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Tanners demand soft loans for relocation

Star Business Report
Tannery owners yesterday urged the government to provide longterm loans with less than 5 percent interest rates to expedite the relocation of the hazardous tanneries from Hazaribagh in Dhaka to Savar.
"We need soft loans to relocate the tanneries as leather is a capital-intensive industry,” said M Abu Taher, chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters' Association, adding that many will have to fold their businesses if the government does not arrange the financing.
Tanners will have to invest around Tk 7,500 crore to relocate the factories, establish new plants and begin commercial production, he said.
The appeal came at a discussion on tannery relocation organised by the association at the Ruposhi Bangla Hotel in Dhaka.
The tannery owners also urged the government to relax land usage rules, which stipulate that at least 33 percent of total land area is left free to set up a factory. The proportion of free space per plot leaves too little for the factory structure as leather factories need more space to set up the heavy machinery, Taher said. Industries Minister Amir Hossain Amu echoed the same.
"It is not logical to leave 33 percent of total land area as free space to set up a factory. This rule may be applicable for the real estate sector. I will obviously take the issue to the housing ministry," he said.
The minister also instructed a working committee with representatives from the industries ministry, Bangladesh Small and Cottage Industries Corporation and tannery owners be formed immediately to solve the bottlenecks of tannery relocation.
"We have to relocate the tannery for protecting environment and keeping our leather goods export markets," said Industries Secretary Mohammad Moinuddin Abdullah, while urging the owners to cooperate with the government for quick relocation of the tanneries.
Awami League lawmaker Sheikh Fazle Noor Taposh called upon the government to include the Savar Tannery Estate as a fast-track project with a time-bound action plan in a bid to get momentum for relocation.
He also said the country's leather industry has immense potential and can work as a cushion against any downswings of the garment industry. BSCIC has already developed the leather estate with spacious roads and adequate fire-fighting capacities and equipment, said its chairman Shyam Sunder Sikder.
The industries ministry has already allocated more than 205 plots on 200 acres to 155 tannery owners through BSCIC, a wing of the ministry.
The project, which took off in 2003 at an approximate cost of Tk 175.75 crore, came to a standstill over a decision on who would bear the lion's share of the cost and get the contract for a common effluent treatment plant.
Initially, it was planned that the 155 tanneries would finance 60 percent of the cost and the government the rest.
However, it was decided that the government would bear 80 percent of the core project cost ofTk 829 crore, as per the second revised proposal passed by the executive committee of the National Economic Council in August last year.
The total project cost since the launch has shot up to Tk 1,079 crore, including the Tk 250 crore in compensation to be paid by the government to the tanneries.
The government now intends to complete relocation by 2O16.The industry earned $980.67 million last fiscal year by exporting leather, leather products and footwear, up from $765.03 million recorded in fiscal 2011-12,