Reforms underway to turn leather sector into $10b export industry: Minister

Highlights:

• Govt targets turning Bangladesh's leather industry into a $10b export sector through a comprehensive reform programme.
• Plans include upgrading Savar's CETP, requiring larger tanneries to install ETPs, and making Leather Working Group certification mandatory.
• He also says weak environmental compliance after the relocation from Hazaribagh led to the sector's decline and loss of premium export markets.

Commerce Minister Khandaker Abdul Muktadir today (7 July) said the government has launched a comprehensive reform programme to revive Bangladesh's leather industry, improve environmental compliance and turn the sector into an export industry worth more than $10 billion.

Replying to a notice raised in parliament by Jamaat's MP Shahjahan Chowdhury, the minister acknowledged the long-standing crisis in the country's leather industry, particularly after the relocation of tanneries from Hazaribagh to Savar.

There was no disagreement over the importance of the issue and admitted that although there might be slight differences in statistics, the overall problems facing the sector were well recognized, he said.

He also said that 15 to 20 years ago, most tanneries were concentrated in Hazaribagh, when international buyers imposed fewer compliance requirements. However, environmental concerns over untreated tannery waste polluting rivers prompted the government to relocate the entire tannery estate to Savar.

"The decision to relocate was right, but the way it was implemented was extremely poor," he told parliament.

According to Muktadir, many tannery owners struggled to restart operations after the move, significantly reducing the sector's production capacity.

He also pointed to shortcomings in the Central Effluent Treatment Plant (CETP) at the Savar Tannery Industrial Estate. Although it was designed to treat around 25,000 cubic metres of wastewater daily, it currently processes only around 14,000 to 17,000 cubic metres under favourable conditions.

The CETP also lacks a chromium recovery facility despite chromium being one of the most hazardous chemicals used in leather processing, the minister added.

In addition, he said most tanneries relocated from Hazaribagh failed to install their own Effluent Treatment Plants (ETPs), preventing them from meeting international environmental standards.

Muktadir said obtaining certification from the Leather Working Group, an internationally recognised compliance body, requires a score of 1,710 points. Of those, only 150 points relate to ETP compliance, while the remaining 1,560 points depend on fulfilling other environmental and operational standards.

However, because many tanneries failed to establish compliant ETPs, they also did not pursue the remaining compliance requirements, resulting in the loss of access to premium international markets, he said.

The minister said this decline in leather exports has significantly affected the domestic rawhide market, reducing the value of sacrificial animal hides collected during Eid-ul-Azha.

"As the number of buyers fell and leather processing capacity declined, the value of donated hides also dropped. This particularly affected Qawmi madrasahs, which traditionally benefit from the proceeds of sacrificial hides," he said.

To address the situation, the government has undertaken several initiatives, Muktadir said.

He announced plans to upgrade the existing CETP to its full design capacity of 25,000 cubic metres per day and construct another central treatment plant to improve wastewater management.

The minister also said larger tanneries will be required to install individual ETPs, with the government providing technical assistance and, where necessary, financial support.

He said LWG certification will be made mandatory for qualifying tanneries to ensure full compliance with international environmental standards.

For financially distressed tannery owners unable to continue operations, the government plans to facilitate what Muktadir described as a "graceful exit" from the industry.

He expressed optimism that these measures will fully restore Bangladesh's leather processing capacity and strengthen exports of leather and leather goods.

"Our goal is to develop leather and leather products into an export sector worth more than $10 billion," he said.

Highlighting measures taken during this year's Eid-ul-Azha, the minister said the government distributed salt worth around Tk17.6 crore through the Bangladesh Small and Cottage Industries Corporation to district administrations for preserving rawhides.

Muktadir said selected madrasah teachers and administrators received training on proper hide preservation techniques, while around 8 lakh leaflets were distributed nationwide alongside television awareness campaigns.

According to government data, around 1.01 crore animals were sacrificed during this year's Eid-ul-Azha, and approximately 70 lakh hides were successfully preserved.

The minister said proper flaying and timely salting within four hours of slaughter are essential to maintaining the commercial value of rawhides for several months.

He said around 30 lakh to 35 lakh hides have already reached the Savar tannery estate for processing.

To avoid overwhelming the Savar facilities immediately after Eid, the government temporarily restricted the movement of hide-carrying trucks into Dhaka for one week through district administrations and the Ministry of Home Affairs, allowing preserved hides to arrive gradually, he added.

Responding to a supplementary question on whether the government will provide loans to the leather sector, the commerce minister said the government has deliberately decided against injecting large amounts of financial support into the market.

He argued that only a limited number of compliant tanneries are currently financially solvent and that indiscriminate lending could distort the market while creating significant risks of loan defaults.

"Instead of releasing unnecessary funds, we chose to provide essential inputs such as salt. We believed that massive financial intervention at this stage would not produce proper returns and banks might not recover the money," he added.