[🇧🇩] Footwear, Rubber and leather Industry in Bangladesh

[Bilal9]

Date of Event: Dec 26, 2024 Source : https://www.tbsnews.net/economy/industry/craftsman-footwear-targets-100m-exports-next-5-years-746322

Craftsman Footwear targets $100m exports in next 5 years​

Craftsman Footwear and Accessories Ltd, an export-oriented shoe manufacturer, has set a target to export shoes worth $100 million by the next five years.

To achieve the goal, the company plans to introduce a double shift at its factory in Gazipur by next year. Currently, it operates three production lines, with the manufacturing of 4,500 pairs of shoes in a single shift daily.

"We want to export $100 million worth of shoes by the next five years," Craftsman's Managing Director Sadat Hossain Salim told The Business Standard.

The company has shipped $7 million worth of shoes in fiscal 2021-22, and has set an export target of around $10 million in the current fiscal year.

Salim added, "Initially, we want to introduce a double shift by the next year to increase the capacity. In addition, we have an expansion plan to build a green building to achieve our goals."

He further said that Craftsman intends to enter the capital market in the SME platform by raising Tk50 million from the public.

"We want to realise the fund from the market through offloading five million shares of Tk10, which will be spent on the company's modernisation, expansion, and bank loan repayment."

The company aims to raise the export volume sufficiently in the next two to three years. For this, it intends to construct new production buildings and separate warehouses.

"We owe a sizable sum to the bank as well. Furthermore, interest rates have lately increased at banks as well. Thus, we wish to arrange capital from the stock market," said Salim.

He mentioned that an application has already been submitted to the Bangladesh Securities and Exchange Commission (BSEC) for enrollment of Craftsman in the SME board, and Green Delta Capital Ltd is acting as the issue manager to bring the company to the capital market.

The journey of Craftsman

In 2017, the Craftsman started operation as a shoe manufacturer for the export market with 35 employees at a small factory unit in Joina Bazar of Sreepur Upazila in Gazipur.

Now, the company has a state-of-the-art manufacturing facility with a 1,00,000-square-foot factory with over 750 manpower.

Sadat Hossain Salim has been inspired to invest in the footwear industry from his professional experiences. Previously he served at several domestic and international companies, including Apex, Partex Group, HRC Group, Duncan Brothers.

Salim mentioned that skilled designers at the Craftsman factory produce a diverse range of shoes that adhere to global standards. The production unit has cutting-edge machinery from Italy and Germany, along with some technological support brought from China.

Shoes such as pami, formal, casual, oxford, moccasin, derby, and high heels are among the productions of the company.

Craftsman Footwear has already received two ISO certifications for product quality and factory environment. It also has C-TPAT and Amfori certifications, said the managing director.

He added that the company imports leather from some compliant tanneries in Asia to maintain compliance in shoe manufacturing.

However, some leathers are sourced by Craftsman from the Chattogram-based tannery Reef Leather, which has the worldwide Leather Working Group (LWG) certification.

"Though our nation is a significant supplier of raw hides, we are losing to China, Pakistan, and India in the competitive market because we do not have LWG-certified leather producers," said Salim.

Craftsman caters to local market too

Craftsman Shoes has already introduced its brand name in the local market and ensured its presence in the online space as well.

Shoes for local sales are produced at a separate unit of the company.

"We have a plan to set up a physical store for local customers," said Salim.

Around 80% of the shoes available in the country are made of synthetic or artificial leather, he said, mentioning, "There is a huge potential for manufacturing of leather shoes and products in the country."

 

[Bilal9]

Shoe City set to reshape Bangladesh's footwear industry​

Despite its potential, Bangladesh's leather product exports, including footwear, have stagnated at around $1 billion for nearly two decades, while Vietnam's footwear exports have skyrocketed from less than $1 billion to an impressive $25 billion. This stark contrast highlights the challenges hindering Bangladesh's leather industry from achieving its full potential.

A significant factor contributing to Bangladesh's export stagnation is its overreliance on imported materials for footwear production. This dependence has rendered the industry vulnerable to supply chain disruptions and exchange rate fluctuations, as industry insiders have pointed out.

In a bold move set to revolutionise the footwear industry, Bangladesh Shoe City Ltd (BSCL) emerges as a beacon of innovation and progress. This groundbreaking initiative, spearheaded by the visionary Jennys Group, consolidates the manufacturing of approximately 50 critical components for shoe production within a single, state-of-the-art facility.

Strategically positioned on a sprawling 35-acre plot in Mouchak union of Gazipur, BSCL stands poised to transform Bangladesh's position as a global footwear manufacturing hub.

With four factories, including one from Canada, already in operation, BSCL's momentum is undeniable. The project's allure has attracted the attention of 15 additional investors from diverse nations, including Japan and China, who are eager to join the venture.

Nasir Khan, chairman of BSCL, a subsidiary of the Jennys Group, reiterated the organisation's unwavering commitment to achieving 100% value addition within its state-of-the-art facility.

Acknowledging the setbacks caused by the pandemic and the ongoing Russia-Ukraine conflict, Khan emphasised the importance of self-sufficiency in the footwear industry.

