Can Bangladesh’s leather industry become our next success story?

Bangladesh possesses one of South Asia's strongest rawhide bases, producing approximately 350–400 million square feet of hides and skins annually. During Eid-ul-Adha alone, nearly 40–45% of yearly rawhide enters the market within only a few days. 

Combined with competitive labour costs and manufacturing experience developed through the garment sector, Bangladesh naturally holds strategic advantages in footwear, handbags, belts and fashion accessories. 

Yet leather exports stood at only around $1.145 billion in FY2024–25 despite the global leather goods market being projected to exceed $738 billion by 2030. This enormous gap reflects not a shortage of raw materials, but limitations in compliance, value addition, industrial coordination and long-term planning.

When relocation outpaced readiness

The move of the factories from Hazaribagh was aimed at minimising the high level of pollution around the Buriganga River. A total of 154-162 tanneries got plots in Savar. But, during the transition, significant gaps in implementation were revealed. During the relocation, the Central Effluent Treatment Plant (CETP) which was regarded as the backbone of the estate was not fully functional. 

Environmental infrastructure and environmental compliance systems did not keep pace with the rapid pace of investments made by many industries through bank loans to relocate factories and machinery. Discharge of wastewater and management of the "chromium sludge" have been targeted as issues years later. 

Low competitiveness in operational costs, financial obligations and limited access to high export markets are also major challenges for many industries. Therefore, the Savar experience proved that competitiveness cannot be achieved by the mere relocation of industries unless they are prepared for the environment, and they are effectively administered and coordinated with institutions.

Why LWG certification matters

The leather trade has undergone remarkable changes on the international level during the last decade. Environmental compliance, wastewater treatment, worker safety, traceability and sustainability standards are more and more becoming key concerns of international brands. This has made the Leather Working Group (LWG) certification a crucial entry point into the premium markets around the world. Many people believe that certification is only based on CETP. 

Actually, LWG assesses the management of wastewater from factories, handling of chemicals, energy usage, sludge disposal, traceability and environmental governance. There is a lack of environmental credibility in many industries, given that they are still largely reliant on the central CETP system with no robust in-house treatment systems. 

However, there are several companies in Bangladesh which have proved that international standards can be met. Apex Footwear is currently the only footwear company in Bangladesh with a Gold-rated LWG tannery and a number of others have moved towards LWG Gold.

The hidden arithmetic of value addition

The low value of semi-processed leather exports is one of the major drawbacks of the industry. In the case of Bangladesh, export of leather in wet blue or crust form is much more substantial to other nations, such as China, rather than being processed into leather goods. The gap in the economy is significant. 

The value that may be generated by semi-processed non-certified leather can be about $1 per square foot equivalent value, while the properly finished LWG-certified leather products can generate about $4 – $10 or more per square foot equivalent value. 

Based on the above, industry stakeholders are convinced that Bangladesh might be able to surpass its leather export figure of $5 billion by implementing environmental compliance and certification with a strategic approach and value addition process.

The recurring Eid rawhide crisis

Each year at Eid-ul-Adha, there are the same challenges that the country has to deal with – rawhide spoilage, price instability, poor salting practices, and poor preservation systems. Bangladesh has yet to establish adequate cold storage, preservation centres and an organised collection system after years of discussion. 

This results in the loss of quality in large quantities of rawhide within hours of being collected, thereby lowering the value for exports and eliminating unnecessary economic losses. This regular seasonal disease is a sign of underlying problems in the supply chain and institutional readiness.

Lessons from neighbours

China expanded through industrial scale and technological integration. Vietnam advanced through compliance-oriented manufacturing and integrated supply chains. India diversified across multiple leather product categories and Pakistan developed specialised export niches. 

Bangladesh still possesses major advantages in raw material availability and labour competitiveness, but continues lagging behind regional competitors in environmental infrastructure, certification coverage, branding and coordinated industrial planning.

What Bangladesh must do now

Upgrade CETP and expand factory-level ETPs: The Savar CETP requires urgent modernisation, but sustainability cannot depend on the CETP alone. Large industries should establish in-house ETPs for primary waste treatment, while the CETP should handle advanced treatment beyond factory capacity.

Establish factory-level cold storage: Tanneries should develop their own cold storage and preservation systems to manage the Eid-ul-Adha rawhide surge, reduce spoilage and stabilise supply.

Develop central preservation hubs: Centralised preservation and cold storage hubs may later be developed through public-private partnerships to support smaller traders and strengthen nationwide rawhide management.

Build modern central slaughterhouses: Modern slaughterhouses with hygienic processing, traceability and waste management systems would improve rawhide quality, reduce contamination and simplify international compliance requirements.

Establish hazardous waste facilities: Bangladesh urgently needs internationally compliant treatment and dumping facilities for chromium-containing sludge and leather waste.

Strengthen administration and coordination: The sector's future depends heavily on effective administration. Strong coordination among the Ministry of Industries, Department of Environment, financial institutions, exporters and certification bodies is essential for implementation, monitoring and compliance management.

Form a dedicated technical core group: A small technical core group, supported by foreign expertise if required, should continuously guide compliance, certification and environmental standards.

Prioritise upskilling and training: Regular training in tanning technology, wastewater management, chemical handling and traceability systems must become a sector-wide priority.

Support LWG compliance financially: Industries investing in LWG certification and modern compliance systems should receive soft loans, incentives and financial assistance from the government and banks.

Shift toward high-value finished products: Bangladesh must gradually reduce dependence on semi-processed exports and move toward finished leather goods, footwear and branded manufacturing with higher export value.

A strategic opportunity still exists

Bangladesh's garment industry once began under similarly uncertain conditions before eventually becoming the backbone of the national economy. The leather sector now stands before a comparable opportunity. The country already possesses the raw materials, workforce and manufacturing foundation necessary for success. 

The real challenge is whether Bangladesh can establish the environmental credibility, institutional discipline and strategic industrial vision required to transform leather from a low-value rawhide economy into a globally respected value-added manufacturing industry.

Maj Gen (Retd) Md Nazrul Islam is a former executive chairman of BEPZA, a retired major general of the Bangladesh Army, and a PhD researcher on technology, workforce transformation, and industrial competitiveness.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.