Md. Joynal Abdin
The Financial Express on March 25, 2013
According to the Bangladesh Bank, the country’s foreign exchange reserve crossed the $13 billion mark recently, a record high. The central bank sees it as a stronger feature of the country’s economic stability and progress. Experts suggest that a portion of the big reserve be invested into productive sectors. The major part of the foreign exchange reserve comes in the form of inbound remittance from Bangladeshi expatriate workers working in different other countries. We have options to increase foreign currency earnings by sending abroad semi-skilled or skilled manpower as well as by increasing the number of products in the export basket.
We have a very limited number of products in our export basket. There may be at best 500 export items on this list. The amount of earnings by most of the products is negligible. It is difficult to add items to the export list in a large number within a short span of time. Geographical location, atmosphere, religion, customs, availability of raw materials and labour force are relatively the stronger factors that work in developing a new exportable product or service. Bangladesh is a densely-populated country. So the government may develop manpower based on a need-based analysis of the international markets. Semi-skilled or skilled manpower export may be a better solution to addressing the population problem as well as enhancing foreign currency earnings. Similarly, alongside the ready-made garments (RMG), we can explore new sectors of production for faster export earnings.
Leather goods and footwear may be the second largest sustainable export earnings sector for Bangladesh that stands at a strategically advantageous location for leather production. India is one of the largest producers of domestic animals like cow, buffalo, goat and sheep. But they do not consume beef. As a result, we are in an advantageous position to have a good supply of these animals from the neighbouring country. As the Muslims in Bangladesh account for 90 per cent of the population, we have a major source of leather supply everyday. The supply increases many times during the Eid-ul Azha each year.
Recent performance of the leather goods and footwear sector is highly encouraging. The data shows that the country earned $83 million in the first seven months (July-January) of the current fiscal year 2012-13 by exporting leather products, with a growth rate of 102.12 per cent over the corresponding period of last fiscal, when export of the products fetched only $41 million. The country had earned a total of $99.36 million from this single sector in the fiscal year 2011-2012. The government had projected an export earning of $135.45 million from the leather sector for the current fiscal year. It shows that the leather goods and footwear sector may be a reliable source of export earnings if proper attention is given to it.
There is a leather goods cluster at Bhairab in Kishoreganj. It is a unique cluster outside metropolitan cities but makes a significant contribution to the gross domestic product (GDP). This cluster is located in the surrounding areas of Bhairab Upazila headquarters. It is about 2.30 to 3.00 hours away from Dhaka city. Road communication of this cluster with other major cities of Bangladesh is good. It is a very good example of relocation of industries from Dhaka city to a rural area. This cluster was initiated in 1989 by a few workers and entrepreneurs previously working in different shoe factories in Dhaka city. Presently, the Bhairab Shoe Cluster is one of the largest leather goods and footwear manufacturing clusters in Bangladesh. There are about 3,500-5,000 factories employing more than 30 thousand workers and supplying a large quantity of footwear to different areas throughout the country. Leather, paste, solution, foam, rubber and sewing thread are the major raw materials of this industry. Sewing machine, bob machine, colour machine and knife are the main tools of production. Footwear is the major product, but keds and other leather goods like belt, bags, and ladies’ hand bags are also produced here.
Productions are based on orders from stores located in cities. Though not directly exported, a few entrepreneurs send their products to Saudi Arabia, Dubai and Bahrain through middlemen. This bears testimony to the fact that the footwear of Bhairab is of high quality, and if the required facilities are provided, they can be a good source of foreign exchange earning.
Most of the entrepreneurs want to expand their factories but cannot do so due to the lack of skilled workers. Moreover, the cluster being located outside metropolitan areas, the entrepreneurs have limited access to bank loans. Entrepreneurs complain that banks do not provide loans without a land mortgage and there is also a condition that the borrower’s land has to be located inside the Bhairab upazila headquarters area. The entrepreneurs find it very difficult to send their products to different destinations as the Bangladesh Railway does not carry footwear from the Bhairab station.
There are about 3,500-5,000 factories in different villages surrounding the Bhairab upazila headquarters. Had they been located in a single zone, their productivity could have been far higher. Establishment of more wholesale markets in the area would also benefit the manufacturers in marketing their products.
A number of measures can help develop this cluster that will ultimately contribute to the country’s economy. A census may be carried out to ascertain the actual number of factories located in this cluster and elsewhere. Once the actual number of such factories is available, it will be easier to ascertain their strength and weaknesses. Establishing a training centre for creating a skilled labour force will boost production and quality. A special tailor-made loan package may be offered enabling the entrepreneurs to overcome their financial stringencies. Provisions should also be made for transportation of their commodities by rail. A wholesale market will help the factory owners to showcase and market their products. It will also save them from the monopoly of middlemen.
There is a large area of unutilised government land at Satmokher Bill where the government may take an initiative to establish a shoe cluster. The shoe factories scattered at different places may be relocated to that cluster where all industrial supports will be available.
The Bhairab shoe cluster has tremendous potential, and if properly developed it can play a vital role in promotion of the leather goods and footwear sector. The government can play the role of a catalyst to make this cluster more productive and help create a greater number of jobs. This cluster may be a role model of economic activities in a rural area.