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The Financial Express
Swasti Lankabangla Swasti Lankabangla

Covid spells leather woes

| Updated: August 10, 2020 09:56:28


Covid spells leather woes

The Covid-19 pandemic has worsened the woes of the country's leather industry, insiders say.

They said the sector has already been reeling from the falling demand for products in the global market and incomplete relocation of tanneries to the Savar Leather Industrial Park.

The industry continued to lose its global market share for last few years and its export earnings gradually declined to US$ 797.6 million in FY'20 from US$ 1.23 billion in FY'17.

According to the industry players, the government in 2003 undertook a project to shift the industry to Savar on environmental ground, but could not complete it yet in last 17 years, intensifying the difficulties of the industry.

General secretary of Bangladesh Tanners Association Shakhawat Ullah said the sector started witnessing a reverse picture of its growth from 2017 when the government shut the tanneries and asked them to shift from Hazaribagh. The industrial park was not ready for operation though.

"The central effluent treatment plant (CETP) at the industrial estate has not been fully operationalised yet. This is very unfortunate," he said.

Because of the incomplete relocation, many factories lost the certificate of leather working group (LWG), a global body for compliance and environmental certification in the leather and leather goods sector, he said.

"The ongoing pandemic worsens the situation further," he added.

Md Imam Hossain, owner of ABS Tannery Limited, said people have been talking about too many issues over the drastic fall of the export earnings.

"The major problem is incomplete relocation. Why the CETP cannot be made operational over the years? Why we're not getting LWG certification?" he questioned.

As a result, the sector continued to lose buyers and export earnings, he added.

"This non-compliance issues also discouraged the tanners to procure more salted rawhides as they have stock of hides which remained unsold amid the fall of orders from the international market."

When contacted, project director of Savar Tannery Industrial Estate Jitendra Nath Paul contradicting with the industry players said that most of the trade in the industry were being dealt by non-LWG certified factories.

"So, it is not true that the businesses are being affected due to the certification. Yes, we can export our leather to the USA and UK if we have the certificate and we will get a good price," he said.

He informed that they were developing an emergency dumping facilities at the project site which is expected to be completed by this September.

Mr. Paul also said that they have almost completed the CETP as the fine-tuning works are going on. "For the last several months, it has been functioning to treat the waste. We will be able to completely finish the project by early 2021."

Research director of the Centre for Policy Dialogue Dr Khondaker Golam Moazzem expressed his dissatisfaction over the slow progress of developing the key industrial hub.

He said leather is one of the country's most promising sectors through which the country could fetch a handsome amount of export earnings annually.

"The government should act promptly and make the site ready as soon as possible so that the sector can turn around strongly," he added.

According to the Export Promotion Bureau (EPB), leather and leather products exports declined by 21 per cent in FY'20 to US $798 million which was $1.019 billion in FY'19.

The exports mainly declined in the last six months (January-June) of the FY'20 amid the Covid-19 pandemic across the globe.

The export earnings also showed a declining trend in the ongoing fiscal year as overall shipment declined by more than 15 per cent in the month of July compared to that of the last year.

Leather, leather products and footwear exports registered an export earning of $89 million in July 2020 which was $106 million in the corresponding period of 2019, the EPB data showed.

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