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Footwear export potential Bangladesh’s footwear exports will reach $1 bn in current FY

The pace of export of all types of footwear including leather and synthetics has increased. For the first time in the current financial year, the country’s footwear exports will reach 1 billion dollars.

According to the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh, China accounts for 55% of the global footwear market. India and Vietnam also have good positions. Bangladesh ranks 18th in the world footwear market. Bangladesh’s contribution to this sector in the world market is only 1.8 percent.

Figure 1: A worker makes shoes at the factory of Panda Shoes Industries Ltd. in Gazipur on the outskirts of Dhaka, Bangladesh. Courtesy: Xinhua

Orders from China, the main exporter of leather goods, have started arriving in Bangladesh. Orders are also coming from Vietnam. If these opportunities are put to good use, exports will increase further in the future. Tipu Sultan, Secretary-General of the Hyde and Skin Merchant Association in Bangladesh, an association of leather traders, said the demand has increased and prices have risen, so export earnings are rising.

In the first nine months of the current financial year, exports of leather and footwear worth were USD 540 million and synthetic footwear worth was USD 340 million. This is 31.34 percent more than the same period last year.

Ziaur Rahman, Managing Director of footwear exporter Bay, said that some purchase orders have come to Bangladesh from China. Some new buyers have also come to Bangladesh. They will also order in the future. Meanwhile, demand is rising in the United States. All in all, the purchase order is expected to increase further in the coming days.

Figure 2: Exports of leather footwear products.

The footwear industry has shown great potential to reduce the dependence of the garment sector on the country’s export earnings. Exporters hope that there will be a lot of orders in the leather sector as well as readymade garments (RMG). The current positive trend of exports will continue in the days to come.  At one time only leather footwear was made but now there are several factories of cloth and synthetic footwear in the country. Footwear is exported from Bangladesh to 90 countries around the world.

European countries are the main markets for leather and leather products in Bangladesh. However, Bangladesh also exports to the United States, Japan, and a few other countries.

Figure 3: Bangladesh footwear Export scenario.

The footwear factories have become busier as manufacturers have received more export orders. In the meantime, under increasing pressure, some companies have started expanding their factories.

“We are expanding infrastructure and adding new production lines to meet the growing demand for exports,” said Kamrul Hasan, Executive Director of Walkar Footwear. Some companies are also making new investments to increase production capacity. At present, there are 165 footwear and leather factories in Bangladesh, besides; there are 161 tanneries in the country which produce raw leather by processing raw hides.

Investment in leather goods and footwear is growing at a significant rate. However, entrepreneurs are reluctant to make large investments. Manufacturers are already struggling with projects to relocate leather and tanneries. In 2003, the government undertook a project to shift the leather industry from Hazaribagh to Savar to make it environmentally friendly. The project was to be completed in three years. However, after a decade and a half, this industrial city has not yet become environmentally friendly.

Although the project was not completed, the High Court announced the closure of Hazaribagh Leather Factory in 2016. As a result, the government closed all the factories in Hazaribagh. Several of these have been certified by the Leather Working Group (LWG), a global platform for the leather industry. Thanks to this charter, they could export leather to Japan, Korea and Europe-America. Tannery factories have lost certificates and buyers (foreign buyers) due to closure of factories in Hazaribagh.

Even after all this time, the factories have not yet got the LWG certificate back as the leather industrial city of Savar is not fully ready. At the same time, new markets did not emerge or appear. The government has launched Savar Leather Industrial City to create new avenues in the leather industry. Exports will increase – but as of yet – the infrastructure stumbled due to setbacks. So far, this industrial city is not able to play any role in increasing exports. The parliamentary committee has even recommended the closure of the city, which was built at a cost of several thousand crores.

According to the manufacturers, Bangladesh needs to build skilled workers and ancillary industries to build a strong position in the global footwear market. The crisis in the footwear industry has suddenly increased the pressure on exports. The leather industry employs 850,000 workers directly and indirectly. Traders say there are not enough initiatives to create skilled workers.

It is also challenging to complete the export on time. The industry imports most of the raw materials and accessories except leather.

Jahangir Alam, Managing Director of Italy Footwear, said: “We, the manufacturers, are urging government officials to streamline the raw material supply chain.”

The government is giving 15 percent cash incentive for the export of leather footwear and 19 percent for the export of synthetic, textile and other footwear. Entrepreneurs say that in order to increase exports, the services of the concerned government institutions should be made easily available including bond facilities.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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