Leather export increases by 6.04%

Bangladesh’s exports of leather and leather goods increased by 6% to $832 million during first eight months of current fiscal year, compared to the same period of the previous fiscal, amid negative growth of major sectors except RMG.

According to Export Promotion Bureau (EPB) data, during July-February period of FY23, Bangladesh earned $832 million, up by 6.04 per cent, which was $785 million in the same period a year ago.

However, the export earning is 10 per cent less than the target of $925 million set for the period.

The exporters and producers of leather and leather products were worried about exports due to the increasing inflation in the United States and European countries triggered by the post-Covid global recession and the Russia-Ukraine war, but their apprehension has started to subside due to the increasing exports.

The export of leather goods in the eight months of the current financial year has increased by about 24 per cent compared to the same period of the last financial year. During the time, footwear exports have increased by 2.48 per cent.

Leather, the second biggest export earning sector, has maintained export growth during this period of global crisis. However, despite the growth in the export of leather products and footwear, Bangladesh is lagging behind in the export of finished leather due to non-compliance of the leather industry.

During the July-February period of the current financial year, leather exports decreased by 14 per cent compared to the same period of the previous year. During the eight months, export of leather was worth $85.68 million which was $100.27 million during the same period of the last year.

Businessmen related to this sector said that the biggest reason for the decrease in the export of leather and leather products than the target is the decrease in the export of finished leather to the European market due to environmental pollution. Export of finished leather fell by 26 per cent compared to the target. Moreover, exports of leather goods and footwear were 8 per cent less than the target.

They think that it is important to increase the capacity of the exporters of the leather and footwear industry to survive in competition with Vietnam, Indonesia, India and Brazil.

The Ministry of Commerce has taken up development projects to increase the capacity of leather and footwear industry. Although the project includes export development plans, there is no major change in export scenario due to lack of effective measures.

According to EPB data, exports of leather and leather products have been steadily increasing since 2010. Exports increased to $1.23 billion in fiscal year 2017-18. Since then, exports of leather and leather products have declined for three consecutive years.

In 2018-19, the export income from this sector decreased to $1.02 billion. During the pandemic, the export income from this sector decreased to $797.6 million in fiscal year 2019-20. However, in fiscal year 2020-21, the export volume of leather and leather products increased by 18% to $941.6 million compared to the previous fiscal year. In fiscal year 2021-22, export earnings from this sector reached a record high of $1.25 billion which was 32% more than the previous year. The export of leather and leather products is on the upward trend in the current fiscal year 2022-23 also.

However, considering the potential of this sector, the government declared leather, leather goods and leather footwear as the ‘Product of the Year’ in January 2017, setting the export target for this sector at Tk 5 billion by 2021.

According to the export outline of this sector set by the commerce ministry, export earnings were $839 million in fiscal year 2015-16 and based on the earning of that year, the government set export targets in two contexts. In the first context, $2.34 billion export target was set for FY2021-21 and $5.52 billion for FY2024-25. The second context set export targets of $5 billion and $17.40 billion respectively.

But, in FY 2020-21, the export target fell short by many times. If the current problems of the leather sector are not resolved, it will be impossible to achieve the target for the next two years.

Pollution affects leather sector exports

Even though the leather industry was shifted to Savar from Hazaribagh in the capital long time ago to prevent environment pollution by waste, the issue is yet to be resolved.

In 2003, the government took up the project of shifting the leather industry from Hazaribagh to Savar to make it environment-friendly. The project was to be completed within three years, but even after 19 years, the industrial city in Savar has not become environment-friendly.

Although the project was not completed, the High Court announced the closure of the leather factories in Hazaribagh in 2017. As a result, all factories were closed. A number of these tanneries were certified by the Leather Working Group (LWG), a global platform. They could export leather to Japan, Korea and Europe-America using the certificate. As the factories in Hazaribagh were closed, the leather factories lost their certificates and licenses.

More than five years have passed since then. Even after such a long period of time, the factories have not yet regained the certificate of LWG as Savar’s leather industry city is not fully prepared. At the same time, no new market was created.

At present, only three factories in the country have received LWG certification. However, due to restrictions, these factories cannot export the products produced using local raw materials. They are manufacturing and exporting goods from imported leather.