Leather sector needs more attention from the government
Friday, 12 December 2008
Syed Fattahul Alim
The exporters of leather, especially raw hide and skin, have been hard hit by the global economic meltdown. The demand from the international buyers has plummeted resulting in the sharp fall in the price of raw leather in the country. Compared to last year, the price of per square feet of raw hide has come down to half this time.
It is common knowledge that during the Eid-ul-Azha every year, the business in raw hide and skin reaches its peak. Seasonal traders, middlemen as well as the wholesalers in the hide and skin trade naturally look forward to this time of the year to make a good earning from buying and selling the hides of sacrificial animals. This year their hopes have been dashed.
In fact, most of these seasonal traders in cow and goat hides could not even recover the amount of investment they had made in the trade. Their sorrows and grievances have already got publicity through the electronic media the very day after the Eid. Their many complaints about such plight, which have generally gone against the tanners and the wholesalers and, what they said, their discriminatory pricing of the raw hide while buying them from the small and seasonal traders, the fact remains that the entire episode should be blamed on the economic crisis that the entire world is going through at the moment.
The government and the owners of the tannery business in a meeting before the Eid had fixed the rate of cattle hide at Tk 30 per square foot in Dhaka, while for the places outside Dhaka it was fixed at Tk. 25 per square foot. But last year the prices of hide fixed through a similar meeting between the tanneries and the government were Tk 70 for Dhaka and TK 65 for other districts. A member of the Bangladesh Finished Leather Goods and Footwear Exporters Association (and the Owner of Dhaka Tannery) Joynal Abedn Bhuyian Khokon informed the news media that there were few orders for raw hides and skins this year from the foreign buyers. So, it is understandable why the price of raw hide has dipped so alarmingly also at home. However, the price of the finished leather is still enjoying a good time, Mr. Joynal Abedin assured.
Other factors of international origin also played their part in the steep fall of hide and skin price. According to the president of the Bangladesh Finished Leather Goods and Footwear Exporters Association, the tannery owners were extra careful about the pricing of raw hide this year. The cautiousness has been due to the behaviour of the foreign buyers of leather last year. In fact, they failed to keep to their promises about the purchase orders for the hide they had made to the local exporters earlier. As a result, local exporters had to face serous loss last year, the president of the Association informed the media. The decision to lower the price of raw hide in consultation with the government was prompted largely due this reversal last year, it was learnt from the leader of the finished leather and footwear exporters association. What came in their way further is the lack of interest of the banks to assist the leather and hide merchants with bank loans.
Needless to say, the government needs to take the issue of loss facing the traders and exporters of raw hide as well finished leather and footwear seriously. For it must be admitted that this is the most prospective sector of export after the garments. The demand for Bangladeshi leather and leather goods is very promising in the international market. Moreover, unlike the readymade garments, the leather has the added advantage that it adds more value to the finished leather or the footwear exported to the overseas market. The government should therefore give more attention to this sector than it has already been achieving.
The complaint of shyness on the part of the banks therefore will not help flourish the sector. And it is not just in the export of leather and the leather goods that the entire potential of leather sector lies. Leather has its huge domestic potential, too. Considering both the sides, the government needs to develop its policy for further development and expansion of the leather-based industry in the country.
The issue has become pertinent, especially after the recent recession that has set in all over the global marketplace. The global economic crisis has forced the rest of the world that depended largely on the European and the North American market for exporting their industrial as well as farm products. The recession in the advanced economies has now provided the reason for looking at the issue of growth and industrial development in a fresh light. Are their priorities of development foolproof? Is it wise to put all the eggs solely in the basket of export to Europe and the USA?
A look at the present situation of the highly successful emerging economies will be lesson enough for the still less fortunate nations of the world. Bangladesh as a member of the club of the least developed economies has undoubtedly a lot to learn from how countries like China, India as well as other big emerging economies are faring in the face of the raging economic crunch worldwide.
It is therefore time to be more attentive to the domestic side of industrialisation, so that falling external demand may not severely affect the economy. At the same time, it is also important to gradually lessen our over-dependency on the European and US markets for our exports. And fresh look also at other export destinations in Asia, Africa and other parts of the world would be highly advisable under the circumstances.
To achieve that end, the leather sector would need a better supportive policy from the government. It is not, however, being suggested that the government, which is already weighed down with too many demands for financial support from various claimants than it has the ability to meet, should come up with a big package of subsidy to bail out the leather sector. In fact, that would be an unjustified demand on the government. But notwithstanding such limitations, the government will still have to help such an important cash earning sector of the economy through further easing up its access to bank credit and widening the scope of other supports to this vital sector of the economy.
