Move to issue legal notice for relocation disappoints tanners

Tanners have expressed their disappointment over the Industries Minister's decision to issue legal notice to tannery owners in the capital's Hazaribagh for not relocating their industrial units within the stipulated time.
They said such a decision is not fair as tanners have been relocating. If some lag behind, the Industries Ministry should help them out.
"We are trying our best to comply with ministry's given time, but money is a big constraint. The Industries Ministry should not take such a decision," said Bangladesh Finished Leather, Leathergoods and Footwear Exporters' Association (BFLLFEA) President Mohammad Abu Taher.
On November 12, Industries Minister Amir Hossain Amu gave an order to issue legal notice to tannery owners of Hazaribagh for relocating their industrial units within the stipulated time.
At the same time, the Minister gave order to the Bangladesh Small and Cottage Industries Corporation (BSCIC) to disburse compensation money from next week to those tannery owners who have already started construction works at the Savar leather industrial city.
However, tanners said the BSCIC has not yet started disbursing compensation money as a week passed after issuance of the order.  
The Industries Ministry allocated plots on the 200-acre leather estate in Savar to 155 tannery owners through the BSCIC, a wing of the Industries Ministry which is implementing the project.
About 80 tanneries have started the process of relocation, according to the tanners' association.
The tannery leaders said all of the 155 tannery owners have got approval of their design plans of building structures in the Savar Tannery Estate, but almost half of the tanneries could not start relocation.
Mr Taher said all the tanneries are not equally well-off. They cannot relocate on their own.
"We tried to get easy and long-term loan to bear the expenditure of relocation of our factories, but the response is not enough. Though the Bangladesh Bank (BB) announced an incentive but getting loan is still a matter of time," said Bangladesh Tannery Association (BTA) Secretary Belal Ahmed told the FE adding that under this circumstance, the Industries Ministry should not issue legal notice.
Early this month, the central bank announced  an incentive package for tanners to help them move the hazardous factories to Savar.
According to the BB notice, tanneries which have already moved to Savar from the toxic tannery hub of Hazaribagh or are under process to do so, will get an opportunity to transfer their irregular loans into block accounts and will have eight years for repayment, with a one-year grace period.
Tanners will be charged 10 per cent interest on the loans in the block accounts or banks' cost of fund or whichever is lower.
The BB also allowed the banks to consider relaxation of the existing down payment while rescheduling old loans or awarding new loans for tanneries involved in exports.
However, fresh collateral has to be ensured in getting new loans if there is any deficit in security money.
Tanners will be able to free their property earlier used as collateral in previous loans if they can show equal collateral. To take the incentives, tanners will have to begin the process of relocation within the next six months, the BB notice said.
The central bank directive is also in line with the demands of the tannery owners.
Mr Belal Ahmed said the amount of irregular loans with the tannery sector now stands at about Tk 4.5 billion of which Tk 2.5 billion is accrued interest.
The tanners will have to invest around Tk 60 billion to relocate the factories, set up new plants and begin commercial production, Mr Ahmed said.
Mr Taher said tanners urged the government to provide long-term loans at single digit interest to expedite relocation, but whatever the central bank directed is alright if loan is disbursed accordingly.
"But some of the banks are not showing any interest to give loans to tanners. Although  some tannery owners contacted the banks,  they showed negative attitude," he said.
The leather industry fetched $1.29 billion from exports in the last fiscal year, crossing the one-billion-dollar mark for the first time, according to the Export Promotion Bureau.
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