Leather industry losing momentum amid policy neglect, compliance failures: Experts

Bangladesh's leather industry, once considered a promising avenue for export diversification and industrial growth, is gradually losing its competitive edge due to policy neglect, environmental compliance failures, financing constraints and weak institutional support, industry leaders and experts said at a policy dialogue today (6 June).

The observations came during a webinar titled "Is the Future of Bangladesh's Leather Industry Losing Its Momentum?" organised by the Power and Participation Research Centre (PPRC).

Participants said that despite offering up to 80% value addition potential and playing a significant role in export earnings and employment generation, the sector continues to grapple with longstanding structural challenges.

Speaking at the event, Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association (BFLLFEA), said environmental facilities promised during the relocation of tanneries from Hazaribagh to Savar's Hemayetpur remain incomplete.

"The environmental facilities that were the main reason behind the shifting from Hazaribagh to Hemayetpur are yet to be given to us. Because of this, we have also lost customers," he said.

He added that the absence of adequate compliance infrastructure has undermined the industry's credibility among international buyers and limited the growth of smaller businesses within the leather value chain.

Jennys Shoes Ltd Chairman Nasir Khan identified cumbersome licensing procedures, tax-related harassment, ineffective incentive structures and limited value addition as major obstacles facing the sector.

Drawing comparisons with Vietnam, he said Bangladesh has yet to establish the policy and business environment necessary to compete effectively in global leather markets. He also criticised the country's tax regime, arguing that it discourages multinational companies from operating in Bangladesh.

Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), warned that Bangladesh could face additional challenges under the European Union's Carbon Border Adjustment Mechanism (CBAM) if exporters fail to comply with emerging environmental standards.

"Bangladesh must prepare for CBAM, as failure to meet new environmental standards could weaken the competitiveness of our exports," he said.

Professor Abdus Sattar Mondal called for reducing leather waste by at least 50% within a year through stronger monitoring mechanisms and improved preservation practices.

Moderating the session, PPRC Executive Chairman Hossain Zillur Rahman said future interventions must address environmental, economic and institutional challenges simultaneously to ensure the long-term sustainability of the leather industry.