Highlighting the challenges posed by an overreliance on imported materials, he said buyers often express concerns about the stability of supply chains heavily dependent on imports, underscoring the need for a more resilient and integrated approach.

To address these concerns and establish a robust footwear manufacturing ecosystem, BSCL has undertaken a comprehensive project to establish end-to-end infrastructure within its facility. This holistic approach encompasses the production of both raw materials and finished products, all conveniently located within a single, strategically positioned complex, he added.

Sonjoy Saha, project director of BSCL, envisions the company as a one-stop shop for footwear manufacturing, with an estimated cost of Tk800 crore. Anticipating the commencement of production by all companies by 2030, the project aims to generate around 25,000 new jobs upon completion.

Saha said currently, necessary equipment for shoe production is being imported from various countries, including China and India. Typically, around 50 items are required for shoe manufacturing, and importing these items can be a time-consuming process.

In an effort to streamline the process, Saha said foreign buyers often open Letters of Credit (LCs) for 40 to 50 days. Ordering products from China and awaiting their arrival takes time, leading production units in the region to meet the demand of local factories.

"Our initiative is expected to enhance efficiency, allowing production units in the area to fulfil the demand of both local and international markets. The goal is to have 28 establishments producing a variety of products," Saha said.

Saha emphasises that BSCL will not lease land but will provide leased buildings, with terms ranging from five to 15 years, tailored to the investor's needs. The aim is to facilitate an easy setup for production, where companies can focus on manufacturing products with the provided infrastructure.

Shoe City has a comprehensive plan for the diverse range of footwear and accessories that will be manufactured within its facility. These include leather shoes, sports shoes, jute or espadrilles shoes, safety shoes, children's shoes, ladies' fashion shoes, canvas shoes, school shoes, rubber shoes, Goodyear welted shoes, gags, wallets, and belts.

Shoe City will also foster the development of ancillary industries dedicated to producing essential footwear components, including outsoles, rubber, crepe, adhesives, synthetic materials, boxes, cartons, printing, labelling, tags, threads, moulds, dyes, toe puffs, counters, and tapes.

Shoe City said by using a shared services model, factories will be able to pool their resources together for the functions in the existing value chain to run cost-effective manufacturing operations.

The gap between manufacturers and suppliers will be mitigated as all the back-linkage industries will be located in one central location. By our estimates, the production cost of member factories will go down by 20 %, making their products very competitive in the world market, Sonjoy Saha said.

The project commenced in 2017 and has transformed the entire landscape, readying it for the establishment of factories. A new five-story building having over one lakh square feet is under construction. Five companies have already initiated production, and we have secured memorandums of understanding (MOUs) with an additional 15 companies from Europe, China, and Japan. These partnerships will facilitate the manufacturing of various shoe-making components, Saha said.

Shoe City moving forward despite challenges

"We are facing many challenges after the pandemic. The global economic crisis triggered by the Russia-Ukraine war has also impacted us.

Foreign companies that have expressed interest in setting up factories here are taking their time due to these uncertainties, including the upcoming Bangladesh national election. However, we are hopeful that several companies will commence production here by 2024," Saha said.

He said buyers in developed countries are emphasising transparent and sustainable supply chains. To meet these demands, foreign buyers are enforcing strict compliance standards across all organisations. They are particularly checking whether establishments possess Leather Working Group (LWG) certification.

"We are moving forward with our plans. Our Effluent Treatment Plant (ETP) is nearly 90% complete. We will provide ETP connections to any tannery or company that requires them. We will also establish a Green Resilience Zone, which will facilitate the acquisition of Leather Working Group (LWG) certification from the institute here. Additionally, we will maintain Renewable Energy Solutions," Saha added.

Companies in production now

Five-R Footwear Ltd: A full-fledged leather footwear manufacturing company producing approximately 2,000 pairs of leather footwear daily.

The company encompasses a leather finishing tannery with a capacity of 20,000 square feet per day and a sole manufacturing unit capable of producing 3,000 pairs per day. Five-R Footwear boasts an on-site bonded warehouse and an operational ETP that effectively decomposes various types of waste.

In addition, an Indian company is now manufacturing leather elastic, a Portuguese company is manufacturing shoe oil and a Canadian company is engaged in producing souvenir products incorporating cloth and leather.

"In addition to footwear manufacturing, we have also opened up our facility for garment production. This facility will specifically cater to manufacturers of leather-based souvenir items, such as handbags and gloves," Saha said.

In addition to the state-of-the-art manufacturing facilities, the leather industrial park will boast an array of comprehensive central facilities designed to cater to the needs of its occupants and foster a vibrant and well-rounded work environment.

These facilities include a training centre, restaurants, a childcare centre, a medical centre, a library, prayer rooms, a central administrative building, a central display sales centre, a central inspection centre, tasting laboratories, a central bonded warehouse, a fire station, a logistic and transportation company, a central security system company, accommodations hotel, grocery shops, and a central wastage management.

Sonjoy Saha said, "We are ready to provide all facilities including utilities [gas and electricity] to investors. We have constructed a rainwater reservoir and even a helipad. The government is giving us the necessary support."

Bangladesh has set a target of $10 billion in leather product exports by 2030. Currently, about $1.7 billion in leather products are exported annually. Sonjoy Saha hopes that Shoe City will help the country meet the export target.

