Term Papers and Free Essays

Term Paper - Prospect Of Export Oriented Leather Industry In Bangladesh

Prepared For : Sheikh Ziaul Islam ASSOCIATE PRPFESSOR Department of Marketing Azam khan Govt commerce college,Khulna

Prepared By : Newaj Raj
University Roll : 9783541
University Reg : 1706344
Session : 2010-2011
College Name : Azam khan Govt commerce college,Khulna

Table of Contents

Chapter Name Name of topics Page no
Chapter-1
INTRODUCTION
1.1 Origin
1.2 Why chosen
1.3 Objectives
1.4 Methodology followed 4
Chapter-2 . BACKGROUND
2.1 Background
2.2 Sector Highlights
2.3 Industry Outlook
2.4 Various leather goods
2.5 Current Export Policy
2.6 Investment Incentive 7----11
Chapter-3 MARKET
3.1 Historical background of leather and and leather goods industry 3.2 Bangladesh in the international Market eather goods industry
3.3 Global market for leather footwear
3.3.1 World Import of leather and leather products
3.3.2 Trend in World Trade in Leather and Leather Products & main competing countries
3.3.3 Top Importing countries of Leather and Leather Products
3.3.4 Top Exporting countries of Leather and Leather Products
3.3.5 International Market Trend
3.3.6 Asia in the world leather footwear market
3.3.7 Status of Leather Industry In Neighboring Country - India
3.4 Case for Bangladesh
3.4.1 Background
3.4.2 Leather footwear Industry
3.4.3 Export earning from leather footwear
3.4.4 Comparative advantage of Bangladesh
3.4.5 Labor cost, a crucial factor in the labor intensive Industry 11------------20
Chapter-4
. SWOT ANALYSIS
4.1 Strengths:
4.2 Weaknesses:
4.3 Opportunities:
4.4 Threats: 20-----22
Chapter-5

Conclusion 22-----23

1. INTRODUCTION
1.1 Origin
Our honorable teacher, Associate Professor Sheikh Ziaul Islam Department of Marketing Studies, has assigned me to prepare term paper on â Prospect of Export Oriented Leather Industry in Bangladesh. This is a term paper for our Course: International Business and Management (EM-527).
1.2 Why chosen
As a country, we must emphasize more & more on our exports. Our export has been from garments, which now is now under threat in post GATT era. So, we must concentrate on other export industries like leather, pharmaceuticals, information technology, etc.
1.3 Objectives
The objectives of this term paper are:
1. To assess Leather industry of Bangladesh.
2. To find out worldwide leather export scenario.
3. To evaluate export prospect of our leather industry.
1.4 Methodology followed
Due to time constraints, mostly I had to depend on secondary data. Information sources that I have used, are:
For Information, articles & statistics: • Current Export Policy, Bangladesh Export Data: Export Promotion Bureau Web Site - www.epbbd.com • Various World Statistics: International Trade Center (ITC), Geneva Web
Site - www.intracen.org • Indian Leather Export Data: Council For Leather Exports Web
Site - www.leatherindia.org • Relevant Articles in Newspapers & Internet
Besides, for industry information I’ve talked to personnel of some local leather goods companies.
2
. BACKGROUND
2.1 Background
From time immemorial, the arts and crafts of Bangladesh are closely linked to our culture and heritage. Leather and leather products have always been a part of that heritage and after the emergence of an independent Bangladesh in 1971, the industry received a fresh momentum. Bangladesh started exporting crust and finished leather in early 80's and footwear and other manufactured leather goods during 90's. Export growth in this sector is highly encouraging. Export of leather and Leather goods (including Footwear) earned US$217.03 Million for Bangladesh in the fiscal year 2003 (*Note: II). However, there are still huge development and growth potential for export of leather goods. As it is a labour intensive industry, there are lots of scopes to increase export in this area.
