Economic Profile of Bangladesh

Industries
of
Bangladesh
Problems and possibilities
Leather Industry of
Bangladesh
Introduction
The leather industry is the second largest export sector of Bangladesh exporting around $1.2 billion worth of
leather and leather goods annually. In the global leather market of around $210 billion, our market share is
less than 1%.

The leather and its related downstream businesses can claim to be the world's biggest modern business sector
by looking at its products. Leather production generally includes three particular stages: preparation (in the
beam house); tanning (in the tanning yard); and finally finishing with, including dying and surface treatment. 

As indicated by Bangladesh Tanners Association, “the nation produces 220 million square feet (around 20
million square meters) of each year, 64.82 percent of which is leather, 2.25 percent buffalo hide and 1.2
percent sheepskin.
 Background of Leather Industry

• Accessibility of indigenous raw material (hides up and skins) encouraged the

setting up of the business in the mid-1940s in the then East Bengal. The first
tannery in Bangladesh territory was set up at Narayanganj by RP Saha
sometime in the 1940s.

• During Pakistan period (1947-1971), the industry was commanded by non-

Bengali vagrants from India, and the non-Bengali dealers exported a large part
of the produce to West Pakistan for additionally preparing and generation of
leather merchandise.

• A couple of little tanning units was owned by Bengali businessman who

processed leather predominantly for the local market.
 Background of Leather Industry

• After the independence of Bangladesh, the administration assumed control

over the tannery industry relinquished by the withdrawing non-Bengali
business entrepreneurs but had limited success in working them in the public
sector.
• Export of processed leather composed completely of wet blue leather till
1980-81. After 1981, of policy support measures aimed for raising the level of
value addition in the industry provided the incentive for new private interest
in the leather industry.
• The prohibition on the export of wet blue leather in June 1990 prompted the
setting up of modern leather tanning units for the production of outside
leather (tanned leather after further processing of wet blue leather) and finish
leather and this was followed by new investment in leather products industry.
 Economic impact
• As much as 85 percent of the output from the leather manufacturing sector is presently exported. Moreover,
export comprises the top grades of output, the local market being supplied with fifth and sixth grades, or
even lower quality of finished upper leather.
• Bangladesh has a target to achieve a total $60 billion export earnings by 2021 of which $5 billion is expected
to be achieved from LLG.15 But, the probability of achieving the goal within the given timeline is becoming
more and more unlikely as the export growth has not been satisfactory in the last few years.
• The export amount has come down from BDT 505.54 million in FY 2013-14 to BDT 164.62 million in FY
2018-19. One of the main reasons behind the decrease is the degraded condition of the raw hides of the
slaughtered animals.
Economic impact

• Leather Footwear has grown consistently over the years amidst the downturn of leather and leather
products although the growth rate has slowed down in the last 4 years. The growth rate was mainly
driven by the increase in leather footwear exports to United States. Exports of leather footwear to United
States has increased from USD 31 million in 2013-14 to USD.
• Bangladesh exports most of its finished leather to Hong Kong, China and Italy as these countries use
finished leather to manufacture leather goods and leather footwear. Bangladesh exports most of its
leather goods to mainly United States and Japan.
• Indeed, most of the leather exporters from Bangladesh are found to have established a good relationship
with importers from Italy, West Germany, the USA and a number of other developed countries
 Socio-economic
contribution

• According to the World Health Organisation, 90% of Hazaribagh's tanning factory workers would die
before they are 50 due to many diseases resulting from the serious pollution caused by the tanneries.
However, Initiatives are underway to improve the health and safety conditions in leather and leather goods
sector.
• Leathergoods manufacturing sector, including the footwear factories are now free from child labour,
though some of the tanners may still employ some child labourer; The government and the Industry
people appear determined to get rid of this curse.
• The GoB has established the Savar Industrial Park in 2017 which will aid in unemeployment reduction.
 Prospects of Leather Industry
• Bangladesh offers a perfect sourcing diversification opportunity for manufacturing mostly over
dependent on China.
• Proven volume & quality export capability demonstrated by Bangladesh’s position as the world’s 2nd
largest producer of textile apparels after China. Preferential market access to EU, Canada, Australia
and Japan.
• Investment friendly regulation: Bangladesh offers some of the world’s most competitive fiscal and
non-fiscal investment incentives and the most liberal FDI regime in South Asia, allowing 100% foreign
equity with unrestricted exit policy, easy remittance of royalty, and repatriation of profits and
incomes.
• Growing middle class purchasing power: With improving education, health and human development
indicators.
Problems of Leather Industry

• The relocation of tanneries from Hazaribagh to

Savar is being delayed due to the owners reluctance
to move.
• The lack of developed backward linkages is creating
regular shortages in raw hides and skins, also
leather processors are dependent on importing
machinery and inputs for production (chemicals).
• There remains the problem of insufficient measure
to address the environment pollution, health and
safety issues by the tanneries.
Thank you for
your attention