Leather goods outshine finished leather in export

Leather-goods and Footwear Manufacturers and Exporters' Association of Bangladesh (LFMEAB) President Md Saiful Islam presiding
over the 6th annual general meeting of the association at a city hotel recently.

Leather-goods and footwear sub-sector has surpassed the export performance of finished leather
for the first time in the history of Bangladesh's leather sector.

This was revealed at the 6th annual general meeting (AGM) of Leather-goods and Footwear
Manufacturers and Exporters' Association of Bangladesh (LFMEAB) held at Lake Shore Hotel
at Gulshan in the city recently.
President of the association Md Saiful Islam presided over the meeting, according to an
LFMEAB press release.

The meeting reviewed the performance of the association for the year 2009 and adopted the
annual report of the executive committee and audited accounts for the said year.

During the year under review, six new companies joined the association. The association
endorsed 2236 applications for GSP Certificates of the member companies during the year as
compared to 2189 GSP applications in 2008.

The members appreciated the various measures taken by the Executive Committee for the
expansion of the export market to different countries.

The members noted with satisfaction that during financial year 2008-09, exports of footwear
reached $ 186.93 million and leather-goods $ 16.89-a total of US $ 203.82 million equivalent to
Tk 14.27 billion. This was 14.59 per cent higher than the export record of financial year 2007-08.
Target of the sector for the year 2009-10 is $ 246.28 million.

Leather-goods and footwear sub-sector make 80 per cent value addition and make significant
contribution in conversion of local intermediate products. That is why the government continues
its policy support to this non-traditional sub-sector and declared the sub-sector as a thrust sector.

LFMEAB Senior Vice President Nasir Khan, Vice President (Finance) Mohammed Nazmul
Hassan Sohail, Vice President Shakil Ahmed Khan and Executive Committee Members Quazi
Rafi Ahmed, Md Mahbubur Rahman Patwari, AKM Afzalur Rahman and a good number of
representatives of the member companies were present at the AGM.The AGM was also informed
that the sub-sector has expanded both product wise and market wise. In Japan, the leather
products sub-sector has been able to penetrate successfully. As a result, with the success story of
the non-traditional leather items of Bangladesh, traditional exports like RMG and knitwear have
also expanded in Japan market.

Export-Import Information
Year Import (Billion US $ ) Export (Billion US $ )
2001-02 8.54 5.99
2002-03 9.66 6.55
2003-04 10.90 7.60
2004-05 13.15 8.65
2005-06 14.75 10.53
2006-07 17.16 12.18
2007-08 20.37 14.11
2008-09 21.44 15.57

http://www.mincom.gov.bd/export_info.php

Annual Export/Import: US$ 15.57 billion / US$ 21.44 billion (2008-2009)

Major Exports: Readymade garments, frozen foods (shrimps), leather, leather products,
jute, jute products, tea, ceramic, textile fabrics, home textile, chemical product, light
engineering products including bi-cycle.

Major Imports: Oil, edible oil, petroleum product, wheat, seeds, fertilizer, yarn, capital
goods, machinery, power generating machinery, scientific & medical equipment, iron &
steel, motor vehicles, raw cotton, chemicals.

Major Trading Partners: USA, EU countries, China, India, Pakistan, Japan, South Korea,
Canada, Australia, Malaysia, Hong Kong, Taiwan, Thailand, Indonesia, Saudi Arabia and UAE

http://www.mincom.gov.bd/profile.php
Sector Highlights
● The labor-intensive leather industry is well suited to Bangladesh having low-cost
and abundant labor.
● Bangladesh has a domestic supply of good quality raw material, as hides and
skins are a by-product of large livestock industry.
● Adequate government support in the form of tax holidays, duty free imports of
raw materials and machinery for export-oriented leather market
● The industry lacks domestic technology and expertise and local support
industries such as chemicals are still under-developed.

Investment Incentive
● Present government is in the process of setting up of separate Leather Park
relocating the existing industry sites to a well-organized place.
● Leather exporters have been given 15% Duty drawback of cash incentive.

Exhibit 6.6
\Trends of Leather Export from Bangladesh

c. Industry Situation
Bangladesh leather industry is dominated substantially by the domestic investment
which are mostly export-oriented. The leather includes some ready-made garments,
although that aspect is continued 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.
Presently Bangladesh produces between 2 and 3 percent of the world’s leather
market. Most of the livestock base for this production is domestic which is estimated
as comprising 1.8 percent of the world’s cattle stock and 3.7 percent of the goat
stock. The hides and skins (average annual output is 150 million sq.ft.) have a good
international reputation. Foreign direct investment in this sector along with the
production of tanning chemicals appears to be highly rewarding.
Having the basic raw materials for leather goods as well as for the production of
leather shoe, a large pool of low cost but trainable labor force together with tariff
concession facility to major importing countries under GSP coverage, Bangladesh
can be a potential off shore location for leather and leather products manufacturing
with low cost but high quality. In 2004-05 total export of leather goods was 220.93
million US$ on the other hand it is 257.27 million US$ during 2005-06 FY.

d. Industry Outlook
Provision of newly announced infrastructural facilities through establishment of an
integrated Leather Park and simultaneously, growth in the global demand,
opportunities for investing in and setting up export-oriented leather industry in
Bangladesh is definitely attractive. Foreign investors are welcome to capitalize on this
opportunity.