Prospect of Export Oriented Leather Industry in Bangladesh

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1. INTRODUCTION

1.1 Origin

Our honorable teacher, Professor (Dr) Khondoker Bazlul Hoque, Department of

Management Studies, has assigned me to prepare term paper on “Prospect of Export

Oriented Leather Industry in Bangladesh”. This is a term paper for our Course:

International Business and Management (EM-527).

1.2 Why chosen

As a country, we must emphasize more & more on our exports. Our export has been from

garments, which now is now under threat in post GATT era. So, we must concentrate on

other export industries like leather, pharmaceuticals, information technology, etc.

1.3 Objectives

The objectives of this term paper are:

1. To assess Leather industry of Bangladesh.

2. To findout worldwide leather export scenario.

3. To evaluate export prospect of our leather industry.

1.4 Methodology followed

Due to time constraints, mostly I had to depend on secondary data. Information sources

that Ive used, are:

For Information, articles & statistics:

Current Export Policy, Bangladesh Export Data: Export Promotion Bureau Web Site –

www.epbbd.com

Various World Statistics: International Trade Center (ITC), Geneva Web

Site – www.intracen.org

Indian Leather Export Data: Council For Leather Exports Web

Site – www.leatherindia.org

Relevant Articles in Newspapers & Internet

Besides, for industry information Ive talked to personnel of some local leather goods

companies.

. BACKGROUND

2.1 Background

From time immemorial, the arts and crafts of Bangladesh are closely linked to our culture

and heritage. Leather and leather products have always been a part of that heritage and

after the emergence of an independent Bangladesh in 1971, the industry received a fresh

momentum. Bangladesh started exporting crust and finished leather in early 80s and

footwear and other manufactured leather goods during 90s. Export growth in this sector is

highly encouraging. Export of leather and Leather goods (including Footwear) earned

US$217.03 Million for Bangladesh in the fiscal year 2003 (*Note: II). However, there are

still huge development and growth potential for export of leather goods. As it is a labour

intensive industry, there are lots of scopes to increase export in this area.

Export By Major Products (2002-2003) Source: *Note: I

2.2 Sector Highlights

a. The labor-intensive leather industry is well suited to Bangladesh having cheap and

abundant labor.

b. Bangladesh has a domestic supply of good quality raw material, as hides and skins are a

by-product of large livestock industry.

c. Adequate government support in the form of tax holidays, duty free imports of raw

materials and machinery for export-oriented leather market.

d. The industry lacks domestic technology and expertise and local support industries such

as chemicals are still under-developed.

2.3 Industry Outlook

There is already a substantial domestic leather industry, mostly export-oriented. The

leather includes some ready-made garments, although that aspect is continued mainly to a

small export-trade in “Italian-make” garments for the US market. Footwear is more

important in terms of value addition. This is the fast growing sector for leather products.

Most of the livestock base for this production is domestic which is estimated as comprising

1.8 percent of the worlds cattle stock and 3.7 percent of the goat stock. The hides and skins

(average annual output is 150 million sq.ft.) have a good international reputation. Foreign

direct investment in this sector along with the production of tanning chemicals appears to

be highly rewarding.

Having the basic raw materials for leather goods as well as for the production of leather

shoe, a large pool of low cost but trainable labour force together with tariff concession

facility to major importing countries under GSP coverage, Bangladesh can be a potential

off shore location for leather and leather products manufacturing with low cost but high

quality.

2.4 Various leather goods

There are two areas of Leather export:

a. Finished Leather b. Leather Goods.

In both areas are, there are huge prospects to be explored.

There can be many types of leather goods, some of which are:

Leather Footwear:

a. Casual Shoes

b. Sport Shoes

c. Moccasins

d. Safety Boots

e. Monk

f. Oxford

g. Chappals

h. Horachi

i. Sandals Leather Accessories:

a. Bags

b. Wallets

c. Belts

d. Purses

e. Cases

f. Business Organizers

g. Key Chains

h. Picture Frames

i. Jewelry Boxes

j. Briefcase

k. Backpacks

l. Portfolios

Leather Fashion Jewelries:

a. Necklaces

b. Bracelets

c. Hair Clips

d. Chokers

e. Arm Bands

f. Earrings

g. Rings

Leather Furniture:

a. Sofas

b. Chairs

c. Sectionals

d. Recliners

Leather Garments & Clothing:

a. Shirts

b. Jackets

c. Trousers

d. Vests

e. Coats

f. Gloves

g. Shorts

h. Caps

i. Blazers

j. Thongs

k. Overcoats

l. Industrial Clothing

2.5 Current Export Policy

Leather and leather goods industries, alongside readymade garments, computer software

and agro-processing sectors have been declared as Thrust sectors in our Current Export

Policy. Although the leather and leather goods sector has enormous export potential, the

sector has not been able, till date, to achieve desired results. To ensure priority on leather

and leather goods industry, following line of action has been recommended in our Current

Export Policy (*Note: I) :

a. Leather manufacturing units shall be modernized in order to enable them to produce

increased quality of finished leather out of raw hides.

b. With a view to reducing cost of production, steps shall be taken to establish accessories

industries for producing necessary chemicals and other inputs within the country.

c. The existing Leather Technology Institute shall be modernized for use as a Common

Facilities Centre.

d. Necessary credit facilities shall be extended for setting up of leather goods industries

and efforts for marketing the produces shall be strengthened.

e. Cluster industries comprising small units of leather goods factories shall be set up with a

view to generating employment.

f. A Leather Council shall be formed.

g. Industrial units having no bonded warehouse at the same time not interested to avail of

duty draw back facilities shall be entitled to cash benefit in lieu of duty drawback.

h. Import of raw hides including wet blue and pickled leather, shall continue with the

prevailing customs duty (2.5%) and import license fee (2.5%) leviable on the importation