 

[Bilal9]

RFL Footwear looks to raise non-leather exports to Africa​

Workers inspect the quality of shoes at a factory of RFL Footwear in Danga Industrial Park, Narsingdi. Due to shifting global preferences for environment and animal-friendly products, consumers are switching to non-leather products. Photo: Collected

RFL Footwear, a concern of PRAN-RFL Group, wants to expand its non-leather footwear business in African markets.

"Africa can be a good market for us in the near future. Our progress depends on the skills of our workforce. But we have to further reduce our production costs so that we can compete extensively with China," said Ahsan Khan Chowdhury, chairman of PRAN-RFL Group.

"We are trying every day to export our shoes to different parts of Africa. Besides, we have the opportunity to do well in the Middle Eastern and Indian markets," he added.

While pointing to how the government has set an export target of $80 billion by 2024, Chowdhury said the export sector must be diversified.
And footwear, especially non-leather footwear, could be one of the most important products in this regard.

Besides, due to increasing global preference for environment and animal-friendly products, consumers across the world are switching to non-leather products, he added.

RFL Footwear's products are currently being manufactured at its factory in Danga Industrial Park, Narsingdi, Dhaka. The company's footwear industry was set up at a cost of about TK 138 crore and currently employs around 2,500 people.

RFL Footwear manufactures sneaker, ladies' shoes, ladies' sandals and various items for children, Chowdhury said.

RFL started exporting non-leather footwear products in 2021. It exported non-leather footwear products worth about $4.7 million in fiscal 2021-22 and $7.2 million in fiscal 2022-23.

According to the Export Promotion Bureau, Bangladesh exported non-leather footwear worth $478 million in fiscal 2022-23 compared to $244 million in fiscal 2017-18.

At present, RFL is exporting non-leather footwear products through buyers of different countries. Among these, the main buyer is H&M.

Other buyers include Kappa, Umbro, Airness and Redtape, said Rahat Hossain Roni, chief operating officer of RFL Footwear.

RFL's footwear products are currently being exported to 37 countries through these buyers.

The company's export unit has a monthly production capacity of around six lakh pairs, with 10 production lines at two units for four different processes.

RFL Footwear has already obtained GRS and RCS certifications, which will play an important role in exporting its non-leather footwear products.

Most of the raw materials used in RFL's non-leather footwear are imported from China. But, now RFL is working extensively on backward linkage to produce the raw materials itself. As such, preparations are underway to produce the sole, mould and synthetics used in non-leather footwear soon, Hossain said.

If the raw materials that are currently imported can be produced in the country, the lead time for exporting products will considerably decrease.

Also, if the government provides facilities similar to those for the garment industry in establishing backward linkages, then investors will come forward and only then the necessary backward linkages for non-leather footwear will develop.

And if the necessary backward linkages are developed, buyers will be encouraged to buy more products from Bangladesh as the lead time will be reduced, he added.

In 2023, the global shoe market grew to about $400 billion. This market will be worth about $500 billion in 2027, according to industry people.

In fiscal 2022-23, footwear exports from Bangladesh were worth $1,180 million. Leather footwear accounted for $700 million of the sum while non-leather footwear contributed $480 million.

Currently, Bangladesh ranks 16th in global footwear exports.

China is at the top in this regard, catering to more than 60 percent of the global demand.

Hossain informed that RFL will soon move into manufacturing high-value non-leather footwear because they have huge demand worldwide.

Additionally, it is possible to earn a lot of foreign currency through it, he said.

RFL Footwear markets 50 percent of its products domestically and exports the rest.

As there is huge potential for export, about 80 percent of its production is planned to be exported. With this in mind, the company will soon add six more production lines, Hossain said.

Because of that, there are plans to invest about TK 100 crore in the future, he added.

 

[Malang]

Sir do you also make Shoes with Snake’s skin? They are expensive and worth a fortune in western countries. Catch all snakes including your corrupt politicians and make shoes with their skin

Malang

 

[Saif]

Catch all snakes including your corrupt politicians and make shoes with their skin

Malang

 

[Saif]

Can leather industry exploit its potential?

That the country's leather industry had immense potential is universally agreed. Similarly, the fact that it failed to flourish due to policy flaws and a lack of decisive actions to overcome some infrastructural constraints bedevilling the sector is undisputed. Now that the leather industry is faci

thefinancialexpress.com.bd

Can leather industry exploit its potential?​

FE

Published :​

Feb 14, 2024 21:35

Updated :​

Feb 15, 2024 21:43

That the country's leather industry had immense potential is universally agreed. Similarly, the fact that it failed to flourish due to policy flaws and a lack of decisive actions to overcome some infrastructural constraints bedevilling the sector is undisputed. Now that the leather industry is facing a tough time globally, the fragility of the footwear and leather goods sector at home is badly exposed. Had it not been mired by the decades of foot-dragging on relocation of tanneries from the capital's Hazaribagh to Savar Tannery Industrial Estate and then the installation of a defective central effluent treatment plant (CETP) there, quite a few footwear and leather goods manufacturers would have by now received the much vaunted Leather Working Group (LWG) certification. Notably, this certification opens the opportunity to export leather goods and footwear to markets in Europe and America. With just three factories earning the coveted LWG certification--- Apex Footwear (gold), ABC Leather Ltd and Riff Leather Ltd (silver) ---the industry naturally could not achieve the desired position next to the RMG in terms of garnering foreign exchange.