The exporters of leather, especially raw hide and skin, have been hard hit by the global economic meltdown. The demand from the international buyers has plummeted resulting in the sharp fall in the price of raw leather in the country. Compared to last year, the price of per square feet of raw hide has come down to half this time.
It is common knowledge that during the Eid-ul-Azha every year, the business in raw hide and skin reaches its peak. Seasonal traders, middlemen as well as the wholesalers in the hide and skin trade naturally look forward to this time of the year to make a good earning from buying and selling the hides of sacrificial animals. This year their hopes have been dashed.
In fact, most of these seasonal traders in cow and goat hides could not even recover the amount of investment they had made in the trade. Their sorrows and grievances have already got publicity through the electronic media the very day after the Eid. Their many complaints about such plight, which have generally gone against the tanners and the wholesalers and, what they said, their discriminatory pricing of the raw hide while buying them from the small and seasonal traders, the fact remains that the entire episode should be blamed on the economic crisis that the entire world is going through at the moment.
The government and the owners of the tannery business in a meeting before the Eid had fixed the rate of cattle hide at Tk 30 per square foot in Dhaka, while for the places outside Dhaka it was fixed at Tk. 25 per square foot. But last year the prices of hide fixed through a similar meeting between the tanneries and the government were Tk 70 for Dhaka and TK 65 for other districts. A member of the Bangladesh Finished Leather Goods and Footwear Exporters Association (and the Owner of Dhaka Tannery) Joynal Abedn Bhuyian Khokon informed the news media that there were few orders for raw hides and skins this year from the foreign buyers. So, it is understandable why the price of raw hide has dipped so alarmingly also at home. However, the price of the finished leather is still enjoying a good time, Mr. Joynal Abedin assured.
Other factors of international origin also played their part in the steep fall of hide and skin price. According to the president of the Bangladesh Finished Leather Goods and Footwear Exporters Association, the tannery owners were extra careful about the pricing of raw hide this year. The cautiousness has been due to the behaviour of the foreign buyers of leather last year. In fact, they failed to keep to their promises about the purchase orders for the hide they had made to the local exporters earlier. As a result, local exporters had to face serous loss last year, the president of the Association informed the media. The decision to lower the price of raw hide in consultation with the government was prompted largely due this reversal last year, it was learnt from the leader of the finished leather and footwear exporters association. What came in their way further is the lack of interest of the banks to assist the leather and hide merchants with bank loans.
Needless to say, the government needs to take the issue of loss facing the traders and exporters of raw hide as well finished leather and footwear seriously. For it must be admitted that this is the most prospective sector of export after the garments. The demand for Bangladeshi leather and leather goods is very promising in the international market. Moreover, unlike the readymade garments, the leather has the added advantage that it adds more value to the finished leather or the footwear exported to the overseas market. The government should therefore give more attention to this sector than it has already been achieving.
The complaint of shyness on the part of the banks therefore will not help flourish the sector. And it is not just in the export of leather and the leather goods that the entire potential of leather sector lies. Leather has its huge domestic potential, too. Considering both the sides, the government needs to develop its policy for further development and expansion of the leather-based industry in the country.
The issue has become pertinent, especially after the recent recession that has set in all over the global marketplace. The global economic crisis has forced the rest of the world that depended largely on the European and the North American market for exporting their industrial as well as farm products. The recession in the advanced economies has now provided the reason for looking at the issue of growth and industrial development in a fresh light. Are their priorities of development foolproof? Is it wise to put all the eggs solely in the basket of export to Europe and the USA?
A look at the present situation of the highly successful emerging economies will be lesson enough for the still less fortunate nations of the world. Bangladesh as a member of the club of the least developed economies has undoubtedly a lot to learn from how countries like China, India as well as other big emerging economies are faring in the face of the raging economic crunch worldwide.
It is therefore time to be more attentive to the domestic side of industrialisation, so that falling external demand may not severely affect the economy. At the same time, it is also important to gradually lessen our over-dependency on the European and US markets for our exports. And fresh look also at other export destinations in Asia, Africa and other parts of the world would be highly advisable under the circumstances.
To achieve that end, the leather sector would need a better supportive policy from the government. It is not, however, being suggested that the government, which is already weighed down with too many demands for financial support from various claimants than it has the ability to meet, should come up with a big package of subsidy to bail out the leather sector. In fact, that would be an unjustified demand on the government. But notwithstanding such limitations, the government will still have to help such an important cash earning sector of the economy through further easing up its access to bank credit and widening the scope of other supports to this vital sector of the economy.