Bangladesh’s leather industry leaders blamed prolonged delays in establishing a fully functional central effluent treatment plant and inconsistent government policies for the sector’s stagnant exports despite the country’s abundant supply of raw hides.
They also said that nearly nine years after the relocation of tanneries from Hazaribagh to the Savar Tannery Industrial Estate, the key objective behind the move, ensuring environmentally compliant leather production, remains largely unfulfilled.
They were speaking at a webinar titled ‘Is the Future of Bangladesh’s Leather Industry Losing Its Momentum?’, organised by the Power and Participation Research Centre as a part of its Ajker Agenda policy conversation series.
At his speech, Tipu Sultan, chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters’ Association, said that they shifted from Hazaribagh to Savar in 2017 after the government assured them that all environmental facilities, including a CETP, chrome recovery plant, dumping yard and other infrastructure, would be established.
Tannery owners invested heavily in relocating machinery and constructing new factory buildings in Savar, he said, adding that they were now waiting for the CETP.
‘We have now been waiting for nine years, but a fully functional CETP is still not in place,’ he added.
He alleged that the failure to establish an internationally acceptable CETP prevented Bangladeshi leather producers from obtaining globally recognised environmental certifications, including certification from the Leather Working Group, prompting many international buyers to leave the country.
‘We gradually lost all compliant customers because we could not show them the required certificates. Products that could have been sold at $1.5 to $2 per square foot were eventually sold to Chinese buyers for only $0.4 to $0.5,’ he added.
Tipu said the CETP project cost had increased from an initial estimate of about Tk 250 crore to around Tk 1,200 crore, while tannery owners contributed 20 per cent of the cost.
Despite the increase in expenditure, he claimed, the installed facilities failed to meet expected standards and capacities.
‘The planned treatment capacity was reduced substantially and the project could not even secure full approval from the country›s environmental authorities, let alone internationally recognised certification bodies,’ he added.
Industry leaders said the absence of internationally accepted environmental compliance severely undermined Bangladesh’s ability to capitalise on its natural advantage as one of the world’s largest producers of raw hides.
They pointed to Vietnam as an example, saying the country imports raw hides and exports high-value leather products to Western markets, while Bangladesh has struggled to expand despite abundant domestic supplies.
‘Many exporters are now forced to use imported leather because locally processed leather lacks LWG certification,’ Tipu said.
He also criticised frequent policy changes and administrative turnover within government agencies.
The leather sector has been treated like a training centre for bureaucrats. Officials are transferred frequently and no consistent policy framework is maintained,’ he added.
Nasir Khan, managing director of Jennys Shoes Ltd, echoed similar concerns.
He said Japanese buyers once accounted for a major share of his company›s business, but many prominent Japanese clients have since left Bangladesh.
‘We do not have a shortage of entrepreneurs. We have capable second-generation business leaders. The problems are rooted in policy and governance failures,’ he added.
Nasir alleged that the abrupt shutdown of utility connections in Hazaribagh during the relocation process created anxiety among international buyers.
‘Korean, Japanese, Italian and other buyers became alarmed when they saw gas and electricity connections being cut before adequate facilities were ready in Savar,’ he added.
Nasir Khan alleged that the previous Awami League government failed to prioritise the leather sector and had effectively gifted to a neighbouring country.
‘Following the disconnection of power in Hazaribagh, the industrial zone in Bongaon (in India) opened the following week. The timing was significant,’ he added.
Referring to the CETP project, he alleged that despite spending around Tk 1,200 crore, the authorities had failed to make the facility fully operational and now it has been destroying the Dhaleshwari River.
‘We repeatedly sought permission to establish our own CETP facilities, but approval came only after years of delay, by then most major buyers had already left,’ he added.
Exports have remained stuck at around $1 billion for years despite significant growth potential.
He identified four major obstacles confronting businesses in the sector: complex licensing procedures, tax-related harassment, poorly designed incentives and limited value addition.
Despite lower rawhide prices, leather goods prices remained extremely high in Bangladesh, with no significant improvement in exports over the past decade.
According to the Export Promotion Bureau, Bangladesh exported leather and leather goods worth $1.14 million in the financial year 2024-25, which was $1.03 billion in FY24, and $1.17 billion in FY23.
Shaheen Ahmed, president of the Bangladesh Tanners Association, said around 9 million animals were sacrificed during the festival this year, but a substantial portion of hides suffered quality deterioration.
He said nearly 60 per cent of goat skins were damaged due to poor preservation and handling practices.
‘Before the Savar relocation, around 30 tanneries specialised in processing goat skins in Hazaribagh. After the relocation, only six of those factories moved to Savar while the rest ceased operations or became inactive,’ he added.
He also blamed the shortage of skilled workers and a lack of awareness among those involved in slaughtering and hide preservation.
Shaheen said bank financing for seasonal rawhide purchases had declined sharply over the years.
They urged the government to improve access to finance, support the establishment of private effluent treatment plants and develop refrigerated warehouses across the country to preserve raw hides and reduce post-slaughter losses.
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue, said that while Bangladesh once held strong prospects in the leather industry, that promise is gradually fading.
He highlighted the potential impact of the Carbon Border Adjustment Mechanism on export competitiveness and stressed the need for early preparation to meet emerging environmental standards in global markets.
He also said that the value addition in the leather sector could be reached up to 90 per cent due to domestic supply of raw materials.
Hossain Zillur Rahman, executve chairman of the PPRC, moderated the session.