Export By Major Products (2002-2003) Source: *Note: I
2.2 Sector Highlights
a. The labor-intensive leather industry is well suited to Bangladesh having cheap and abundant labor.
b. Bangladesh has a domestic supply of good quality raw material, as hides and skins are a by-product of large livestock industry.
c. Adequate government support in the form of tax holidays, duty free imports of raw materials and machinery for export-oriented leather market.
d. The industry lacks domestic technology and expertise and local support industries such as chemicals are still under-developed.
2.3 Industry Outlook
There is already a substantial domestic leather industry, 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. 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 labour 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.
2.4 Various leather goods
There are two areas of Leather export:
a. Finished Leather b. Leather Goods.
In both areas are, there are huge prospects to be explored.
There can be many types of leather goods, some of which are:
Leather Footwear:
a. Casual Shoes
b. Sport Shoes
c. Moccasins
d. Safety Boots
e. Monk
f. Oxford
g. Chappals
h. Horachi
i. Sandals Leather Accessories:
a. Bags
b. Wallets
c. Belts
d. Purses
e. Cases
f. Business Organizers
g. Key Chains
h. Picture Frames
i. Jewelry Boxes
j. Briefcase
k. Backpacks
l. Portfolios
Leather Fashion Jewelries:
a. Necklaces
b. Bracelets
c. Hair Clips
d. Chokers
e. Arm Bands
f. Earrings
g. Rings
Leather Furniture:
a. Sofas
b. Chairs
c. Sectionals
d. Recliners
Leather Garments & Clothing:
a. Shirts
b. Jackets
c. Trousers
d. Vests
e. Coats
f. Gloves
g. Shorts
h. Caps
i. Blazers
j. Thongs
k. Overcoats
l. Industrial Clothing
2.5 Current Export Policy
Leather and leather goods industries, alongside readymade garments, computer software and agro-processing sectors have been declared as a Thrust sectors in our Current Export Policy. Although the leather and leather goods sector has enormous export potential, the sector has not been able, till date, to achieve desired results. To ensure priority on leather and leather goods industry, following line of action has been recommended in our Current Export Policy (*Note: I) :
a. Leather manufacturing units shall be modernized in order to enable them to produce increased quality of finished leather out of raw hides.
b. With a view to reducing cost of production, steps shall be taken to establish accessories industries for producing necessary chemicals and other inputs within the country.
c. The existing Leather Technology Institute shall be modernized for use as a 'Common Facilities Centre'.
d. Necessary credit facilities shall be extended for setting up of leather goods industries and efforts for marketing the produces shall be strengthened.
e. Cluster industries comprising small units of leather goods factories shall be set up with a view to generating employment.
f. A 'Leather Council' shall be formed.
g. Industrial units having no bonded warehouse at the same time not interested to avail of duty draw back facilities shall be entitled to cash benefit in lieu of duty drawback.
h. Import of raw hides including wet blue and pickled leather, shall continue with the prevailing customs duty (2.5%) and import license fee (2.5%) leviable on the importation of raw leather for three years.
i. Uniform policy on bank loan as regards criteria and rate of interest shall be followed for credit to leather sector.
j. The total credit excluded to the leather sector shall be brought under a single bank and export will also be effected through that designated bank.
k. After careful revision of the overall situation prevailing in the leather industries, the time-limit for export of crust leather has been extended upto the year 2000. Facilities for BMRE and other transformation process shall be made available to all tanning units to enable them to switcher by 2000, to processing crust/finished leather from wet blue leather.
Above action plan should be very much encouraging to existing to leather industries & as well as new entrepreneurs in the sector.
2.6 Investment Incentive
a. Present Government is in the process of setting up of separate Leather Zone relocating the existing industry sites to an well-organized place.
b. New FDI inflow is highly encouraged and foreign investors are welcome to have the opportunity.
3
. MARKET
3.1 Historical background of leather and leather goods industry
The history of leather processing and leather goods industry go side by side In the 1940's and before, the America continents with large cattle population and abundant grazing ground developed technology to process leather, a by product of ranching industry in industrial scale. Therefore the tannery and leather industry concentrated in the United States and export was mostly towards Europe.
