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Policy support can ensure ‘brown revolution’ in leather sector

Expert’s paper presented at city seminar says

By Monjur Mahmud
Proper policy support which includes streamlining the import policy, giving direct fiscal incentives to exporters and setting up a tannery modernisation fund can help bring about the much-awaited brown revolution' in the country's leather sector, says a top leather expert and entrepreneur.
Syed Nasim Manzur. an expert on development of high value-added leather and leather goods and also a director of Apex Footwear Ltd . in a paper recently presented at a seminar said that duty rates on finished shoes, shoe components and accessories are almost the same and discouraging for the local shoe manufacturers.
Today, the local shoe industry is under severe threat from cheap imports that are being smuggled In and dumped by neighbouring countries like Myanmar ano India, he said.
“Bangladesh needs to do away with the present prohibitive duty structure on com-
ponents and raw materials as It encourages smuggling, under-Invoicing and other illegal forms of trade lucrative for some business people."
Bangladesh currently produces only a small fraction ol the total global demand for leather goods though it has all the reasons to capture the international market, he mentioned.
The annual footwear production capacity in Bangladesh in 1997 was only 22 millions pairs while the worlds total footwear production In 1996 stood at 10.800 million pairs. The projected global footwear output for 2005 is 14.5 billion pairs.
This once again proves that Bangladesh should consider the vast potential of the world market and Introduce supportive policies for the development of this sector, observed Manzur.
“It will be wrong to think that buyers will flock to Bangladesh Just because we
have cheap leather and labour. Bangladesh needs to create value addition in products, be It through utilisation of more labour, use of special materials or new designs as well as offering competitive prices and services."
Citing the Indian experience, Manzur said that direct fiscal Incentives in the form of export cash subsidies, import license benefits against export performance. tax-free export earnings. reduced air freight costs and duty drawback system were Introduced from the seventies till the nineties. These incentives were withdrawn only when the exporters were on a sound footing. But then the Indian rupee was depreciated heavily.
The expert also said that the bar on exporters in marketing their products locally was proving a bane for the manufacturers.
In China and India, the ex-
porters can sell up to 50 per cent ol their total output in the local market and can still enjoy the exporter status. Bui In Bangladesh, local sales are taxed al such high rales that It makes the goods too costly for the mass consumers.
He said that Bangladesh could learn from the Chinese model where appropriate government policy In terms ol duty exemptions, tax breaks, foreign exchange benefits and even Infrastructural support such as low-cost housing facility for migrant labourers and training facilities should serve as a blue print.
The country needs to have a clear position on environmental Issue, working conditions, occupational safety and hazards as well as labour practices for the short, medium and long term, that will allow it to retain competitive advantage and adhere to global standards, the expert recommended.