As part of diversification of the export basket, however, this had to be on the priority list. The country's pharmaceutical industry and leather industry are two leading candidates for taking on the mantle of the RMG in case the number one forex earner faced a reversal for some reason. But at a time footwear and leather goods are bogged down by lower demand worldwide, leather factories -- particularly the smaller and the medium ones among them -- are witnessing a sharp decline in export. Already handicapped by their limited market with no access to the high-end destinations, these factories now find a daunting challenge for their survival. The export of leather and leather goods declined by 14 per cent but that of footwear declined by 26 per cent between July and January of 2023-24. Since footwear production is more than leather goods, a bigger market slump for the former means the value addition has also suffered in the process.

It is exactly at this point the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) has been looking for ways to tide over the current crises. As part of pre-budget proposals, it has asked for a unified tax rate of 1.0 per cent on import of raw materials. This will reduce the lead time by 20 days, triggering a 50 per cent increase in export of their products, it claims. Currently, the bond management stands in the way of easy access to industrial inputs.

The proposal certainly has its merit because the manufacturers and exporters of leather and leather goods are not asking for too much when they also seek rationalisation of tax at source by reduction of the 1.0 per cent freight on board (FOB) value to 0.5 per cent. In the context of the January 30 circular by the Bangladesh Bank to the effect of slashing cash incentives for export of some key exportable items, the demand for tax holiday may hardly be entertained. But synthetic and fabric footwear along with chemicals and spare parts for CETP certainly deserve special considerations. If the objective is to give the leather industry a competitive edge in the global market, such concessions ought to be granted at least for a reasonable period.​

 

[Bilal9]

Non-leather sports shoe mfr. in Bangladesh, will source Adidas shoes from Bangladesh

 

[Saif]

MK Footwear to raise Tk 55cr by issuing bonds

After raising funds from the SME board of the Dhaka Stock Exchange (DSE), MK Footwear is going to secure funds amounting to Tk 55 crore by issuing non-convertible fully redeemable bonds.

www.thedailystar.net

MK Footwear to raise Tk 55cr by issuing bonds​

After raising funds from the SME board of the Dhaka Stock Exchange (DSE), MK Footwear is going to secure funds amounting to Tk 55 crore by issuing non-convertible fully redeemable bonds.

The Bangladesh Securities and Exchange Commission (BSEC) yesterday approved the bond at a meeting.​

​

The tenure of the bond will be eight years and its coupon rate will be the Six months Moving Average Rate of Treasury bill (SMART) and additional 2 percent.

The bond will be issued to institutional investors and high-net worth individuals through private placement. The offer price of each bond is Tk 10 lakh.

With the proceeds, the footwear company will meet its working capital demand.

Community Bank Investment is the trustee of the bond, while Alpha Capital Management is the arranger.

Last year, the company raised Tk 10 crore by issuing one crore shares and got listed on the SME board of the DSE.

MK Footwear PLC was incorporated in 2015. It produces and exports several types of leather and synthetic footwear.​

 

[Saif]

A shot in the arm for leather sector

Of the export sectors that did not perform well in the previous fiscal (FY2022-23), 'leather and leather goods' was one. The Export Promotion Bureau (EPB) data say that in FY23, this sector earned US$1.25 billion from exports which was 2.0 per cent less than that of the previous fiscal (FY22). In t

thefinancialexpress.com.bd

A shot in the arm for leather sector​

FE

Published :​

Mar 12, 2024 22:02

Updated :​

Mar 13, 2024 21:51

​

FE file photo

Of the export sectors that did not perform well in the previous fiscal (FY2022-23), 'leather and leather goods' was one. The Export Promotion Bureau (EPB) data say that in FY23, this sector earned US$1.25 billion from exports which was 2.0 per cent less than that of the previous fiscal (FY22). In the eight months between July and February of the current fiscal, the export earnings from this sector decreased by 14 per cent compared to those of the same period in the previous fiscal. Similarly, three other sectors including live and frozen fish, agricultural products and jute and jute goods also registered a decline in export. However, poor performance of the leather sector, which is the second biggest export earner after garment, is indeed concerning. Understandably, the decline in the demands for leather items in the European market, the main export destination of these products, had no doubt to do with wars and high inflation affecting that part of the world during the time in question. But that apart, the main hurdle before Bangladeshi leather items remained the tariff barrier raised by the export markets largely attributable to the failure (of local leather products) to meet the standards set by the Leather Working Group (LWG).

Notably, the LWG is a global non-profit platform dedicated to promoting best practices in leather sector. But meeting LWG's standards is an expensive option. The criterion set for leather and leather goods production facilities is to make them environment-friendly, which requires a lot of investment. Small wonder that our leather items fail to get fair price from western buyers as those are not LWG compliant. Against this backdrop, the government is learnt to have decided to reduce the tax deducted at source (TDS) on leather and leather goods export from the current 1.0 per cent by 50 per cent to 0.5 per cent.

