Foreign investors want ‘plug and play’ production setups
Foreign investors expect hassle-free, ready-to-use industrial setups, which the country's leather sector, especially footwear and associated goods, lacks, says Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI).
Constraints over the availability of suitable land at proper locations and the tannery industry's compliance to environmental regulations are the main barriers to drawing foreign investment and boosting the exports, he said.
Foreign investors do not want to spend time and money building up infrastructure from scratch, said Islam while talking to The Daily Star on the sector's exports.
"But we cannot provide…this type of environment…in spite of the huge potential," he said.
The government had set a target to give a boost for the sector to earn $5 billion from exports by 2021.
But this remained unattained for the lack of compliance, a backward linkage industry and necessary investment from home and abroad.
The sector earned $941.67 million from export of leather, leather goods and footwear in financial year 2020-21.
The sector is still dependent on the import of raw materials, including leather, said Islam, also president of the Leathergoods & Footwear Manufacturers and Exporters Association of Bangladesh.
"We cannot use local leather from Savar Tannery Industrial Estate as it is not compliant (to environmental regulations)," he said.
"We have to mention the source of raw materials, whether it is compliant or not (to environmental regulations). Without compliance, buyers do not accept products and place orders," he noted.
Local leather can only be used when the tannery industry abides by environmental laws and obtains certification from Leather Working Group, the global body for compliance and environmental certification in the leather and leather goods sector, he said.
However, Islam expressed hope over a "shoe city", which was to be established by Jennys Shoes in Gazipur, to provide all the necessary backward linkage.
It will also help exporters reduce lead time and production cost, which will enhance the industry's competitiveness in the global market, he said.
Establishment of backward linkages and availability of import substitutes will attract foreign investment and buyers and augment competitiveness of local companies, enabling rapid growth of exports, he said.
He believes if the sector was able to avail these facilities, export targets would be achievable within the stipulated time.
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