Leather sector poised for fresh funds

The leather industry logged robust growth in fresh investment proposals in the first eight months of the fiscal year, riding on the growing popularity of Bangladeshi wares globally.
Between July and February, local leather companies placed investment proposals of Tk 399.22 crore to the Board of Investment, whereas the amount for the whole of fiscal 2012-13 stood at Tk 290.76 crore, according to Bangladesh Economic Review 2014.
Aniruddah Kumar Roy, managing director of Footbed Footwear Ltd that exported around Tk 182 crore during the July-May period, said the sector's huge growth potential is the reason behind the spike in investment proposals.
“Bangladesh can now produce quality footwear at competitive prices, so many companies are pouring fresh funds to set up shoe factories or expand operations,” said M Abu Taher, chairman of Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association.
Tannery owners too are investing money for relocating their hazardous factories from the capital's Hazaribagh to Savar, he added.   
BoI also registered Tk 30.94 crore of fresh investment proposals for foreign or joint venture projects during the July to January period, whereas the amount was Tk 57.29 crore in the whole of fiscal 2012-13.
Many foreign companies are relocating their factories from China to Bangladesh for cost advantages, Saiful Islam, managing director of Picard Bangladesh, a Bangladesh-Germany joint venture, told The Daily Star earlier.  
Picard has shut down its operations in China due to increased production costs and scarcity of workers and is now diverting its investment to Bangladesh, he said.
The company has recently set up a 250,000 square-foot plant at Zirabo in Savar to export leather trolley-bags and other high value-added products.
China produces around $90 billion of footwear and $39 billion of leather goods, which account for 65 percent and 35 percent of the global demand respectively, according to Roy.
But it is also facing a number of challenges such as anti-dumping tax imposed by the European Union, strengthening of renminbi by 20 percent against the dollar.   
As a result, China's leather industry is now shifting to Bangladesh, Vietnam, Cambodia, Pakistan, India and Myanmar.
Between July and April, the leather industry exported $1.06 billion of products, whereas the export receipts for fiscal 2012-13 stood at $980.67 million, according to data from the Export Promotion Bureau.
Of the leather exports, 60 percent goes to the EU, 30 percent to Japan and 10 percent to the rest of the world, according to industry insiders.