The finance ministry has meanwhile directed the National Board of Revenue (NBR) to implement the order, to be effective till June 30, 2025, exclusively for leather and leather goods export. But, as reported, some pieces of good news are also there for companies paying below the usual 12 per cent year-end tax in addition to the uniform 1.0 per cent tax paid on their export value will also be allowed to pay source tax at a lower rate. In fact, the government move will prove to be a shot in the arm for the leather sector, especially after the reduction of cash incentive or subsidies on the export sector last January. As a result, leather was hit hard as the government decision practically eliminated all export incentives from this sector. Undeniably, the government move to cut TDS against leather items export will enable Bangladeshi leather and leather goods to be more competitive in the western markets. However, it is still going to be a stopgap measure until leather and leather goods from Bangladesh are fully LWG compliant and the only way to do that is by way of installing central effluent treatment plant (CETP) at the Savar Tannery Industrial Estate (STE). With only three factories of the country earning LWG certification, the leather sector has to surrender a large portion of its rightful share in export earnings. The reduction of tax at source has to be complemented by turning the CETP at Savar fully functional. Much depends on the CETP for the leather sector to become LWG compliant and vibrant. Thus the tannery industry can take its rightful place in country's economy, diversifying and enriching its export basket.​

 

[Saif]

Bangladesh: A rainmaker for Bata

Bangladesh is already one of the top 10 markets for Bata Shoe but its Chief Executive Officer Sandeep Kataria thinks the country offers further growth opportunities for the multinational company.

www.thedailystar.net

Bangladesh: A rainmaker for Bata​

Bata CEO Sandeep Kataria says Bangladesh can be the global sourcing hub for the footwear industry

Bangladesh is already one of the top 10 markets for Bata Shoe but its Chief Executive Officer Sandeep Kataria thinks the country offers further growth opportunities for the multinational company.

"So, it's a very important market for us."

Although the top official did not disclose Bangladesh's position among the top ten markets, he said it moved up in the ranking last year.

"This was partly because of what the company has done in Bangladesh, and partly because of the dollar impact on some of the countries," Kataria told The Daily Star in an interview in Dhaka last week during his visit to the country.

Bata Shoe started its operations in Bangladesh in 1962, nearly a decade before its independence.

"We have received a lot of love from the consumers of Bangladesh in the past 62 years. Still, we are seeing a lot of opportunities for growth in the country in the coming days."

Kataria said some of Bata Shoe's managers played a role during Bangladesh's struggle for Independence. "Therefore, our company has been very much part of Bangladesh's growth trajectory."

"We continue to look at this as a strategic market for us, not just for business, but also for sourcing from the country."

Sandeep Kataria, CEO of Bata Shoe Company

Kataria is a business and marketing leader with more than 25 years of experience in the consumer products and retail industry across developing and developed markets.

He worked for several international companies such as Vodafone India, Yum! Brands and Unilever, in different markets before joining Bata in 2017 as the CEO of Bata India.

An engineer from IIT-Delhi, he was appointed as the CEO of the Bata Shoe Organization in December 2020 with the task of transforming the footwear giant into a modern and contemporary brand for generations to come.

This time, he came to Bangladesh after a gap of two years and he was impressed by the massive change Bangladesh is witnessing in the infrastructure sector. The country has also maintained a steady economic growth and per capita income despite challenges at home and abroad.

Kataria thinks Bangladesh can be the global sourcing hub for the footwear industry.

"We already make a lot of shoes in our two big factories here. We also have some partners. We want to turn some of them into large, important, sourcing partners for our markets across the world. They can actually make shoes for the world, not just for Bangladesh."

One of the things that makes Bangladesh more interesting to Bata is the trading treaties it has with partner countries and the deals it is going to sign with them in the coming years.

Kataria thinks there are two more things that will allow that to happen.

One of them is the opportunity for the partners to be able to secure some of the raw materials that may not be easily available in Bangladesh. Therefore, there is a scope to look at the duty structure around raw materials.

The second issue is local entrepreneurs need to be ready to innovate as consumers always want new styles.

"So, partnering with us to innovate and bring in new styles and new trends to the market is always helpful."

The CEO terms Bangladesh as lucky since manufacturing costs are comparatively lower in the country.

"All of these factors will transform Bangladesh into a good sourcing hub for us."

Sales of Bata Shoe Bangladesh rose 1.3 percent year-on-year to Tk 754 crore in the January-September period of 2023. During the same period, profits rose 53 percent to Tk 42 crore.

Kataria also spoke about the recent situation of the footwear business in Bangladesh.

"It is similar to what is happening in many of the discretionary categories, whether it is apparel, footwear, or even eating out to some extent, since many consumers are tightening their belts."

The footwear business has recovered from the slowdown induced by the coronavirus pandemic. But the lingering impacts of the worldwide health crisis and the Russia-Ukraine war sent consumer prices as well as raw materials costs high globally, hurting the business growth.

"As higher inflation is putting pressure on the wallets of consumers, they are sometimes prioritising expenditures."

Although elevated consumer prices have affected the number of pairs sold, the value is going up because of inflation. Some consumers are ready to upgrade and get a better quality.

