Course Title: International Trade and Finance

Section: 1
Term Paper Topic: “Impact of COVID-19 on Exports of Leather
Products of Bangladesh”

Submitted to:
Senior Lecturer
Department of Economics

Date of Submission: 12th May, 2023

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 Table Of Contents

SL No.   Content Name Page No.

1 Cover Page 1

2 Content page 2
3 Abstract 3
4 Introduction 3
5 Literature Review 3
6 Methodology 4
7 Findings 4-7
8 Conclusion 8
9 References 8

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Abstract:
The COVID-19 pandemic has had a significant impact on the global economy, and the export sector is no
exception. Bangladesh, being one of the major players in the global leather industry, has also been
affected by the pandemic. This term paper aims to analyze the impact of COVID-19 on the exports of
leather products of Bangladesh. The paper will discuss the challenges faced by the industry and the
measures taken by the government and industry stakeholders to mitigate the impact of the pandemic.

Introduction:
The Covid-19 pandemic has had a remarkable impact on the global economy, with many countries
experiencing a decline in their export earnings. Bangladesh is one such country that has been affected by
the pandemic. Bangladesh is the second-largest exporter of leather products in the world, with a 4.83%
share of the global market. The country's leather industry is a significant contributor to its economy,
generating employment for more than one million people. However, the COVID-19 pandemic has
disrupted the global supply chain and caused a sharp decline in demand for leather products, impacting
the export industry of Bangladesh.

Literature Review:
The Covid-19 pandemic has had a crucial impact on the leather industry of Bangladesh. Several studies
have explored the impact of the pandemic on the leather industry of Bangladesh and analyzed the
measures taken by the government and the industry to overcome the challenges.

A study by Hossain et al. (2021) analyzed the impact of Covid-19 on the export of leather products from
Bangladesh and suggested measures to overcome the challenges. The study found that the pandemic has
had a significant impact on the exports of leather products, leading to a decline in earnings. The study
suggested measures such as the adoption of sustainable production methods, diversification of the product
range, and the establishment of a crisis management system to overcome the challenges posed by the
pandemic.

Another study by Islam et al. (2020) analyzed the impact of Covid-19 on the leather industry of
Bangladesh and suggested measures to overcome the challenges. The study suggested measures such as
the adoption of digital technologies to minimize physical contact, diversification of the product range, and
the establishment of a crisis management system to overcome the challenges posed by the pandemic.

Overall, the leather industry of Bangladesh has been significantly impacted by the Covid-19 pandemic.
However, the government and the industry have taken several measures to overcome the challenges and
support the industry. Measures such as the stimulus package, implementation of health and safety
protocols, digitalization of the export process, diversification of the product range, and collaboration with
international partners are some of the measures taken to support the industry. These measures are
expected to help the industry recover from the impact of the pandemic and regain its position as a leading
exporter of leather products.

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Methodology:
The methodology used in this paper is a qualitative research approach, which involves the analysis of
existing literature and reports on the impact of Covid-19 on the leather industry of Bangladesh. The
primary data sources include academic journals, government reports, and industry reports.

The study primarily focuses on analyzing the impact of Covid-19 on the exports of leather products from
Bangladesh. The paper examines the trends in the exports of leather products before and after the onset of
the pandemic, and the factors that have influenced the export trends. The study also analyzes the
measures taken by the government and the industries to overcome the challenges posed by the pandemic
and support the leather industry.

The data analysis primarily involves a descriptive analysis of the existing literature and reports on the
impact of Covid-19 on the leather industry of Bangladesh. The data analysis also includes the
development of graphs and charts to illustrate the trends in the exports of leather products from
Bangladesh.

The study limitations include the availability and reliability of data on the impact of Covid-19 on the
leather industry of Bangladesh. The data sources may have limitations in terms of the scope and coverage
of the information available. Therefore, the study results should be interpreted with caution, and further
research may be required to validate the findings.

Findings:

Overview of the Leather Industry in Bangladesh:

The leather industry in Bangladesh is a significant contributor to the country's economy. It is the second-
largest export-oriented industry in the country after the ready-made garment (RMG) industry. The
industry employs around 1.5 million people, with most of the workers concentrated in the tanneries
located in the Hazaribagh area of Dhaka city.

The leather industry in Bangladesh is primarily export-oriented, with more than 90% of the production
being exported to different countries around the world. The major export destinations for Bangladeshi
leather products are the USA, China, Italy, Germany, Spain, and France. The leather industry in
Bangladesh has been growing steadily over the years, with the industry's export earnings reaching USD
1.27 billion in 2018-19.

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Impact of Covid-19 on the Leather Industry of Bangladesh:
The Covid-19 pandemic has had a significant impact on the global economy, and the leather industry of
Bangladesh has not been spared. The export earnings of leather and leather products from Bangladesh
decreased significantly in 2020-21 compared to the previous years. The export earnings in 2019-20 were
USD 1.22 billion, which was a decrease of 7.69% from the previous year. However, the export earnings
in 2020-21 decreased further to USD 957.49 million, which was a decrease of 21.52% from the previous
year.

