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Export status of leather industry in Bangladesh

Export status of leather industry in Bangladesh
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Bangladesh leather industry makes leather-based products such as garments, shoes, belts, bags, and jackets, suitcases, wallets, and some fancy items. These products are sold both in the domestic and foreign markets. Leather footwear is the fastest growing segment of the leather industry. Bangladesh meets the demand for about 10% of the world’s total leather market.

According to the Leather Goods and Footwear Manufacturers’ and Exporters’ Association of Bangladesh (LFMEAB), the domestic demand of leather footwear and goods was worth about Tk. 160 billion but 40 percent of the demands are met by importing goods from abroad.

The leather industry, country’s second largest export-earning industry, is observing a continuous decline in export earnings. According to the data of Export Promotion Bureau (EPB), export earnings from the leather and leather products declined by 16.11% to US$434 million in the five months of the fiscal year 2018-19, which was US$518 million in the same period last year.

In fiscal 2017-18, according to data from the EPB, export of leather, leather goods, and footwear were USD 1.08 billion. In 2016-17, Bangladesh exported leather and leather goods worth $1.23 billion, compared with $1.16 billion in the previous fiscal year. Export earnings from the leather & leather products declined by 16.11% in the five months of the current fiscal year. Therefore, it shows that the sector is not having a strong and remarkable growth.

Fiscal Year Export Earnings (in billion US$)
2013-2014 1.12
2014-2015 1.13
2015-2016 1.16
2016-2017 1.23
2017-2018 1.08

Export destination
About 85% of leather and leather products of Bangladesh are exported abroad, mostly in the form of crushed leather, blue wet leather, finished leather, leather garments, and footwear. Most of the leather and leather goods are exported to the EU, the US, Australia, Japan, Singapore, and South Korea etc.

Leather and leather goods foreign market for Bangladesh
EU, USA, Japan, Australia, Singapore, South Korea

Investment trend
At present, Bangladesh has 165 footwear and leather factories, in addition, the country has 161 tanneries that process raw hides into finished leather. Investment in leather goods and footwear has been rising significantly. Bangladeshi entrepreneurs are investing in compliant factories to produce high-quality footwear that will eventually reduce the dependence on the import of leather goods.

Mohammed Nazmul Hassan, Vice President of the Leather Goods and Footwear Manufacturers’ and Exporters’ Association of Bangladesh (LFMEAB) and Managing Director of Leatherex Footwear Industries Limited told, “Every year, 15–20 new leather products and footwear factories are being opened in the country.”

China is still the biggest leather product sourcing country in the world, but if any buyer wants to buy leather footwear from China must give 17 percent import tax to the Chinese government.

“We export footwear at zero percent tariff rate and that’s perhaps another reason why foreign buyers are eager to come and invest in Bangladesh,” he said.

According to the data LFMEAB, wages have increased in competitor countries like China by 19 percent, followed by Vietnam, 14 percent; India, 13 percent; and Indonesia, 30 percent. Because of higher wages, a lot of foreign leather products and footwear manufacturers have been compelled to shut down their businesses in those countries, said LFMEAB officials.

Source: Online/SZK

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