Govt moves to revive sick leather sector

Sohel Hossain Patwary

The government has moved to take a set of initiatives to fully utilise the potential of the leather sector in the wake of a continued fall in leather and leather goods exports.

A recent meeting of a ‘leather task force’ has decided to review the existing duty and tax structure, taking steps for getting Leather Working Group (LWG) certification for leather exporters to help boost exports.

The government formed the task force in October last year to help the sector recover from the stagnant export situation in the sector.

The task force also stressed the need for an extensive move towards product development, market and product diversification in a bid to increase exports.

The Cabinet Division formed the 29-member task force comprising ministers of industries, commerce and environment, state minister for industries, chairman of the National Board of Revenue (NBR) and leather sector representatives.

In its first meeting held recently, the task force members said the raw materials of leather and leather goods have seen significant changes in its import duty structure.

Also, the leather and leather goods exporters have to pay additional duty, tax and fees including supplementary duty, value-added tax, advance tax, regulatory duty and advance trade duty.

Owing to the fact, the country’s leather and leather goods exporters are losing their completive edge in the global market.

Considering the fact, the task force has decided to review to restructure the duty system for the sector.

Bangladeshi leather and leather goods manufacturers are not getting adequate orders from global buyers due to the lack of LWG certificate.

The Leather Working Group (LWG) is a global platform made up of brands, retailers, leather manufacturers, suppliers and technical expert.

A certification from the LWG is crucial to get orders from top buyers. But Bangladeshi exporters are not getting the certificate mainly due to compliance issues.

The taskforce learned that a leather manufacturer needs to get 1355 points in 18 categories to get the LWG certificate. Of the total points, 200 points allocated for CETP and Waste Management and rest on other issues.

To get the LWG certificate, the task force decided to review the overall requirements for getting points and will take initiatives with the stakeholders, said the meeting sources.

Leather and leather goods exports continue to fall

Despite being the country’s second-largest export-earning sector, leather and leather exports continue to fall in the last one year.

According to Export Promotion Bureau (EPB) data, leather sector’s exports declined by 10.78 percent in the first seven months of FY 2019-20.

During the June-January period, this thriving sector earned only $558 million, down from $626 million during the same period a year ago.

In 2018-19 fiscal, Bangladesh fetched $1.01 billion in export income from the leather, leather goods and leather footwear sector.

The government later set a target to earn at least $5 billion from the leather sector by 2024. While Bangladesh’s exports continue to fall, countries like Vietnam has seen a 14 percent rise in their exports.

Mohiuddin Ahmed Mahin, Chairman of RMM Leather Industries Ltd, said lather and leather products sector showed a very positive growth since 2015.

But the growth turned negative in the last one and half years due to the disruption caused by the relocation of tanneries, some compliance issues and lack of product diversification, he said.

He also urged the government to come up with new initiatives and policy support to help this potential sector flourish.