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Leather exports slow in financial rout

Sayed a Akter
Exports of finished leather and leather goods declined by around 18 percent in July-November period of the current fiscal year, which the industry insiders blame on the global financial meltdown.
“The demand for finished leather and leather goods has dropped in international markets, ultimately affecting our exports. The drop is mainly due to the global financial crisis,” said Tipu Sultan, former chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association.
“We are constantly on the look out for potential buyers who will offer higher prices for our leather, this has created uncertainty over estimating our export targets for the year," he said.
“We still have a huge stock of unsold finished leather, which we could not sell because of a decline in the international market prices," he said.
Sultan said the consumption of leather and its prices in the international market went down by 30 percent last year, following a decline in international production by 6 percent.
Earlier, industry people warned that leather exports might drop by 25 percent in the current fiscal year, influenced by a slump in demand in international markets. This will directly concern 195 tanneries in the country.
“Currently the demand for finished leather in international markets has been replaced by a growing demand for rawhide, which we do not export. This has worsened our situation," he explained.
There are four types of
leather - rawhide, wet blue, crushed and finished leather. Bangladesh mainly exports crushed and finished leathers, whose demand and sales dropped in international markets on the back of the global financial crisis.
"At the same time, the global use and sale of finished leather in the automobile sector (seat cover) and making bags have declined severely. The increased use of rexin is another big reason behind the crisis," he added.
Bangladesh has plenty of rawhide as every year thousands of sacrificial cattle and goats are slaughtered to celebrate Eid-ul-Azha, a religious festival of the Muslims. This year, more than 29 lakh cowhides and 45 lakh goatskins have been collected.
Leather is one of the most important export items of the country, as it fetches impressive foreign currency. Some of the most common leather items are shoes, bags and purses.
Currently, the overall market size of the leather industry is worth around Tk 3,500 crore a year, with export figures standing at $284 million in 2007-08, said
industry people.
Of the total leather exports from Bangladesh, 80 percent is crushed leather and the remaining is finished. The product is mainly sent to Italy, Japan, Korea and China, Sultan said.
Crushed leather is mainly used for making luxurious and fashionable items such as shoes and accessories.
Interestingly, the exports of leather footwear and bags have increased by 39 percent and 45 percent respectively in the July-November period of the current fiscal year.
"This statistics shows us an opportunity to overcome the losses associated with declining finished leather and leather goods exports to international markets,” Sultan said. "We should now concentrate on producing diversified products."
Currently finished leather is mainly used in the global market for making high quality shoes, furniture, and accessories, bags and purses, jackets and seat covers for vehicles.
"The demand for leather jackets, furniture and shoes is still steady in international markets, but we have a few skilled people and this is another shortcoming that is
resisting a comeback for the sector," said Sultan.
He said the government should take initiatives to develop expertise in producing high standard leather items including jackets, furniture and shoes.
Sultan also said another problem this industry faces is the rising cost of processing finished leather, which makes Bangladeshi leather more expensive than in China, India or Morocco.
"Currently, we are offering shoes at competitive prices compared to China and India. If we can beat them, we will eventually grab a greater share of their markets,” he added.
He said the government should take necessary measures to develop and patronise the leather industry even further.
"Essential chemicals, such as sodium chloride and sulfuric acid that are needed for conversion of animal hides to leather, have to be imported and are very expensive," he said. Sultan suggested that the government should reduce import duties and VAT on these chemicals.
sayeda@thedailystar.net