EU carbon rules add pressure on leather sector
Bangladesh’s leather sector is facing growing challenges that are eroding its international competitiveness, with industry leaders and economists citing policy weaknesses, environmental compliance issues, financing constraints and limited institutional support as key obstacles to growth.
The concerns were highlighted during a webinar titled “Is the Future of Bangladesh’s Leather Industry Losing Its Momentum?” organised by the Power and Participation Research Centre (PPRC) on Friday.
Participants observed that despite its strong potential for export earnings, employment generation and value addition, the leather industry continues to grapple with a range of structural challenges that have hindered its development over the years.
Md Tipu Sultan, chairman of the Bangladesh Finished Leather, Leathergoods and Footwear Exporters’ Association (BFLLFEA), said several critical environmental facilities promised during the relocation of tanneries from Hazaribagh to Hemayetpur in Savar remain incomplete.
He noted that the relocation was intended to improve environmental compliance and strengthen the sector’s global standing, but delays in completing the required infrastructure have affected the industry’s ability to meet international standards and retain overseas buyers.
According to Sultan, shortcomings in environmental compliance have weakened confidence among international brands and limited opportunities for expansion across the leather value chain.
Jennys Shoes Ltd Chairman Nasir Khan identified complex licensing procedures, tax-related challenges, ineffective incentive structures and limited value addition as major impediments to the sector’s growth.
Drawing comparisons with Vietnam, he argued that Bangladesh has yet to establish a sufficiently competitive policy and business environment to strengthen its position in global leather markets.
He also said the current tax framework does not provide adequate incentives for foreign investment, particularly from multinational companies.
Professor Mustafizur Rahman, distinguished fellow at the Centre for Policy Dialogue (CPD), cautioned that Bangladesh’s leather exporters could face additional challenges from the European Union’s Carbon Border Adjustment Mechanism (CBAM) if environmental compliance standards are not strengthened.
He stressed the importance of preparing for emerging global regulatory requirements, warning that failure to adapt could affect the sector’s export competitiveness in key international markets.
Professor Abdus Sattar Mondal called for measures to reduce leather waste by at least 50 per cent within the next year through improved monitoring, better preservation practices and more efficient management systems.
Moderating the discussion, PPRC Executive Chairman Hossain Zillur Rahman said the long-term sustainability of the leather industry would depend on addressing environmental, economic and institutional challenges in a coordinated manner.
He emphasised that comprehensive reforms are needed to unlock the sector’s full potential and enhance its contribution to the national economy.