The European economy following the World War II provided the USA the opportunity to develop capital intensive and high technology industries. Thus in the 1950's the labor-intensive leather industry migrated from the USA to the war-ravaged economies of UK, Germany and France. Capital scarcity, unemployment and low industrial output encouraged the shift. However, increasing wage rates and growing environmental pressure shifted the industry once again to Japan and Italy. By 1970 Italy dominated the leather industry, excelling in quality & finishing. But as Japan & Italy developed, the leather industry shifted to Hong Kong. Korea and Taiwan by mid seventies. These countries with lower wage rate and less stringent pollution law were able to absorb the technology efficiently. Their production capacity was built up almost entirely on imported raw hides and skins.
In the 1980's and 1990's the Asian dragons had expanded their industrial base and with rising age rates and levels of technology in these countries, the leather industry shifted to other South Asian countries such as Thailand, Indonesia, China, India. Pakistan and Bangladesh. South America still retains a manufacturing base to sustain its own leather goods industry, but it cannot compete in the long term with South Asian producers for much higher wages.
3.2 Bangladesh in the international market
From time immemorial, the arts and crafts of Bangladesh are closely linked to our culture and heritage. Leather and leather products have always been a part of that heritage and after the emergence of an independent Bangladesh in 1971, the industry received a fresh impetus. Today the country earns a sizeable amount of foreign exchange every year through export of leather and leather products to a number of overseas markets. The Leather Industry of Bangladesh has been given particular attention for developing its infrastructure. By combining the latest in leather technology with abundant raw materials and inexpensive skilled labor, leather and leather products are now playing an important role in earning foreign exchange for the country.
Bangladesh is capable of producing 210 Million sft of Leather annually. The industry also produces the world's finest quality goatskin of a very fine and smooth grain pattern. Country's cow leather has excellent natural compact fiber structure with a round feel and touch. More than eighty percent of the country's annual production is exported worldwide as semi finished/finished Leather, footwear and accessories.
Footwear and Leather accessories had indeed made great strides during the decade. There are 15 large-scale modern shoe factories engaged in the production of high quality footwear with 2500 smaller footwear units spread all over the country. These units are producing for the domestic market. Over 50 manufacturers are producing various Leather items such as travel goods, suitcases, briefcases and fashion accessories, along with belts, wallets, hand bags, case holders etc. for overseas export. Bangladesh has also entered the field of Leather fashion garments with items of distinction and prestige.
Although Bangladesh is a new entrant in the international leather market, the export growth in this sector is very encouraging. Bangladesh started export of crust and finished leather in early 1980 and footwear and other manufactured leather goods in early 1990. Export earning from leather goods in 1972-73 was negligible, but has increased considerably since 1990-91.
