Bangladesh's leather exports are recovering slowly but surely and the industry is ready to move forward if long-identified bottlenecks are removed.
This rosy outlook was presented at a webinar on Tuesday.
Global footwear market, which now stands at $1 billion per day and forecasted to reach $530 billion a year by 2027, offers limitless potentials for Bangladesh. But there are things to be considered if local leather industry wants to compete more viably in the export market, Apex Footwear Limited Managing Director Syed Nasim Manzur said at the webinar.
He said daily global footwear sales amounted to $300 million and this demand would not fall.
He further said brands still wanted durable leather, but the rise in logistics and shipping costs posed a challenge for Bangladesh's leather industry.
Giving an impressive picture of Bangladesh's leather goods export even during the pandemic, he said that in six months of 2021 (till June), total export of leather & leather products grew 54% to $495.56 million from $321.77 million in 2020. The growth was 18% last year, though it was 1.65 percentage point less than in 2019.
In his presentation titled "Back to the Future: Towards a sustainable leather industry," the leather industry whiz-kid said 'Made in Bangladesh' tag was gaining ground for shoes and bags and Brands wanted sustainable leather for which new investment and talents needed to be attracted with effective policy focus.
Many buyers are watching development at Savar tannery hub where firms are improving. There are huge opportunities for export growth and job creation, but to get full benefit of global market potentials, the first thing Bangladesh needs is to get the corporate social responsibility (CSR) aspects right at Savar, Nasim Manzur pointed out.
As the leather industry labels leather as a "sustainable" material, the current Savar tannery hub remains a major sore that captures every conversation. A properly structured Bangladesh leather industry should be able to take some of the business that will leave China as costs there rise and companies put resilience into their supply chains, said the leading industrialist in leather footwear.
To move forward, Nasim said the industry needed to identify and engage proven world-class solution providers for design, supply, installation, financing and operations. At the same time, local skills should be encouraged in leather engineering and public-private monitoring of factory performance.
Alignment with Leather Working Group (LWG) protocols must be ensured to help the industry achieve global standards, he pointed out. LWG audit is a globally-accepted assessment of environmental compliance in leather industry.
"Build a viable financial model and offer eligible Tannery Owners customized financial exit so those who remain may grow & serious new entrants can invest," the leading leather goods exporter said, suggesting that good practices should be incentivized with green tax breaks, duty free import of all capital equipment related to ETP and materials needed for sustainable operations.
RAPID Executive Director Dr M Abu Eusuf said all three leather items - leather, leather goods and footwear – had seen a growth last year, which should continue.
Compliance at all levels is very important to this end and tannery workers should be given training, he added.
Dr M Abu Eusuf, who is also the director of the Centre on Budget and Policy, Dhaka University, made a presentation titled "Reviewing the leather sector: Way forward for overcoming the barriers." He said exports of leather and leather goods were about to rebound.
Referring to the barriers to the further growth of the sector, he said obtaining LWG Certification will be a far cry without a properly functional central effluent treatment plant at Savar with solid waste management, chrome recovery unit and water treatment and reuse system.
He also put emphasis on efficient supply chain and backward linkage management with improvement in skills in cattle production, flaying and curing and modernised abattoir facililities.
Professor Abu Eusuf also focused on proper Rawhide management during Eid-ul-Adha, the main season for raw material supply for the local leather industry.
RAPID Chairman Dr Mohammad Abdur Razzaque said local trade in leather goods had declined by 22% in the pandemic, much higher than the 10% fall in global trade.
The use of non-leather products and prices of raw materials have been rising globally, creating challenges for the leather sector. Big brands are leaving China, and Bangladesh has great business potential if it can take advantage of the situation, Abdur Razzaque said.
There should be a mega plan to fix the problems of the Savar tannery estate and attract foreign investments, he added.
Salman F Rahman, private industry and investment adviser to the prime minister, slammed the Bangladesh University of Engineering and Technology's (Buet) Common Effluent Treatment Plant (CETP) design for the Savar tannery estate. He said the Buet had repeatedly made faulty designs but did not acknowledge doing so.
He said the faults should be fixed, and a foreign company was already working on that.
The business leader also said the prime minister had agreed to provide facilities enjoyed by the apparel industry for all sectors.
He said it was clear that non-apparel sectors would also do well if they were given these facilities. He added that he would ask the commerce ministry to work on that.
ERF General Secretary SM Rashidul Islam moderated the event, which was chaired by the forum's President Sharmeen Rinvy. The Asia Foundation's Country Representative Kazi Faisal Bin Seraj delivered the welcome address.
Former adviser to the caretaker government Syed Manzur Elahi was the guest of honour while Secretary of the commerce ministry Tapan Kanti Ghosh; Bangladesh Finished Leather, Leather Goods, and Footwear Exporters' Association Chairman Mohiuddin Ahmed Mahin; and Chairman of Bangladesh Tanners Association Md Shaheen Ahamed joined as special guests.