"But overall, there's a bit of a tightening of volume demand," Kataria said.

Shares of Bata Shoe (Bangladesh) also traded at the Dhaka Stock Exchange and were up 1 percent to Tk 1,000 yesterday. It provided a 330 percent interim cash dividend for the first nine months of 2023.

Kataria says one of the big things about Bata is it is more local and less multinational.

"If you ask a Peruvian, an Indonesian, or a Bangladeshi, they will probably tell you that Bata is a local company."

He, however, says one shoe does not fit all because of different weather conditions in different countries.

"So, you will have to provide consumers something that they want and suits the weather and the wallet. Therefore, what we've always tried to do is to make sure that there's a good mix of global ideas and trends and we get inspired by them and we share that locally."

Bata also gives local teams a lot of power to develop products.

"In Bangladesh, more than 85 percent of our shoes are actually manufactured by our own factories."

Speaking about sustainability, the CEO said the company is using alternative sources of energy wherever possible and trying to recycle products.

​

 

[Saif]

‘Leather export potential remains untapped’

Breaking News, International News & Multimedia

thedailynewnation.com

‘Leather export potential remains untapped’​

28 Mar 2024, 12:00 am

Tasnuba Akhter Rifa :

The leather and leather goods industry in Bangladesh has garnered the trust of both domestic and foreign buyers owing to its combination of low prices and high quality.
Nevertheless, its export potential remains largely untapped due to a lack of international standard certification.

In response, the National Board of Revenue (NBR) has implemented a reduction in source tax on leather and leather goods exports from 1% to 0.5% until June 30, 2025.

While this move is expected to provide some relief to entrepreneurs and potentially stimulate employment, industry insiders caution that it may not significantly bolster exports.

Experts emphasise that enhancing compliance within the sector is crucial to unlocking its full export capacity.

Foreign buyers insist on satisfactory working conditions, worker safety, and environmental standards before engaging with factories, necessitating compliance with government regulations and buyer-imposed rules.

Compliance not only ensures adherence to laws and policies but also guarantees benefits for workers and employees.

According to the NBR Chairman, environmental pollution stands out as the primary challenge in the leather and leather goods sector, hindering entrepreneurs from tapping into significant global markets. Improved compliance, he argues, would lead to an increase in exports of leather and leather goods.

“The main problem in the leather and leather goods sector is environmental pollution. That’s why entrepreneurs are not able to capture big markets around the world.
If compliance improves exports of leather and leather goods will increase.” said NBR Chairman.

Despite being the country’s second-largest export product, the leather and leather goods sector faces hurdles. In the current financial year (2023-24), it aims for exports totaling $13 billion.

However, exports during the first eight months (July-February) amounted to approximately $71 crore, marking a 14.38% decrease compared to the same period last year.

In the previous financial year (2022-23), exports reached $122 crore, down about 2% from the preceding year.

During a pre-budget discussion in February, the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) highlighted various challenges in the sector and proposed reducing the source tax on leather goods and footwear exports from 1% to 0.5%.

LFMEAB Senior Vice President Mohammad Nazmul Hasan expressed optimism to The New Nation regarding the government’s initiative, anticipating an increase in leather goods exports and the creation of new jobs.

However, he highlighted challenges such as decreased demand for these products in the international market and increased production costs in the domestic market, especially with a 45% rise in sea transportation costs due to fuel price hikes and Middle East conflicts.

Contrary to the reduction in incentives, Dr. Mahfuz Kabir, a Senior Research Fellow and economist at BIISS, argued that such measures wouldn’t facilitate market entry into Europe or other regions, attributing the sector’s export challenges primarily to compliance issues.

“There is no benefit in reducing the incentive in this sector. Even if we reduce it, we will not be able to enter the European or other markets.

We are not able to capture the market due to compliance issues.” said Dr. Mahfuz Kabir, BIISS Senior Research Fellow and Economist.

He emphasised environmental pollution as a significant hurdle, citing the incomplete functionality of the central effluent treatment plant (CETP) at the planned leather industrial city in Hemayetpur, Savar.

This pollution impedes tanneries from obtaining international standard certification, thereby hindering Bangladesh from fully capitalising on its export potential.

In order to sell leather and leather goods at a good price to international brands, one has to have the certification of the Leather Working Group (LWG), a global leather industry organisation.

It is known that only six establishments in Bangladesh have LWG certification.

Domestic entrepreneurs export leather and leather goods to markets where there is no brand value. Each leather processed in a non-LWG-certified factory in the country is being exported for a minimum of 45 cents to $1.60.​

 

[Saif]

Leather shipment recovers, fetches $100 million in 9 months

Leather exports rose 9.8% year-on-year in Jul-Mar of FY24

www.thedailystar.net

Leather shipment recovers, fetches $100 million in 9 months
Leather exports rose 9.8% year-on-year in Jul-Mar of FY24

The shipment of leather has started to revive as Bangladesh fetched $100.40 million from the sales of the semi-finished raw materials in July-March of 2023-24, data from the Export Promotion Bureau (EPB) showed.

The exports were up 9.8 percent from the identical period a year prior.

A spike in the import of semi-finished leather by China is helping local suppliers export a higher volume of the product.

