex Footwear, said leather exports have stagnated between $1.2 and $1.6 billion annually. He attributed this underperformance to several factors.

Despite relocating the tannery hub from Hazaribagh to Savar, the central effluent treatment plant (CETP) is not yet fully operational, which continues to hinder export growth, he said. 

Nasim emphasised that the lack of internationally recognised certifications, such as those from the Leather Working Group (LWG), has made Bangladesh less competitive in the global market, leading to reduced value realisation for its leather products. 

He also pointed out that the absence of compliance within the industry further contributes to its underperformance.

Nasim stressed the need to facilitate an orderly exit for struggling or disinterested firms within the sector, thereby easing access to credit for active entrepreneurs. Additionally, he called for the leather industry to be brought under a single ministry to streamline governance and enable focused development, as it currently falls under multiple jurisdictions.

Adilur Rahman Khan, industries adviser and the chief guest at the discussion, underscored the importance of adopting new technologies, modernising production processes, ensuring environmental sustainability, and maintaining compliance in order to boost global competitiveness. He noted that the industries ministry has initiated steps to establish a comprehensive ecosystem for the leather sector in coordination with relevant stakeholders.

He urged tannery owners to refrain from discharging waste into rivers, citing significant damage to aquatic ecosystems, including a decline in fish reproduction, which adversely affects the fisheries sector and those dependent on it. He also noted that many tanneries are delinquent in paying electricity, water, and other utility bills, which creates operational challenges. He called for the timely payment of these charges.

Saiful Islam, chairman of the Bangladesh Small and Cottage Industries Corporation (BSCIC), said while LWG certification is required for 17–18% of the market, there remains a vast untapped global market beyond that segment, which Bangladesh should focus on.

DCCI President Taskeen Ahmed said the leather sector, second only to RMG in terms of export earnings, holds significant potential for value addition, employment generation, and sustainable industrial growth. "However, Bangladesh has not been able to fully leverage its potential in this sector, contributing less than 1% to the global leather market." 

FBCCI Administrator Hafizur Rahman advocated for extending bonded warehouse facilities to promising export-oriented sectors, akin to those in the RMG industry.