Savar tannery estate in a mess

Savar tannery estate in a mess Leather exports fall in Q1 of FY2018–19

Exports of leather and leather products fell significantly in the first quarter of the current financial year 2018–19 (July–September) compared to the same period of the previous fiscal year 2017–18 (July–September).

Most of the tannery owners blamed the lack of product variety and a lack of vigilance on the part of the tannery estates, which have hurt the growth of the sector and the environment as well.

According to the Export Promotion Bureau (EPB), the sector registered a negative growth rate of 17.46 per cent, resulting in earnings of USD 267.94 million in the current financial year 2018–19 (July–September). This figure was USD 324.62 million during the same period of the 2017–18 (July–September) fiscal year.

Shaheen Ahmed, chairman of the Bangladesh Tanners’ Association (BTA), told The Independent that 155 factories have been shifted to Savar. Of these, 125 factories are currently operational while 25 tanneries have started full operations but are processing only crust leather. He said this sector is not getting the advantage of the central effluent treatment plant (CETP) and, so, is struggling hard to achieve global standards in terms of compliance.

A Chinese contractor was given the responsibility and work order to build the CETP and dumping yard, he explained. However, the work has not been completed yet, he added.

A sub-power station with a 10MW generation capacity was built in the Savar Tannery Complex, he said. It can generate a maximum of 5 megawatts (MW) of power from the sludge to operate the CETP if the project is implemented. The power can also be used for other uses like production work, he added.

BTA members said the construction of the administrative buildings and fire brigade stations has been completed in the project area. Also, drains, deep tube-wells, water delivery pipelines, culverts, electricity lines and gas lines have already been laid.

“The situation will change and we will see positive growth if the CETP becomes ready and fully functional,” said Ahmed.

Only leather footwear registered a slight positive growth rate of 5.65 per cent, resulting in earnings of USD 175.52 million. This figure was USD 166.13 million during the same period in the 2017–18 FY.

“We imported finished leather from abroad and then processed the finished leather into finished products. That is one reason we can export quality footwear abroad,” he said.  

The CETP and the related drainage system are not yet fully ready. “We cannot capture the foreign markets and buyers’ orders because the CETP is not fully functional yet,” he said.

He observed that a huge opportunity lies in the US market at the current juncture because of the ongoing trade war between China and the US.

The US government has signalled an imposition of 25 per cent tariff on a number of Chinese products entering the US market. If that happens, Bangladesh could easily seize the opportunity to supply leather products to the US market.

“But we could not grab the opportunity because of the non-functional CETP,” he rued.

Shakawat Ullah, general secretary of the BTA and the owner of Salma Tannery, told The Independent that the Bangladesh Small and Cottage Industries Corporation (BSCIC) is yet to complete the land registration for plot owners in the Savar Leather Industrial Park. “As a result, they are unable to take loans from banks because they cannot produce those documents.”

When asked the reason, he said that BSCIC has not been able to determine the price of land yet. “As a result, the registration process is being delayed.”

About the production capacity, he said, “We process both crust and finished leather of about 5 to 6 lakh sq. ft per month.” Ahmed also disclosed that import duties on chemicals used for protecting raw hide have been increased, affecting the exports of crust leather. Crust leather has experienced a negative growth rate of 21.28 per cent in the fiscal year 2017–18.

Ahmed, who is the managing director of Kohinoor Tanneries Ltd, said: “Around 70,000 to 80,000 people used to work in the tanneries in Hazaribagh before we shifted all the factories to Savar. As a result, many people have lost their jobs. This has also hit the exports of leather goods.”

Describing the opportunities before this sector, Ahmed said since raw materials were available, 350 million sq. ft of leather are produced annually in Bangladesh. Of these, 20–25 per cent go to meet domestic demand, while the rest is exported.

There is a huge domestic demand for leather goods in Bangladesh, he noted.

EA

Savar tannery estate in a mess

Savar tannery estate in a mess Leather exports fall in Q1 of FY2018–19

Exports of leather and leather products fell significantly in the first quarter of the current financial year 201819 (JulySeptember) compared to the same period of the previous fiscal year 201718 (JulySeptember). Most of the tannery owners blamed the lack of product variety and a lack of vigilance on the part of the tannery estates, which have hurt the growth of the sector and the environment as well. According to the Export Promotion Bureau (EPB), the sector registered a negative growth rate of 17.46 per cent, resulting in earnings of USD 267.94 million in the current financial year 201819 (JulySeptember). This figure was USD 324.62 million during the same period of the 201718 (JulySeptember) fiscal year. Shaheen Ahmed, chairman of the Bangladesh Tanners Association (BTA), told The Independent that 155 factories have been shifted to Savar. Of these, 125 factories are currently operational while 25 tanneries have started full operations but are processing only crust leather. He said this sector is not getting the advantage of the central effluent treatment plant (CETP) and, so, is struggling hard to achieve global standards in terms of compliance. A Chinese contractor was given the responsibility and work order to build the CETP and dumping yard, he explained. However, the work has not been completed yet, he added. A sub-power station with a 10MW generation capacity was built in the Savar Tannery Complex, he said. It can generate a maximum of 5 megawatts (MW) of power from the sludge to operate the CETP if the project is implemented. The power can also be used for other uses like production work, he added. BTA members said the construction of the administrative buildings and fire brigade stations has been completed in the project area. Also, drains, deep tube-wells, water delivery pipelines, culverts, electricity lines and gas lines have already been laid. The situation will change and we will see positive growth if the CETP becomes ready and fully functional, said Ahmed. Only leather footwear registered a slight positive growth rate of 5.65 per cent, resulting in earnings of USD 175.52 million. This figure was USD 166.13 million during the same period in the 201718 FY. We imported finished leather from abroad and then processed the finished leather into finished products. That is one reason we can export quality footwear abroad, he said. The CETP and the related drainage system are not yet fully ready. We cannot capture the foreign markets and buyers orders because the CETP is not fully functional yet, he said. He observed that a huge opportunity lies in the US market at the current juncture because of the ongoing trade war between China and the US. The US government has signalled an imposition of 25 per cent tariff on a number of Chinese products entering the US market. If that happens, Bangladesh could easily seize the opportunity to supply leather products to the US market. But we could not grab the opportunity because of the non-functional CETP, he rued. Shakawat Ullah, general secretary of the BTA and the owner of Salma Tannery, told The Independent that the Bangladesh Small and Cottage Industries Corporation (BSCIC) is yet to complete the land registration for plot owners in the Savar Leather Industrial Park. As a result, they are unable to take loans from banks because they cannot produce those documents. When asked the reason, he said that BSCIC has not been able to determine the price of land yet. As a result, the registration process is being delayed. About the production capacity, he said, We process both crust and finished leather of about 5 to 6 lakh sq. ft per month. Ahmed also disclosed that import duties on chemicals used for protecting raw hide have been increased, affecting the exports of crust leather. Crust leather has experienced a negative growth rate of 21.28 per cent in the fiscal year 201718. Ahmed, who is the managing director of Kohinoor Tanneries Ltd, said: Around 70,000 to 80,000 people used to work in the tanneries in Hazaribagh before we shifted all the factories to Savar. As a result, many people have lost their jobs. This has also hit the exports of leather goods. Describing the opportunities before this sector, Ahmed said since raw materials were available, 350 million sq. ft of leather are produced annually in Bangladesh. Of these, 2025 per cent go to meet domestic demand, while the rest is exported. There is a huge domestic demand for leather goods in Bangladesh, he noted. EA