Leather maintains healthy export growth despite global crisis
Despite the raging global economic crisis, Bangladesh's leather and leather products sector witnessed a 17.56 per cent year-on-year growth in export earnings in the first five months of the current fiscal year on the back of orders shifting away from competitors.
In July-November, exporters earned $537.50 million from the shipment of leather and leather products. It was $456.85 million during the corresponding period in the previous financial year, data from the Export Promotion Bureau (EPB) showed.
The leather footwear segment fetched $328.19 million during the five-month period, up 17.55 per cent year-on-year, while leather products brought home $153.74 million, an increase of 26.89 per cent.
Leather shipment was, however, down 1.61 per cent at $55.57 million.
The sector suffered severely in 2020 and partly in 2021 as orders slumped for the coronavirus pandemic. But it did not take much to make a comeback.
As a result, leather, leather goods and footwear exports from Bangladesh reached a 10-year-high of $1.25 billion in the last fiscal year that ended in June, since orders flocked to the country as importing countries reduced their dependency on China and other producing nations amid the Covid-19 pandemic.
Nasir Khan, managing director of Jennys Shoes Ltd, a footwear exporter, says the export volume of leather products and leather footwear has gone up thanks to the higher demand ahead of winter and Christmas.
"Some manufacturers did well in July-November."
Khan is, however, not sure whether the current export trend would continue during the rest of the financial year as the global crisis, driven by the Russia-Ukraine war, shows no sign of abating anytime soon.
The entrepreneur urged the government to resolve the challenges facing the sector regarding using the bonded warehouse facility and sought cooperation from the National Board of Revenue and the customs department to this effect.
"If we get the necessary support, exporters will be able to lift earnings to a much higher level as there is a huge potential sector for export."
According to Khan, though the export performance of the sector is growing, it is far below the expectation.
"The sector is still un-organised. Manufacturers can't collect raw materials and accessories on time. As a result, they struggle to maintain the lead time."
Mohammed Nazmul Hassan Sohail, managing director of Leatherex Footwear Industries Ltd, described the export growth as insignificant compared to the pre-pandemic period.
"If the export growth surges 60 per cent, then it would be considered a better performance," he said.
Although the EPB data portrays a better export performance of footwear and leather goods, the scenario for manufacturers is not that rosy, according to the vice-president of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh.
"My export order is still 40 per cent below the pre-pandemic level."
He said the non-leather footwear sector is doing better than the leather sector due to the increasing global demand for footwear items made from low-priced synthetic.
The global synthetic leather market is expected to reach $66.84 billion by 2030, growing at an average rate of 8 per cent annually in the decade, according to a study.
The shipment of leather goods is gaining momentum despite the crisis induced by the Russia-Ukraine war, according to manufacturers.
"The higher quality of leather in Bangladesh and the improvement in designs have attracted foreign buyers. This has driven up the export of leather goods," said Rubina Akter Munni, owner of Design by Rubina, a leather goods manufacturer and exporter.
According to the entrepreneur, Bangladeshi manufacturers can offer comparative prices as raw materials are available locally.
"I have received export orders even from Japan and Poland."
If the Savar Tannery Industrial Estate receives the certification from the Leather Working Group (LWG), the shipment would receive a huge boost, said Munni.
In the absence of the accreditation, local exporters have to export leather at rates about 40 per cent lower than the going rates in the international markets to China, which accounts for about 60 per cent of the tanned leather produced in Bangladesh.
Similarly, finished goods exporters have to import rawhides from LWG-certified factories in other countries to ship products to developed markets.