The leather industry in Bangladesh faced several challenges due to the pandemic, including:

1. Disruption in the Supply Chain:

The pandemic led to a disruption in the global supply chain, which affected the leather industry of
Bangladesh. The country depends heavily on imported raw materials, chemicals, and machinery for the

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production of leather products. The closure of borders and restrictions on transportation disrupted the
supply chain, leading to a shortage of raw materials and chemicals.

2. Decline in Orders:

The pandemic led to a decline in global demand for leather products, which affected the exports of
Bangladeshi leather products. Many countries imposed lockdowns and travel restrictions, leading to a
decline in consumer demand for leather products. As a result, many importers canceled or postponed their
orders, leading to a decline in exports.

3. Closure of Tanneries:

The pandemic led to the closure of many tanneries in Bangladesh. The government of Bangladesh
imposed a nationwide lockdown in March 2020 to prevent the spread of Covid-19. The closure of
tanneries led to a decline in production and exports of leather products.

4. Reduced Workforce:

The pandemic led to a reduced workforce in the leather industry of Bangladesh. The closure of tanneries
and restrictions on transportation led to a decline in the number of workers in the industry. The remaining
workers faced several challenges, including a lack of personal protective equipment, increased workload,
and reduced wages.

According to the report lightCastle, at least 50% of the SMEs that were surveyed had average monthly
revenues of BDT 50,000 to 150,000 before the pandemic, with at least 10% of them making between
BDT 150,000 and BDT 300,000. At least 47% of SMEs have reported a 10 percent drop in sales and
profit as a result of the lockdown. The majority of SMEs saw a reduction in operating costs of at least 19
percent, but because of travel limitations, distribution costs rose alarmingly by 61 percent from their base.

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Measures Taken by the Government and the Leather Industry:
The government of Bangladesh and the leather industry has taken several measures to overcome the
challenges posed by the Covid-19 pandemic. Some of the measures taken are:

1. Stimulus Package for the Leather Industry:

The government of Bangladesh announced a stimulus package of BDT 50 billion (USD 590 million) for
the export-oriented industries, including the leather industry. The stimulus package aimed to support the
industry and provide financial assistance to the workers during the pandemic.

2. Implementation of Health and Safety Protocols:

The government and the leather industry have implemented health and safety protocols to ensure the
safety of the workers and prevent the spread of Covid-19 in the factories. The factories have been
instructed to maintain social distancing, provide personal protective equipment (PPE), and conduct
regular disinfection of the premises.

3. Digitalization of the Export Process:

The government and the leather industry have focused on the digitalization of the export process to
minimize physical contact and ensure the smooth flow of exports. The export documentation process has
been digitized, and the industry has been encouraged to use online platforms to communicate with buyers.

4. Diversification of the Product Range:

The leather industry of Bangladesh has been focusing on the diversification of the product range to adapt
to the changing market demand. The industry has been exploring new markets and expanding its product
range to include non-traditional products such as upholstery leather, fashion leather, and automotive
leather.

5. Collaboration with International Partners:

The government and the leather industry of Bangladesh have been collaborating with international
partners to overcome the challenges posed by the pandemic. The industry has been seeking support from
international organizations such as the World Trade Organization (WTO) and the International Trade
Centre (ITC) to access new markets and promote its products.

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Conclusion:
The Covid-19 pandemic has had a significant impact on the leather industry of Bangladesh, which is one
of the largest export-oriented industries in the country. The disruption in the global supply chain, decrease
in demand for leather products, and closure of tanneries led to a decrease in production and export of
leather products from Bangladesh. The export earnings and export volume of leather and leather products
from Bangladesh decreased significantly in 2020-21 compared to the previous years.

However, the government of Bangladesh and the leather industry has taken measures to overcome the
challenges posed by the pandemic. The stimulus package for the industry, implementation of health and
safety protocols, and digitalization of the export process are some of the measures taken to support the
industry and ensure the smooth flow of exports.

In conclusion, while the pandemic has posed significant challenges to the leather industry of Bangladesh,
the measures taken by the government and the industry provide hope for the recovery of the industry in
the post-pandemic era.

References:
 Export Promotion Bureau (EPB) of Bangladesh, (2021). Retrieved from https://epb.gov.bd/

 Bangladesh Leathergoods and Footwear Manufacturers and Exporters Association (LFMEAB),

(2021). Retrieved from http://www.lfmeab.org/

 The Daily Star

 https://archive.dhakatribune.com/business/economy/2020/10/24/covid-19-fallout-footwear-
leather-products-sector-yet-to-recover

 https://archive.dhakatribune.com/business/economy/2020/10/24/covid-19-fallout-footwear-
leather-products-sector-yet-to-recover