Significant export prospects bring a growing number of local and foreign entrepreneurs into the shoe and leather goods industry.
In the past several years, more than a dozen of local firms have signed up for making footwear and leather goods. The investors put the money in the sector as international buyers flocked to Bangladesh, a low-cost source, due to rising costs in the world’s biggest footwear exporter — China, industry operators said.
Foreign investors, especially from Taiwan, have also established factories in export processing zones (EPZs) to cash in on Bangladesh’s cheap labour and a duty-free export opportunity to Europe and Japan.
Already, exports of shoes and leather goods are on the rise.
“Many are investing in shoe and bag making business amid rising production costs in China. Exports will be huge within 10 years,” said Tipu Sultan, managing director of Bengal Leather Complex.
Some 11 Taiwanese groups have established factories in EPZs in the last three to five years, said Sultan, also a former chairman of Bangladesh Finished Leather, Leather Goods & Footwear Exporters Association.
Taiwanese firms control around 60 percent of shoe trading business globally, he said.
Since 2006, the association has awarded memberships to 13 new local firms, mostly shoes and leather goods makers.
Sultan said his firm also opened shoe and bag units a year ago after making finished leather for a long time.
Bengal Leather has been exporting shoes and bags for the last eight months, he said, adding that accessories factories are also being set up to support the shoe industry.
M Fayaz Taher, managing director of Fortuna Leather Craft Ltd, said many tannery owners are now going for further value addition.
“Future is very bright,” he said.
New footwear ventures are coming up and Bangladesh will be the next footwear destination, he added.
Their optimism came at a time when economic turmoil in Europe has slowed down demand for footwear and leather goods.
However, rising inquiries from buyers give them the hopes that the fall in demand would be short-term.
“We are all under stress. Buyers are getting more and more interested in our products. We are trying to upgrade our factories to meet their requirements,” said Ziaur Rahman, managing director of Bay Footwear Ltd.
In fiscal 2011-2012, export growth of the entire leather industry slowed to 17 percent from 41 percent a year ago, according to Export Promotion Bureau.
Exporters bagged $765 million in fiscal 2011-2012, up from $651 million in the previous year.
The leather industry, which has grown on local hides and skins, now emerges as the third largest sector to contribute to exports after garments, and jute and jute goods.
Rahman said small and new entrants might find some difficulties due to the sluggish global demand.
“But future looks bright. We may have to struggle in the current year only,” he said.
Footwear and leather goods accounted for one-fifth of the total export earnings of the leather industry a decade ago.
The share of the two sub-sectors rose to 56 percent in fiscal 2011-2012.
The rise was due to buoyant growth in footwear exports and a recent surge in exports of leather goods such as bags, purses wallets and belts, according to the EPB.
Saiful Islam, a former president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, said improved quality has helped win confidence of more buyers.
He said the customs authority should cut time in giving clearance to imported raw materials for shoes and leather goods.
-With The Daily Star input
