The leather industry has been struggling to attract new investments due to environmental pollution caused by hide processing, lack of product variety and relocation of tanneries to the Savar Tannery Complex which is not fully functional yet. Exports of leather and leather products slumped significantly in FY2018-19 (July–May) compared to the same period in FY2017-18.
According to the Export Promotion Bureau (EPB), the sector has registered a negative growth rate of 5.53 per cent by fetching USD 943.83 million in FY2018-19 (July-May). This figure was USD 999.07 million during the same period of FY2017-18. Shaheen Ahmed, chairman of the Bangladesh Tanners’ Association (BTA), told The Independent that renowned leather producers are moving towards producing artificial leather products to address the global demand as leather prices have soared in the world market since 2013. “We are losing foreign and local investments due to continuous negative growth,” he added. “China used to take raw hide from us to produce raw materials by carrying out further processing. But the US government has signalled the imposition of a 25 per cent tariff on a number of Chinese products (including leather products) entering the US market. Eventually, this decision has affected us badly and China halted taking raw hide from us,” he explained. He also said that in 2013, leather prices went up in the world market, and since then, renowned leather manufacturers in the world started producing artificial leather products to address global demand.
In total, 155 factories have been shifted to Savar. Of these, 125 factories are running and 25 tanneries have fully started operations but are processing only crust leather, he added. He explained that this sector is not getting the advantage of the Central Effluent Treatment Plant (CETP) and is struggling hard to achieve global standards in terms of compliance. Only leather footwear registered a slight positive growth rate of 8.96 per cent, resulting in earnings of USD 557.41 million. This figure was USD 511.58 million during the same period in the FY 2017-18. When asked, Ahmed said import duties on chemicals used for protecting raw hide have increased, affecting the export of crust leather. Crust leather has experienced a negative growth of 6.42 per cent in FY2018–19.
Ahmed, who is also the managing director of Kohinoor Tanneries Ltd, said: “Around 75,000-85,000 people used to work in the tanneries of Hazaribagh before we shifted all the factories to Savar. As a result, many people have lost their jobs. This has hit the exports of leather goods.”