Govt has think of a solution to the hurdle to higher leather exports
The government will allow construction of effluent treatment plants (ETPs) by individual tanneries inside Savar Tannery Industrial Estate (STIE) in a bid to expedite the process of obtaining much-needed certification from the Leather Working Group (LWG) to improve export of leather goods.
Exporters now face delays in getting LWG certificates as Bangladesh Small and Cottage Industries Corporation (BSCIC), the authority of the estate, cannot complete construction of a central ETP at the website despite going for a project in 2012.
The groundwork for the CETP were only available in 2014 and it was supposed to be completed by 2017.
The UK-based LWG is made up of member brands, retailers, product and leather manufacturers, chemical and machinery suppliers, technical professionals and other companies that work together to keep environmental stewardship protocols specifically for the leather manufacturing industry.
Obtaining recognition from the group is a prerequisite for just about any country to market leather and leather goods at international rates.
As European and American buyers usually do not buy goods from non-compliant factories in Bangladesh that are yet to be certified by the LWG, exporters sell tanned leather for some Chinese companies at rates 40 % lower than those prevailing in the international markets.
The Chinese importers reprocess those goods as per international standards.
The construction of the CETP has been delayed for several reasons, just like the change of project directors for a number of times over the years, fund crisis, legal dilemmas, bureaucratic tangles and delays due to Chinese engineers.
Up to now, Tk 879 crore has been spent on the CETP, said Jitendra Nath Paul, project director of the STIE.
"I hope this time around we will be in a position to build the CETP as the construction of the primary part is complete."
Work for just two waste dumping stores is going on, which is likely to be complete over another two months.
"We will be ready to dominate the CETP from the construction company by December."
Once the CETP is ready, the authorities will make an application for LWG certification in order that Bangladeshi companies can export more and get better charges for their leather and leather goods, Paul told The Daily Star over the telephone.
"We are preparing to let individual tanneries build their own ETPs in the estate," said Md Jafar Uddin, commerce secretary.
The LWG certificate can help Bangladesh grab a bigger share of the international market and ensure better charges for locally produced goods, he said.
The government has taken some programmes to increase export, add more value and create jobs in the leather and leather goods industries, which is the second-highest export earning sector after apparel, he said.
The leather and leather goods industries generate fully value-added products and the majority of the raw materials are given by residents, he said.
"We are working to attain the target of exporting $5 billion worth of leather and leather goods by 2024," Uddin said.
Last month, the federal government took a project titled Export Competitiveness for Creating Jobs with the view to creating skilled manpower, he said.
The local manufacturers will also be in a position to hire skilled persons to learn through this project, he said, adding that the project can help diversify markets and products.
"I believe the export target of $5 billion is achievable as the major markets just like the EU and the US would be opened up once we have the LWG certification," Uddin said.
Currently, the neighborhood leather and leather goods exporters receive 15 per cent cash incentive on the export receipts.
Since, Bangladesh is a major producer of rawhide, the manufacturers and exporters of leather and leather goods should be able to get the recycleables easily, which can only help in reducing the lead time, he said. "That is a major advantage for Bangladesh."
Many internationally reputed brands usually do not show interest in sourcing leather and leather goods from Bangladesh only as a result of the absence of the LWG certification, said Saiful Islam, president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh.
"So, obtaining LWG qualification is important for the country. It will help create more demand for locally made leather and leather goods, which, subsequently, will improve the demand for rawhides in the country."
The demand for leather and leather goods is low now weighed against the pre-pandemic times as persons examine these goods as luxury items, Islam said.
If Bangladesh obtains the LWG recognition and the government formulates proper policies, the sector can reach the $5 billion export target in the stipulated time.
Currently, three local leather and leather goods manufacturing companies have the LWG certification and they are doing good business with their international trading partners.
More companies have to have the certification, Islam added.
Monitoring would be very difficult if the government allows the construction of the ETPs by individual companies as there are 155 tanneries within the STIE, said Md Shaheen Ahmed, president of the Bangladesh Tanners Association.
Up to now, two companies applied to BSCIC for obtaining permission to construct the average person ETPs, he said.
About 155 tanneries have invested Tk 7,000 crore within the estate, employing nearly 50,000 people.
Across the country, the leather, leather goods and leather footwear industries have invested $1 billion in upwards of 1,200 factories, where multiple lakh people work.
Of the total commercial units, 200 are engaged in export.
The leather, leather goods and leather footwear may be the only sector after apparel that has been fetching over $1 billion from export annually since fiscal 2011-12 save for last fiscal year.
In fiscal 2019-20, export earnings from leather and leather goods fell 21.79 % year-on-year to $797.6 million, according to data from the Export Promotion Bureau.