3.3 Global market for leather footwear
3.3.1 World Import of leather and leather products
For better understanding of international leather & leather products market scenario, World Import of leather and leather products (1999 - 2003) is shown below:
(Value in Million US$)
DETAILS 1999 2000 2001 2002 2003
Leather 12,789.88 14965.69 16197.23 15882.95 17052.57
Leather Footwear 26,901.92 27598.13 28908 30600.23 33297.17
Footwear Components 4,537.86 4446.66 4598.18 4374.37 4612.19
Leather Garments 3,162.00 4457.92 4771.19 4223.19 4131.86
Leather Goods (Including Gloves) 6,703.68 7254.22 7531.73 7966.31 8882.51
Saddlery & Harness 416.6 447.84 464.07 497.99 593.81
TOTAL 54,511.94 56094.34 60722.62 64007.33 65049.05
Source: *Note: II
3.3.2 Trend in World Trade in Leather and Leather Products & main competing countries
Recent trend in World Trade in Leather and Leather Products & main competing countries, is shown below:
(Value in million US$)
Country 1999 2000 2001 2002 2003
Export from China 11,432.01 13,741.54 14,691.95 16,160.70 19,240.56
China's share in world import% 15.94% 17.77% 18.19% 19.74% 21.82%
Export from Italy 11,527.92 12,286.64 13,124.72 12,942.28 13,985.29
Italy's share in world import% 16.08% 15.89% 16.25% 15.81% 15.86%
Export from Korea Rep. 2,275.28 2,465.84 2,160.13 1,828.85 1,627.95
Korea's share in world import% 3.17% 3.19% 2.67% 2.23% 1.85%
Export from Brazil 1,985.05 2,427.44 2,616.38 2,564.01 2,778.62
Brazil's share in world import% 2.77% 3.14% 3.24% 3.13% 3.15%
Export from Thailand 1,293.48 1,304.27 1,302.76 NA 1,272.36
Thailand's share in world import% 1.80% 1.69% 1.61% 1.44%
Export from Indonesia 1,761.49 1,923.00 1,737.69 1,309.95 1,325.68
Indonesia's share in world import% 2.46% 2.49% 2.15% 1.60% 1.50%
Export from Taiwan 1,588.17 1,527.00 1,312.88 1,300.98 1,238.11
Taiwan's share in world import% 2.21% 1.97% 1.63% 1.59% 1.40%
Export from Turkey 404.60 448.50 485.18 461.05 533.14
Turkey's share in world import% 0.56% 0.58% 0.60% 0.56% 0.60%
Export from Mexico 803.30 870.28 707.40 640.53 667.37
Mexico's share in world import% 1.12% 1.13% 0.88% 0.78% 0.76%
Export from India 1604.35 1963.55 1936.14 1875.21 2094.33
India's share in world import% 2.24% 2.54% 2.40% 2.29% 2.38%
Source: *Note: II
3.3.3 Top Importing countries of Leather and Leather Products
Top Importing countries in Leather and Leather Products in recent times, are shown below:
(Value in thousand US$)
Top Importing Countries 1999 2000 2001 2002 2003
USA 18,735,835 20,701,743 20,964,183 20,930,420 21,155,555
HONG KONG 8,261,292 9,097,919 8,763,738 8,517,831 8,989,123
ITALY 3,947,073 4,712,550 5,491,003 5,750,595 6,576,007
GERMANY 6,268,482 5,571,828 5,864,154 5,678,359 6,387,381
FRANCE 3,668,538 3,867,975 4,048,609 4,444,479 5,271,459
UNITED KINGDOM 3,998,401 3,863,227 4,161,022 4,461,108 4,919,971
JAPAN 4,000,314 4,472,168 4,548,827 4,252,672 4,528,927
CHINA 2,302,097 2,743,976 2,783,883 2,923,013 3,331,768
SPAIN 1,348,070 1,434,855 1,656,184 1,758,393 2,252,521
BELGIUM 1,513,295 1,454,493 1,680,984 1,758,886 1,902,306
CANADA 1,400,590 1,537,222 1,535,187 1,569,899 1,653,293
NETHERLANDS 1,524,048 1,588,051 1,686,189 1,630,462 1,621,742
Source: *Note: II
3.3.4 Top Exporting countries of Leather and Leather Products
Top Exporting countries in Leather and Leather Products in recent times, are shown below:
(In Thousand US$)
Country 1999 2000 2001 2002 2003
CHINA 11,432,019 13,741,549 14,691,959 16,160,702 19,240,562
ITALY 11,527,927 12,286,645 13,124,728 12,942,283 13,985,295
FRANCE 2,470,648 2,581,061 2,719,493 2,777,324 3,347,780
GERMANY 2,529,249 2,359,215 2,576,000 2,916,415 3,216,009
SPAIN 2,545,534 2,455,521 2,643,642 2,806,026 2,998,678
BRAZIL 1,985,056 2,427,440 2,616,381 2,564,017 2,778,627
INDIA 1,619,793 2,015,927 1,969,620 1,877,790 2,204,709
BELGIUM 1,623,832 1,526,738 1,853,163 2,062,335 1,899,640
KOREA REP. 2,275,284 2,465,842 2,160,132 1,828,856 1,627,955
Source: *Note: II
3.3.5 International Market Trend
Ten years of world trade in leather shoes show that the Americans buy more than they supply, Asia's supply is far in excess of its demand, and Europe's export has fallen sharply in the last decade. In terms of international supply, Europe has lost huge market share to Asia while Asia gained substantially in the European market. Intra-zone commerce in Europe fallen considerably, because Asian shoe sales have increased significantly in last ten years.
