Leather and Leather Goods Subsectors
Bangladesh has a long established tanning industry which produces around 2-3% of the world’s leather from a ready supply of raw materials. The country is therefore an established and attractive location to source and outsource the manufacture of finished leather products. The leather industry is ideally suited to Bangladesh with its abundance of labor and natural resources at internationally competitive rates.
Flourishing in this sector are finished leather and leather goods.
Abundant, low-cost labor – ideal for labor intensive industry.
Good quality domestic supply of raw materials, as by-products of the large livestock industry.
Government support in the form of tax holidays, duty-free imports of raw materials and machinery for the export-oriented leather market, export incentives.
Tariff and quota-free access to major markets such as the EU.
Industry Outlook and Investment Incentives
In 2008-09 total export of leather, leather goods was $381.14m.
Bangladesh produces between 2% and 3% of the world’s leather. Most of the livestock base for this production is domestic, which is estimated as comprising 1.8 % of the world’s cattle stock and 3.7 % of the goat stock. The hides and skins (average annual output is 15m sq.m.) have a good international reputation.
Foreign direct investment in this sector along with the production of tanning chemicals appears to be highly rewarding due to this presence of basic raw materials for leather goods including shoes, a large pool of low cost, trainable labor, and a tariff concession facility to major importing countries under Generalized System of Preferences (GSP) coverage. Thus Bangladesh is an ideal offshore location for leather and leather products manufacturing with low cost but high quality.
The government is in the process of setting up a separate Leather Zone, relocating the existing industry sites to a well-organised environment. Exports include some ready-made garments, although that aspect is confined mainly to a small export trade in “Italian-make” garments for the US market. Footwear is more important in terms of value addition. This is the fast growing sector for leather products.
Trend of Leather Export from Bangladesh
Source: Bangladesh Economic Review