According to industry insiders and exporters, China has started to import a significant quantity of semi-finished leather from Bangladesh to remain competitive in the US market by the way of keeping the production cost lower.

"Export orders for semi-finished leather from China have increased substantially in the last three to four months," Diponkar Tripura, owner of Life & Race Bangladesh, a manufacturer and exporter of leather and leather goods.

The dragging trade row between Washington and Beijing has brought about a positive impact on leather exports from Bangladesh.

Besides, the production cost in China has gone up in the last few years driven by a surge in labour wages, prompting manufacturers in the world's second-biggest economy to source raw materials from the South Asian nation.

Chinese companies import semi-finished leather from Bangladesh and process them in China before manufacturing finished products in Vietnam and Cambodia for the US markets, said Tripura.

If Chinese firms export products from China, the US importers will have to pay an elevated level of tariffs, which are comparatively higher than Vietnam and Cambodia, he said. "Therefore, they are importing raw materials from Bangladesh."

Besides, Chinese companies use imported raw materials to meet the demand for their domestic leather goods market, which was valued at $22 billion in 2022.

Bangladesh has 161 tanneries that process rawhides into finished leather. However, 98 percent of them are not compliant as per global standards, forcing local suppliers to sell semi-finished leather, said Tripura.

Arifur Rahman Chowdhury, general manager of ABC Footwear Industries Limited, said China is phasing out industries hazardous to the environment such as the initial processing of rawhides. "So, they import semi-finished leather from Bangladesh."

However, he said, the price of semi-finished leather is low in Bangladesh, making the country a lucrative sourcing destination for Chinese importers.

Although the exports of semi-finished leather are gaining pace and generating foreign currencies for the country, Bangladesh is, in reality, losing out since it could have earned more had it been able to export finished leather and finished goods produced from the local leather directly.

For that to happen, local processors will have to secure certification from the Leather Working Group (LWG), a global multi-stakeholder community committed to building a sustainable future with responsible leather.

A top official of a leather product exporter says the Bangladeshi firms that process world-class finished leather don't sell them in the local market since they don't receive cash incentives from the government.

The government provides a 12 percent cash incentive on the shipment receipts of semi-finished leather. Of the semi-finished leather produced in Bangladesh, 70 percent is exported, mainly to China.

The official says there is a scope to add value to the products sold abroad and then export them directly. Direct exports can earn as high as $5 billion for Bangladesh, he said.

A senior official of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) said the global economy has begun recovering, which will raise the demand for luxury products like leather items.

"As a result, the orders for leather from Bangladesh will grow in the coming months and we will receive better prices as well."

Finished leather exports fetch less than one-third of footwear: one square foot of leather fetches only $0.60, according to the LFMEAB .

Bangladesh would have received at least $1.5 per square foot if the central effluent treatment plant in the tannery estate in Savar could treat all of the toxic chemicals released, said MA Awal, vice-chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association.

Bangladesh produces 400 million square feet of leather annually, according to industry people. There are 165 footwear and leather factories in the country.​

 

[Saif]

CPD for nearly doubling tannery workers’ wages

Tannery workers in Bangladesh should get a minimum monthly wage of Tk 22,776 considering the current market conditions and high inflation in the country, according to the Centre for Policy Dialogue (CPD).

www.thedailystar.net

CPD for nearly doubling tannery workers' wages
Says current market and living conditions should be considered

Tannery workers in Bangladesh should get a minimum monthly wage of Tk 22,776 considering the current market conditions and high inflation in the country, according to the Centre for Policy Dialogue (CPD).

A study by the CPD revealed that a worker's food and non-food expenses stand at a combined Tk 33,478 per month in 2024, or Tk 20,564 and Tk 12,914 respectively.

A minimum wage of Tk 13,500 was fixed for workers of the export-oriented tannery industry in 2018.

"But the owners did not implement that," said Tamim Ahmed, a senior research associate at the CPD, during a discussion and media briefing on the new minimum wage for tannery workers at the CPD office in the capital's Dhanmondi yesterday.

The CPD recently surveyed 35 tanneries and 105 tannery workers in the BSCIC Hemayetpur Tannery Estate in Savar in partnership with OSHE Foundation and under coordination of the Leather Development Forum.

At least 16 percent of the surveyed tannery workers are receiving less than Tk 13,500 as monthly wages despite working in their respective positions for more than a year.

Meanwhile, 43 percent of them received less than Tk 15,881 per month despite having held their position for at least six years.

Around 59 percent of the surveyed workers indicated that they have zero awareness of any sort of grading system in regard to wages.

Also, 71 percent do not know about the minimum wage set by the government, the CPD found.

Under the current wage structure, there are no mechanisms for promotion from one grade to another. Hence, the issue of increments is crucial for this sector.

The survey said that other than the amount paid, deviations between factories were also observed in terms of timely payment of wages.

The lack of implementation of the minimum wage could be attributable to the weak monitoring of the Department of Inspection for Factories and Establishments (DIFE).

The CPD found that 46 percent of the surveyed tanneries had not undergone a single inspection till date.

Liaquat Ali Mollah, chairman (senior district judge) of the Minimum Wages Board for tannery workers, said the tannery owners would not be able to implement the CPD's recommendation.