Turning now to Asian shoe imports, Asian share of world demand has progressed noticeably. However, Europe and America are not profiting from the increase in Asian shoe consumption. Earlier the main supplier to this continent was Europe, which has since lost its market share. Shoes imported to Asian countries therefore come from within the region.
The US footwear market is the largest, the most open and the most profitable in the world and with the declining domestic production, the import is expected to increase still further in the near future. The major imports were from Taiwan and South Korea. Lately, China, Thailand, Indonesia, Brazil and India have been able to make significant inroad due to their lower cost.
China has made amazing progress in production and sale of leather footwear in the last decade, as its output has increased by about seven times. The bulk of the production was exported to the USA.
Italy, USA, Taiwan and Korea have been the major market losers during 1996 to 2000; while the major gainers were China, Thailand, Indonesia, Brazil, Portugal & India. The major factor for this change has been the price, determined mainly by wage rate and favorable exchange rate.
The rising demand for various leather products led to the shifting of this industry from developed countries to low cost locations as the market became competitive. A number of leather footwear units in Korea and Taiwan are shifting to China for China's lower wage rate. Some have entered into joint collaborations while other are relocating to Indonesia and Vietnam. It may be noted that shoemakers in Asia today manufacture two out of every three pairs of shoes produced in the world and China accounts for half of Asian production.
3.3.6 Asia in the world leather footwear market
The present trend is to relocate leather and leather products industry to the South and South East Asian countries like Thailand, China, Indonesia, India, Pakistan and Bangladesh, which is expected to continue for the next few years. A growing number of developing countries are successfully exporting leather footwear to the major markets. Shoes produced in the developing countries and Asia are now found in shops across Europe and North America.
3.3.7 Status of Leather Industry In Neighboring Country - India
It is worth discussing development of leather industry in India before discussing Bangladesh scenario. India started exporting shoe uppers during the early 70's. From early 80's, production of shoe and other leather products plants were upgraded. Since then, the shoe sector has developed into a major export earner for them. Table below shows the export of leather and leather products from India in last five years. From the table it is evident that export of shoe components are decreasing while export of finished shoes is increasing.
(Value in Million US$)
CATEGORY APRIL-MARCH
1999-2000 2000-01 2001-02 2002-03 2003-04
FINISHED LEATHER 239.82 381.49 459.25 508.83 519.38
LEATHER FOOTWEAR 377.39 381.37 395.39 423.30 539.70
FOOTWEAR COMPONENTS 215.09 238.09 233.94 175.07 149.82
LEATHER GARMENTS 347.28 460.45 378.75 272.08 295.00
LEATHER GOODS 278.72 343.76 321.46 335.36 469.49
SADDLERY AND HARNESS 34.11 42.66 35.64 43.66 51.94
TOTAL 1,492.41 1,847.82 1,824.43 1,758.30 2,025.33
Source: *Note: III
The Government of India is helping the sector by establishing research centers for leather production as well as design, development & training centers for leather goods production.
