Bangladesh’s leather industry losing ground despite booming global market
While the global leather goods market is expanding rapidly, Bangladesh's leather industry is steadily losing its competitive edge. Industry stakeholders blame the decline on policy failures during the previous Awami League government, which they say pushed the sector into a prolonged crisis.
Once a major export earner with annual exports of 4 billion dollars, Bangladesh's leather sector is now struggling to survive after declining below one billion despite having enormous potential.
Huge Potential of Leather Products
Business leaders say Bangladeshi leather products, including footwear, travel bags, executive bags, handbags, belts, wallets, and other finished goods, enjoy a strong reputation in international markets.
They note that leather goods are among the country's highest value-added export products. However, the industry is now facing severe challenges that threaten its future growth.
Reasons Behind the Decline
Industry insiders allege that the Awami League government, led by former Prime Minister Sheikh Hasina, pushed the sector into crisis through flawed policies.
Business leaders argue that the government's decision to relocate the tannery industry from its long-established hub in Hazaribagh, Dhaka, to Hemayetpur in Savar was implemented without completing essential infrastructure, particularly a fully functional Central Effluent Treatment Plant (CETP).
Although a CETP was installed, industry leaders say it suffers from serious operational deficiencies. As a result, large volumes of untreated wastewater continue to flow into the Dhaleshwari River and eventually reach the Buriganga through various canals.
In addition, the industrial estate lacks an effective solid waste disposal system, contributing to environmental pollution.
Industry representatives also point to the failure of many factories to obtain internationally recognized certifications such as the Leather Working Group (LWG) certification, which is crucial for exporting leather products to major global markets.
According to stakeholders, inadequate environmental compliance, the absence of adequate Effluent Treatment Plants (ETPs), and insufficient water recycling facilities have prevented factories from meeting international standards.
As a result, many European and American buyers have shifted away from Bangladesh in recent years, pushing the sector to the brink of collapse.
Industry leaders allege that repeated appeals to the previous government to upgrade the CETP and address environmental shortcomings were largely ignored.
European and American buyers place tremendous importance on environmental compliance, a sector leader said.
Without LWG certification, our export market has shrunk significantly.
Many factories have already shut down due to prolonged financial losses, while limited access to bank financing has further worsened the situation.
Rawhide Crisis: Unsold Hides Buried Across the Country
The industry's difficulties are also evident in the rawhide market across the country.
Sources said more than 150 sacrificial animal hides were buried at a madrasa in Chandraganj, Lakshmipur, after remaining unsold.
Seasonal traders reported selling cowhides for as little as Tk 50 to Tk 200 per piece, causing widespread frustration among traders and charitable institutions that traditionally depend on rawhide sales.
In another incident, two seasonal traders dumped unsold hides into the Katakhali River in Daganbhuiyan, Feni, on May 29 after failing to find buyers.
The traders, Khurshid Alam and Didarul Alam, said they had purchased hundreds of hides hoping to make a profit but could not sell them despite waiting for wholesalers.
Similar incidents were reported in Shyamnagar, Satkhira, where traders buried unsold hides due to a lack of buyers.
This year, the government had fixed the price of cowhide at Tk 62-67 per square foot in Dhaka and Tk 57-62 outside the capital. Based on these rates, a medium-sized hide measuring 16 to 20 square feet should have sold for between Tk 1,000 and Tk 1,340. However, traders across the country reported selling at far lower prices due to weak demand.
Madrasas and orphanages, which traditionally receive donated hides during Eid-ul-Azha, have also suffered significant financial setbacks due to the market collapse.
Opportunities Remain, But Policy Support Is Needed
Stakeholders argue that the industry's decline is largely the result of policy failures rather than a lack of market opportunities.
As consumers in developed countries increasingly favor environmentally friendly natural leather over synthetic alternatives, demand for quality leather products continues to rise.
Market data shows that the global leather goods market is valued at approximately $531.07 billion in 2025 and is projected to reach $566.23 billion in 2026 before growing to nearly $982.42 billion by 2034.
Experts believe Bangladesh still has the potential to capture a significant share of this expanding market, provided the government offers adequate policy support and addresses long-standing infrastructure shortcomings.
Industry Leaders Call for Reforms
Speaking to Asia Post, Bangladesh Finished Leather, Leather Goods and Footwear Exporters' Association (BFLLFEA) Chairman Md. Tipu Sultan said, "In 2017, when the industry moved from Hazaribagh to Savar, our export market was worth around 4 billion dollars. Today, it has fallen below 1 billion dollars."
He blamed the decline on the relocation process, which he said was completed without establishing internationally required facilities, including a fully functional CETP and proper waste management systems.
"The lack of environmental compliance has driven away many of our major international buyers," he added.
BFLLFEA Senior Vice-Chairman Mahbubur Rahman Panna told Asia Post that many factories had closed, while those still operating faced severe cash-flow constraints due to limited bank lending.
"In such a situation, the shortage of buyers for rawhides is a natural consequence," he said.
BNP Government Keen to Revive the Sector
Both Tipu Sultan and Mahbubur Rahman Panna said the current government has shown interest in reviving the leather industry.
Recently, Industries and Commerce Minister Khandakar Abdul Muktadir acknowledged that the relocation of the leather industry from Hazaribagh to Savar had been marred by serious mismanagement.
After visiting the BSCIC Leather Industrial Estate in Harindhara, Savar, the minister told reporters that the CETP had failed to operate at its planned capacity, while many tannery owners struggled to remain in business after the relocation.
Several factories closed during the transition, leaving owners burdened with significant financial losses and liabilities, he said.
The minister added that the government is now working to restore the CETP's planned daily treatment capacity of 25,000 cubic metres and is assessing technological upgrades, including chromium recovery systems.
Authorities are also exploring ways to revive loss-making tannery enterprises and attract new investment.
Recommendations for Future Growth
Craftsman Footwear & Accessories Ltd Managing Director Sadat Hossain Salim earlier proposed several measures to help Bangladesh capitalize on the growing global leather market.
His recommendations include establishing an independent National Leather Board, ensuring international compliance standards, introducing an effective CETP, developing a modern "Leather City" that accommodates the entire leather value chain, and providing long-term financing on favorable terms.
He also called for business-friendly banking policies, including single-digit interest rates, the abolition of compound interest, longer loan repayment schedules linked to company earnings, and special incentives for value-added products that use more than 40 percent locally sourced raw materials.
Salim further urged the government to formulate subsidy and incentive policies comparable to those offered by competing leather-exporting countries, enabling Bangladeshi manufacturers to compete more effectively in international markets.
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