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Bangladesh at a Glance Bangladesh, in full, People's Republic of Bangladesh, republic of southern Asia, in the northeastern portion of the Indian subcontinent, bordered on the west, north, and east by India, on the southeast by Myanmar (formerly known as Burma), and on the south by the Bay of Bengal. The area of the country is 143,998 sq km (55,598 sq mi). The capital and largest city of Bangladesh is Dhaka.
Bangladesh's Competitive Position In comparison with the countries identified as direct competitors Bangladesh has the following strengths, which if properly utilized then, Bangladesh could become one of the major exporters for leather goods.
Bangladesh has been exporting mainly crust and finished leather, which accounts for nearly 82% of the total exports of Leather and Leather goods industry. Out of the balance export more than 90% is footwear, which means only 1.8% of the total exports of Bangladesh is leather goods. Chart –1 EPB
In the above charts A&B we can Clearly see that the exports of leather goods and footwear are less than one fourth of the total leather exports of Bangladesh. In Chart B Leather Goods export we can see that footwear is over 92% of the total exports of leather goods with the remaining 8% only export for leather bags and purses. (Source EPB). Therefore if the scenario could be changed with Leather goods and footwear accounting for 82% of the total exports of Bangladesh for the leather goods industry then the exports of Bangladesh would increase manifold from what it is today. From the following chart we can see the difference. Chart-2 Apex
If we look a the above chart we can clearly see that by exporting leather goods (Various Items) on1000 sit of leather the value addition for products are much higher compared to the finished leather export. Therefore based on the information provided by EPB for the export of leather and leather goods from Bangladesh for the year 2003-2004 if we compare the ligers of export of leather and only wallet (only ) then total export value would have been 383.64 Million and not 211.41 (US$ 211.41 Mill export / US$ 1.65 finished leather value per sft = 128.13 mill sft/ 1.50 sft consumption of Wallet= 85.42 Mill PCs of wallet x US$ 4.50=US$ 383.04) therefore by exporting wallets instead of finished leather Bangladesh could have earned US$ 172.23 Million extra. Therefore we can clearly see that from the above chart that if we export finished Leather goods weather shoes or bags or other finished items then exports of Bangladesh in this sector would surge. For the Leather goods industry to flourish, Bangladesh needs to improve in the following suggestions mentioned below: RAW MATERIAL: This totally depends on what type of production is being done. In Bangladesh 95% of the companies work according to buyers recommendation using raw materials locally available with some imports. As the local market fo9r leather goods is small and there is no big brand name therefore the overall market for is dependent on foreign buyers. Therefore the development of backward linkage industries for Inner Materials, Lining Materials, Synthetic PVC Materials, Metal Accessories Etc. is essential for the overall development of this industry. FINANCE: It is the biggest obstacle for the industries in this sector because to setup leather goods and footwear industries huge capital is required. Interest rates are very high and for this most of the companies can not pay back on time and thus become sick. So assistance can be provided with or by giving long term loans directly through financial institutions and also provide loans with lower interest rates of 4% to 5%. GOVERNEMENT POLIES: Government has decided this industry as a thrust sector & has approved 15% cash incentives but in most cases this thrust sector phenomenon is real in the books and speeches and has already become a document in the pages of history. The cash incentive concept has become a joke in some cases as most of the companies do not receive their funds due to lack of proper guide line provided by the central Bank. Only some nationalized banks give their customers the fund without any problem but most other banks, commercial, national, private and foreign banks only pay when they receive the payment from Bangladesh Bank. This even takes 6 to 8 months before the payment is received in some cases. Therefore the government should really decide and formulate a policy with clear concepts if they really decide and formulate a policy with clear concepts if they really are sincere about making this industry as a thrust sector. Possible recommendations by the government, which can be implemented, are as follows:
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