The country's footwear industry expects a boom in export as the European Union (EU) has decided to scrap Generalised System of Preferences (GSP) facility offered to Vietnam by the end of this year, officials and exporters said on Friday.
They said it will offer a great opportunity for the Bangladeshi footwear exporters to raise their exports. A number of global companies will also relocate their factories here to reap the benefit.
Top executive of the government's Export Processing Zones Brigadier General Jamil Ahmed Khan told the FE Friday: "It's a good news for us. We are ready to avail of the opportunity."
He said a number of giant shoe makers of South Korea, Taiwan and Hong Kong have already approached the Bangladesh Export Processing Zones Authority (BEPZA) to explore possibility of relocating their factories here.
There is a huge potential to develop the country's footwear industry as Bangladesh has available low cost labour and raw material, BEPZA executive chairman said.
Director General of the Export Promotion Bureau (EPB) Md Khalilur Rahman said Bangladesh shoe export might see a boom in the coming months as buyers from across the Europe and America are expected to come here.
He said the EPB will soon hold meeting with the local shoe manufacturers to discuss how Bangladesh can attract the EU buyers, who might look for new import destinations after the GSP facilities to Vietnam are withdrawn.
The EU has decided to scrap the GSP facility for Vietnam-made footwear arguing that the South East Asian country, which earned almost US$ 4.0 billion last year from exports of footwear, no longer qualifies because of the relative strength of its industry.
"Preferences will be suspended for one country, Vietnam, for section Xii products (footwear and some other products," said a statement of European Commission received here on Thursday.
The EU GSP provides 176 least developing countries preferential treatment through lower tariff or duty-free access in a bid to aid development of their economies.
Local shoe manufacturers said this is a great news for the country's over a thousand of shoe makers and over 27 exporters as access to the European market of 490 million people will be more easier.
They said that the industry now needs right kind of policy support from the government for production of quality leather and leather goods.
Talking to the FE from London over cell phone, Tipu Sultan, president of Bangladesh Finished Leather, Leather Goods, Footwear Exporters Association (BFLLGFEA), said: "It's a great news for us."
"Vietnam is our prime competitor. So, withdrawal of GSP facility for the country will undoubtedly benefit Bangladesh," he added.
But, Mr. Sultan said reaping optimum benefit through exploration of new market in Europe might not be possible unless the government takes some immediate measures for promoting local footwear industry.
He said 10 per cent duty on import of raw materials with 15 per cent VAT remained as one of the key hurdles to the growth of this sector.
Mr. Sultan said establishing a quality shoe factory is a matter of huge investment for which support from the government is also very important.
"We'll fail to meet the demand of the EU importers if we do not enhance our capacity to manufacture all varieties of shoes following the changes in fashion and style of the European buyers."
A senior EPB official said the current growth of footwear and leather industry is very healthy.
According to statistics of the EPB, the country's leather and footwear exporters fetched over $407 million, marking a hefty 18.30 per cent growth in the first 11 months of the current fiscal.
The contribution of the sector will stand at around $1.0 U.S. dollar by next two years as the buyers, especially the EU countries, now want to reduce dependency on Chinese and Vietnam for footwear, an analyst said.
