One of the promising export sectors of Bangladesh, the leather sector has been struggling. After apparel, the leather, leather goods and leather footwear is the lone sector fetching over $1 billion from export every year since fiscal 2011-12 except for last fiscal year.
On top of it the COVID-19 pandemic reduced the global consumption of leather products – the leather exports in the month of July was down by 15.23% to $106.1 million, according to data from the Export Promotion Bureau.
While in FY 2019-20, export earnings from leather and leather goods fell 21.79% year-on-year to $797.6 million.
One of the main barriers of the leather sector is the central effluent treatment plants (CETPs) at the Savar Tannery Industrial Estate (STIE) is not complete yet. Which started in 2014 and it was scheduled to be completed by 2017.
Leather exporters face delays in obtaining LWG certificates as Bangladesh Small and Cottage Industries Corporation (BSCIC), the authority of the estate, cannot finish construction of a central ETP at the site in spite of taking a project in 2012.
Considering all these factors the govt. decided to boost the export of leather goods by permitting construction of effluent treatment plants (ETPs) by individual tanneries inside the Savar Tannery Industrial Estate (STIE) in a bid to accelerate the procedure of obtaining must certification from the Leather Working Group (LWG).
This certificate is a must as EU and USA buyers refrain buying leather goods from non-compliant factories in Bangladesh that are yet to be certified by the LWG. Though some exporters sell tanned leather to some Chinese companies at rates 40% lower than those prevailing in the international markets. The Chinese importers reprocess those goods as per international standards.
Many internationally reputed brands do not show interest in sourcing leather and leather goods from Bangladesh only because of the absence of the LWG certification. Making LWG certification very vital for the country. Which will help create more demand for locally made leather and leather goods, which, in turn, will increase the demand for rawhides in the country.
Experts estimate that if Bangladesh obtains the LWG certification and the government formulates proper policies, the sector can grasp the $5 billion export target by 2024.
Besides, as Bangladesh is a foremost manufacturer of rawhide, the manufacturers and exporters of leather and leather goods will be able to get the raw materials easily, which will aid in reducing the lead time.
Around 155 tanneries have invested Tk 7,000 crore inside the STIE, at the same time employing nearly 50,000 people.