However, a respectable minimum wage will be fixed through discussions with the owners and workers considering both sides' interests, he added.

Mollah also said working conditions in the tannery industry are hazardous for workers' health, so medical allowances should be included in wages to ensure their livelihood.

"If the workers enjoy sound lives, they will perform better and the owners will do well in business," he added.

Mollah suggested owners ensure that factories are compliant with industry regulations and said they could bargain with buyers for better prices, thereby providing reasonable wages to workers.

However, tannery owners feel that it is not possible to implement the minimum wage proposed by the CPD.

"Tannery owners are not doing well, so implementation of the CPD's proposal is not possible," said Md Shaheen Ahmed, chairman of the Bangladesh Tanners Association (BTA).

Besides, due to the increase in tariffs of electricity and gas, the cost of production has increased, he said.

On the other hand, he said they were being compelled to sell leather to non-compliant Chinese companies at low prices due to the non-compliance of tanneries at the Savar Tannery Industrial Estate.

Still, Ahmed assured they would introduce a reasonable and implementable salary structure following a tripartite discussion including owners, workers and the government.

Ahmed also said they are trying hard to avail Leather Working Group (LWG) certification for at least 10 factories within the next six months, which will help improve their bargaining power with European buyers.

Md Abul Kalam Azad, president of the Tannery Workers Union (TWU), stressed the need for compliant factories and changing the mindset of owners to sustain their business.

According to him, the leather sector has the potential to grow a lot as the required raw materials are easily available in the country.

"So, this industry should be protected at any cost," Azad said.

Md Abdul Malek, general secretary of the TWU, said the tannery industry is different from other industries as it is has some health risks since more than 100 chemicals are used.

"Therefore, we need to give protection to the workers," Malek added.

The session was moderated by Khondaker Golam Moazzem, research director of the CPD. SM Morshed, vice-chairperson of OSHE Foundation, and Md Mizanur Rahman, vice-chairman of the BTA, also addressed the discussion.​

 

[Bilal9]

The majority of future exports for Bangladesh shoe export sector is non-leather sneakers. New factories are being set up almost every month and compared to barely a few tears ago, non-leather sneaker and sports-shoe exports have doubled. If past history with other countries is any indication, it will double again in a couple more years. Winding down of non-leather sneaker exports from China is the reason. China is not subsidizing this sector any longer.



Hiking boots, snow. boots, steel toe working boots (though leather based) are also being made in Comilla and Chittagong export zones. Some boots are being supplied to the US Army.

 

[Saif]

Leather losing its shine in exports

Rising local value addition, poor compliance with international standards, and buyers shifting to other countries have thwarted exports of leather, which was once among Bangladesh’s three main export items.

www.thedailystar.net

Leather losing its shine in exports

Rising local value addition, poor compliance with international standards, and buyers shifting to other countries have thwarted exports of leather, which was once among Bangladesh's three main export items.

The relocation of tanneries from Hazaribagh in Dhaka to the Savar Tannery Industrial Estate (STIE) in 2017 and the severe fallout of the Covid-19 pandemic and Russia-Ukraine war are other major reasons for declining leather exports.

In the face of such challenges, leather exports have declined by more than half over the past decade.

In fiscal year 2022-23, leather exports amounted to $123.44 million, down sharply from $397.54 million in FY14, according to data from the Export Promotion Bureau (EPB).

In the July-May period of the outgoing fiscal year, leather exports stood at $125.72 million, EPB data showed.

The rise in value addition means the number of factories, be it for domestic or export purposes, has increased, thereby increasing domestic consumption of tanned leather.

The significant rise in consumption of tanned leather and subsequent value addition can also be gauged from Bangladesh's exports of leather and leather goods.

In FY15, exports of leather and leather goods amounted to $1.13 billion and it has stayed above the billion-dollar mark for the past decade.

In FY23, exports of leather and leather goods brought in $961.49 million.

Exports of jute, tea and leather, once considered the most valuable products of Bangladesh, have been fading either due to loss of competitiveness globally or owing to rising consumption in domestic markets.

For instance, in the case of tea, the consumption in the domestic market increased over the years. At the same time, jute has failed to grab a bigger share as it competes with low-priced plastic.

Even 25 years ago, leather contributed more than 75 percent of the total exports of leather and leather goods, according to Md Saiful Islam, former president of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh.

But its share has now declined to nearly 13 percent, which indicates that local value addition has increased, he said.

Moreover, poor compliance with environmental standards in tanneries and the tannery estate at Savar is a major reason for lower exports of leather. Those factors also lead to lower prices from international buyers, Islam told The Daily Star over the phone.

Md Shakawat Ullah, general secretary of Bangladesh Tanners Association (BTA), echoed those sentiments.

He said local exporters cannot sell tanned hides to renowned international retailers in Europe, North America or other major destinations due to poor compliance at the STIE.

The poor compliance has barred tanners from obtaining a Leather Working Group (LWG) certification, a vital recognition for doing business, he said.

As a result, local exporters are having to send 65 percent of the tanned leather to China, which pays nearly 60 percent lower compared to international prices, he added.

To read the rest of the news, please click on the link above.​