3.4 Case for Bangladesh
3.4.1 Background
The export of leather goods began in 1990-91. Bangladesh earned US$ 147 million in 1992-93 from export of leather and leather goods. Export of leather footwear from Bangladesh increased from US$ 2.844 million in 1990-91 to US$ 4.142 million in 1991-92 and to US$ 9.542 million in 1992-93. Recent past export position is:
Commodities 2002-2003
Leather 191.23 (Value in Million Dollar)
11071.99 (Value in Million Taka)
Footwear (Leather) 35.06 (Value in Million Dollar)
2030.08 (Value in Million Taka)
Leather bags & purse 3.36 (Value in Million Dollar)
194.75 (Value in Million Taka)
Hand gloves (Leather)
0.07 (Value in Million Dollar)
3.84 (Value in Million Taka)
Source: *Note: III
The trend of world export and import of leather shoes has been gradually shifting in favor of developing countries. Bangladesh with lower wage rate is expected to enjoy comparative price advantage in the international market over many other countries. Although some of the developing countries like India, Pakistan and Thailand took the advantage of the global shift of the industry, Bangladesh has not been able to achieve a major breakthrough despite having exportable quality of hides and skins and a large pool of cheap labor force.
3.4.2 Leather footwear Industry
The development of leather industry rests more on higher value added footwear and leather products manufacturing capacity than on raw material base. There are about 200 government recognized large and medium-size and over 3,000 small and cottage size footwear and leather goods manufacturing units producing shoes, sandals, leather garments, bags, purses and other fashionable leather items. Of the recognized units 20 are mechanized, 40 are semi-mechanized and the rest are manual and cottage level footwear industries. The mechanized and semi-mechanized industries are located in Dhaka and Chittagong, Bangladesh and the small and cottage level industries spread all over the country.
Annual production of footwear in Bangladesh estimated by the industry sources is about 20 million pairs of which, about 12 million pairs are produced by recognized units while the rest 8 million are produced by unregistered small and cottage level factories. The largest mechanized and multinational shoe company BATA, with its sub¬contracted manufacturing units, produces about 20,000 pairs per day of various types of gents and ladies shoes (both leather and synthetic) which accounts for about 40% of the footwear manufactured in the mechanized and semi-mechanized sector and about 33% of the country's total footwear production. Excelsior Shoe Ltd., in the Chittagong Export Processing Zone, Meenhar Sport Shoes Ltd. Chittagong, and a few other shoe factories are producing sports shoes for export and local market using imported synthetic materials. Of the mechanized leather footwear factories, only Apex Footwear Limited, a sister concern of Apex Tannery Limited, is producing about 4,000 pairs of complete leather shoes daily for export. A BSB financed unit, Comfort Shoes Ltd. has gone into trial operation for production of leather shoes for export.
3.4.3 Export earning from leather footwear
Export earning by destination is shown below:
Countries 2002-2003
Taka Dollar % of total
Hong Kong 3,997,333 69,039
36.1
Italy 2,236,150 38,621
20.2
Japan 870,170 15,029
7.86
Korea Rep. 795,295 13,736
7.18
Taiwan 669,079 11,556
6.04
Spain 395,586 6,832
3.57
China 343,483 5,932
3.1
Vietnam 285,344 4,928
2.58
Brazil 202,962 3,505
1.83
Mexico 117,372 2,027
1.06
Ireland 116,464 2,011
1.05
Thailand 114,934 1,985
1.04
Source: *Note: I
The buyers of leather footwear and other leather products are sourcing their purchase from countries having lower wages. The cost of manufacturing footwear and other leather products has gone high even in Thailand, Indonesia, Philippines and Malaysia in recent years. This has opened up opportunity for India, Pakistan, Sri Lanka and Bangladesh to manufacture these products competitively.
It is worth mentioning that some footwear manufacturers in the country have received bulk orders for supply of different types of footwear from Japan, Germany and other countries, being satisfied with the quality and price of Bangladeshi shoes. The availability of leather in the country is an advantage to increase the production of leather products including leather shoes.
3.4.4 Comparative advantage of Bangladesh
Bangladesh enjoys the lowest wages with US$550 per worker per annum in leather sector According to manufacturers, standard production cost for a pair of leather shoes in Bangladesh is about US$14 compared to US$18 in Thailand, US$23 in Korea, US$29 in France and US$32 in USA.
