Footwear exports buoyant

Industry leaders say growth may not sustain in recession
Footwear exports have marked a 20 percent rise during July-March this fiscal year, Export Promotion Bureau (EPB) statistics show.
The country fetched $144.69 million from exports of the item in nine months, a sharp rise from $131.52 million in the July-February period.
However, the industry leaders warned that this growth in value added leather products might not sustain, as the global financial meltdown has affected the demand for leather and leather goods in international markets.
The July-March leather exports dropped 34.57 percent to $139.21 million. Earlier EPB data showed around 22 percent drop in footwear and a 72 percent decline in bag exports up to February in the current financial year.
Leather footwear and bag makers hope to overcome losses from the decline in leather exports in recent months.
Tipu Sultan, director of Bengal Leather Complex Ltd, said declining finished leather exports had fuelled the export growth in value added leather products.
“The export growth in value added leather products is fuelled by the declining demand and consumption of finished leather in international markets, due to the global financial crisis,” said Sultan, also former chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association. “We produce high quality finished and crushed leather, which is used to produce footwear, bags and purses.”
“Simultaneously, we have offered competitive prices, which has increased demand for our products in global market,” he said.
“The cost of producing leather shoes is lower in Bangladesh than in China and India and this is the main reason why we are receiving orders from European countries,” said Sultan.
“Another major reason behind this growth is the Italian technology we are using, which builds a level of trust among buyers,” he added.
Nowadays many countries like China and India are failing to produce high quality but low-cost leather items due to the WTO anti-dumping rules. So, orders from Germany, Italy, France, Japan and Canada are shifting to the local manufacturers. Crushed leather is the main raw material for locally produced footwear.
Earlier, China, India and Vietnam were the largest leather shoe exporters in the world.
The demand for fashionable and high end leather shoes has declined in international markets because of the recession. But, it has also given rise to an opportunity for the country to produce shoes that are ordinary but essential.
The country started exporting leather footwear in 1994 on a small scale to neighboring countries, including India and Nepal. The footwear business grew in recent years.
Currently, the total market size of Bangladesh made leather footwear stands at around Tk 1,700 crore, of which about 45 percent is exported. The country exports around six million pairs of leather footwear a year.
Apex-Adelchi Footwear Ltd is the country’s leading footwear exporter, claiming more than half of the total exports. The company earned Tk 450 crore last year.
Bangladesh mainly exports men’s footwear, lady’s sandals and shoes and sports shoes to European nations, China, Canada, Saudi Arabia, Dubai, Iraq, Jordan, India and Nepal.
Syed Nasim Manzur, managing director of Apex-Adelchi Footwear Ltd, said footwear exports may decline in the next quarter of the current FY, as recession strikes consumer expenditure on fashion accessories.
“Export earning have increased in recent months as we produce finished products and many countries like Italy have stopped producing high quality shoes,” he said. “But the recession has taken a toll on the demand for luxury fashion accessories.”
“Our present growth figures are resultant of the orders we received at least 6 to 8 months back. The country’s present work orders have slowed by 50 percent,” Manzur said.
Appreciating the government’s move to increase cash incentive for the leather and leather goods exports by 2.5 percentage points to 17.5 percent from the previous 15 percent, he said the government needs to immediately implement the package, to safeguard the industry.
“Another problem we face is the government’s lack of initiative to devaluate our local currency against the US dollar,” he said. “High interest rates have also slowed our present growth.”
He said Indian entrepreneurs are enjoying credit facilities at a 5.5 percent rate of interest, while in contrast, Bangladesh government lowered bank interest to 13 percent last month.
He urged the government to ensure an uninterrupted supply of power that would help increase the sector’s competitiveness and ensure higher productivity.

Courtesy of The Daily Star