Bangladesh’s leather industry is missing out on billions of dollars in export earnings due to compliance failures, infrastructure shortcomings and underutilisation of raw materials, according to The Daily Star.
They say problems at the Savar Tannery Industrial Estate continue to limit the sector’s growth and access to premium global markets.
Bangladesh produces around 350-400 million square feet of hides and skins every year and holds about 4% of the world’s rawhide and skin resources, according to Md Mizanur Rahman, professor and director of the Institute of Leather Engineering and Technology at the University of Dhaka.
“The country could generate up to $10-$12 billion in export earnings from its existing raw materials alone if the sector were fully utilised.”
– Md Mizanur Rahman, Professor and Director, Institute of Leather Engineering and Technology, University of Dhaka
Rahman said nearly 30% of the country’s leather is wasted because of poor preservation, limited processing capacity and failure to utilise tannery by-products. He added that the sector offers up to 90% value addition as most raw materials are sourced locally.
He said Chinese buyers often purchase Bangladeshi leather for $0.40-$0.50 per square foot and later sell processed leather internationally for around $2 per square foot, leaving much of the profit overseas.
Rahman also highlighted untapped opportunities in by-products such as collagen, gelatin, fertiliser and animal feed.
He noted that 40-45% of annual rawhide supply enters the market within 3 days of Eid-ul-Azha, creating major pressure on processing facilities.
Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA), said compliance remains the biggest challenge for the industry. Only a small number of factories currently meet the certification standards required by buyers in the US and Europe.
Md Salauddin Ahmed, managing director of New Kajol Tannery Ltd and treasurer of BFLLFEA, said the industry’s troubles began after tanneries were relocated from Hazaribagh to Savar before key infrastructure was fully ready.
Ahmed said several factories still face gas and utility shortages, while the central effluent treatment plant (CETP) has not reached the required operating standard.
These issues have prevented the sector from obtaining internationally recognised certifications, including Leather Working Group (LWG) approval.
“As a result, major European buyers are not coming to Bangladesh. We are largely dependent on Chinese buyers, who currently dictate prices.”
– Md Salauddin Ahmed, Treasurer, BFLLFEA
He said processed leather is currently selling for just $0.50-$0.55 per square foot, while rising import costs for chemicals and a stronger dollar have further squeezed profits.
If we can ensure proper environmental compliance and secure LWG certification, European and other international buyers will return. Then we can sell leather at much better prices and pay higher prices for raw hides as well.
For more details, read the full report on The Daily Star.