Environmental concern in Bangladesh are already being addressed with plans for relocation of the tannery industries to a place outside Dhaka which will be equipped with effluent treatment and disposal facilities in order to minimize pollution. This will enable Bangladesh to source good quality leather locally.
As the global demand for leather precaution is increasing with population growth and rise in living standard, Bangladesh can be a significant exporter of footwear and leather goods to compete with other exporting countries, if the sector continues to receive Govt. support.
3.4.5 Labor cost, a crucial factor in the labor intensive Industry
As the leather industry is traditionally labor intensive, it's success is largely affected by direct labor cost which in Bangladesh is one or lowest in the world. Bangladesh also enjoys the lowest labor cost in leather sector among the South Asian countries. The unit labor cost for finished leather in Bangladesh similar to that of West Bengal and the rest of India, but lower than other South Asian countries. In terms of labor productivity Bangladesh enjoys competitive superiority to other South Asian countries.
4
. SWOT ANALYSIS
4.1 Strengths:
a. Bangladesh has the potential to develop its leather goods manufacturing sector by producing more value added manufactured goods such as leather footwear, which has good export prospects.
b. The production process for leather footwear is labor intensive. Bangladesh with its large pool of low cost labor, enjoys competitive edge compared to other countries in the region.
c. We have a huge source of finished / semi finish leather locally, which will bring down cost of raw materials as well ensure easy & faster delivery of raw materials.
d. Due to lower cost of raw materials, cheap labor cost, competitive overheads, tax incentives the production cost will be much lower.
4.2 Weaknesses:
a. A good portion of the machineries as well as raw materials like adhesive, tape, thread, lace, hardener, trims & accessories for export quality production is not locally available. These have to be imported in the primary stage, until adequate backward linkage industry for the same is established here.
b. We are lacking in marketing expertise.
c. Yet many countries are not aware about our export potential & our competitive advantage.
d. For design & production quality, we are behind some of the industrial advanced countries.
4.3 Opportunities:
a. Like other labour intensive industries, world wide Leather industry is moving towards low cost production facilities. Thus Bangladesh has a great scope.
b. The international market is still growing at a high rate, which is encouraging.
c. Both US & European leather & leather goods industry is likely to be falling behind with fast growing competitive Asian producers.
4.4 Threats:
a. Leather industry produces substantial amount of chemical wastage, which might be harmful to the environment & people. So, adequate measures should be taken for safe disposal of the same.
b. Price competitiveness being a major issue, there might be price war among Asian Exporters.
5
. CONCLUSION
In view of above & with an eye to world-wide population growth, rise of production costing in US-Europe & ever-growing global demand for leather & leather goods, it is evident that a Prospect of Export Oriented Leather Industry in Bangladesh has great possibility of success. Government is also planning to give total support & expecting about US$784 Million of export from Leather Sector by 2015 (*Note: IV). Besides, Bangladesh has received spot orders of Tk 26 million (US$371,428) in the Asia Pacific Leather Fair 'Fashion Access-2006' held in Hong Kong in late April 2006 (*Note: VI), which is quite encouraging. Therefore, this is the right time to venture in this sector in order to capitalize its full potential.
A C K N O W L E D G E M E N T S:
I. Current Export Policy, Bangladesh Export Data: Export Promotion Bureau Web
Site - www.epbbd.com
II. Various World Statistics: International Trade Center (ITC), Geneva Web
Site - www.intracen.org
III. Indian Leather Export Data: Council For Leather Exports Web
Site - www.leatherindia.org
IV. Daily Naya Diganta dated May 7, 2005, Report : Government is planning to boost leather export by three times in next ten years
V. Daily Ittefaq dated May 28, 2005, Report : New Leather Industrial Area near River Dholeshshori’.
VI. Yahoo Asia Pulse News (http://au.biz.yahoo.com/060420/17/o2ic.html) dated April 20, 2006, Report : Bangladesh Wins Spot Order in Hong Kong Leather Fair 2006.