Bangladesh’s leather industry is losing export competitiveness as the incomplete 2017 tannery relocation, infrastructure gaps, and financing stress weaken production capacity, suppress prices, and erode compliance, industry leaders and economists said at a policy dialogue in Dhaka.
The discussion, “Is the Future of Bangladesh’s Leather Industry Losing Its Momentum?”, was organised under the Ajker Agenda series by the Power and Participation Research Centre (PPRC), bringing together policymakers, bankers, exporters, and researchers.
Bangladesh Finished Leather, Leathergoods and Footwear Exporters’ Association Chairman Md Tipu Sultan said the relocation of tanneries from Hazaribagh to Hemayetpur was intended to create a compliant industrial hub with a Central Effluent Treatment Plant (CETP), chrome recovery system, and scientific waste management. He also said, the core infrastructure remains incomplete nearly nine years later, undermining compliance and export performance.
“The environmental facilities that were the main reason behind the shifting from Hazaribagh to Hemayetpur are yet to be given to us. Because of this, we have also lost customers,” he said.
He added that Bangladesh has failed to secure Leather Working Group certification due to compliance gaps, cutting access to premium buyers. Leather prices have dropped from about $2.50 per square foot to $0.40–0.50, while relocation costs have surged from Tk250 crore to nearly Tk1,200 crore.
Bangladesh Tanners Association (BTA) President Shaheen Ahmed said the sector is facing a combined capacity and liquidity squeeze driven by weak processing capability, labour shortages, and falling bank financing. “Qurbani advance” loans have dropped from about Tk460 crore to Tk65 crore, disrupting raw hide procurement and seasonal trade liquidity.
Jennys Shoes Chairman Nasir Khan said policy instability and regulatory complexity have reshaped investment behaviour and shifted competitive advantage away from Bangladesh. He said the sudden relocation in 2017, followed by changing industrial policies, indirectly benefited regional competitors such as Kolkata-based tanneries.
He linked repeated disruptions, including utility disconnections in Hazaribagh, to long-term investor distrust and buyer diversion to alternative sourcing hubs. “The tax system of our country is designed in such a way that, in most cases, it drives out large companies unless they can make substantial profits here,” he said. Bangladesh is losing access to a global leather and synthetic goods market estimated at $500–800 billion due to structural barriers, he added.
Fellow of Centre for Policy Dialogue (CPD) Mustafizur Rahman said emerging global compliance rules, including the European Union’s Carbon Border Adjustment Mechanism, will raise costs from 2030, making early certification and environmental compliance unavoidable. “Graduation from Least Developed Country (LDC) status could tighten preferential market access,” he warned.
Bangladesh Krishi Bank Chairman Md Nurul Amin said weak governance of environmental infrastructure and poor policy execution continue to constrain the sector.
PPRC Executive Chairman Hossain Zillur Rahman said the tannery relocation exposed a wider policy failure where environmental intent was not matched by implementation. “Our one-dimensional good intentions may not end up bringing good in the end,” he said.
Industry participants pointed to persistent operational stress across the value chain, including weak hide preservation, seasonal Eid-ul-Adha losses, processing inefficiencies, and liquidity shortages. They said around nine million livestock were sacrificed during Eid-ul-Adha, with goat and sheep skin damage rates reaching up to 60 per cent due to handling and preservation gaps. Earlier restrictions on raw hide movement and weak storage systems have compounded losses, while stranded Hazaribagh assets worth over Tk4,000 crore remain underutilised due to legal and urban constraints.
Additional concerns included rising environmental compliance requirements, weak raw hide prices, and skills shortages, with experts warning that Bangladesh risks further erosion of export competitiveness unless structural reforms are accelerated.
