Mr. Md. Saiful Islam, President of Leathergoods & Footwear Manufacturers & Exporters Association (LFMEAB) speaks to “Leather Bangladesh” as to why Bangladesh is an attractive destination to source and attractive investment destination for investors. :
Q : In your opinion, why Bangladesh is an attractive destination to source?
A : We have the raw material here, we produce 350 million sq. feet of raw leather a year, once we have the raw material then we can cut down the lead time which is most important. At the same time, the workforce in Bangladesh is quite competitive and they are quite knowledgeable, learn skills very fast. The product what we make out of our own leather, the quality is good and craftsmenship is good. When you talk about the competitiveness you talk about the price but as a whole the competitiveness is not only the price it is also the social compliance. Out of our 153 companies all the factories are compliant factories in line with the ILO as well as the guideline of the government in addition we at LFMEAB also have guidelines. This is the reason you get 360 degree benefit as a buyer when you source from Bangladesh. So long as compliance issue is addressed, the importer or the buyer can tell to their end user that the product produced from a compliant country.
Q : What is the product portfolio offered from Bangladesh?
A : I would say leather footwear is dominating and it is almost 65% with the rest being leathergoods. It is growing and I beleive that the way it is growing in the near future the footwear will continue to dominate.
Q : What is the situation on the capacity building?
A : We can see that lot of factories which have been working in China owned by the Japanese or taiwanese are getting relocated.This is a good thing that we see China plus one. Also due to the recent ethinic cleansing in Myanmar, lot of investors are having second thoughts and they feel Bangladesh with China plus one as an added advantaged for them to invest here.
Q : Have you identified any other newer market for exports?
A : Yes, apart from the traditional markets where 65% of our products go to 27 member countries of EU, rest it goes to Far Eastern and some to the North America. Now we are concentrating more and more into the North American market, not only that we are concentrating on the Latin American market too. I am happy to say especially for leathergoods we have penetrated into the Southern Hemisphere in Australia and Newzealand also in the Far East upto Japan and Singapore we are selling our products. I can see lot of market diversification and continous research is being carried out to add more countries into our export basket.
Q : What are benefits for someone to invest in Bangladesh?
A : Bangladesh has one of the most liberal investment environment. In most of the countries whenever you invest, you are not allowed to invest 100%. In our country you are allowed invest 100%.You are also allowed to take back your equity that is being invested and also take back the profits. Bangladesh has got a liberal policy for foreign investment. For Leathergoods and Footwear sector government gives policy support and it is becoming a long term support. There is no differentiation between local owned and foreign owned companies or the joint venture ones. Cost of fund is being reduced that you get access to export development fund which is popularly known as EDF where cost of fund for trading which is about 3.75%. So cost of fund has been reduced previously we have been paying 10% plus as an interest now for trade financing we take it from Export Development Fund which is 3.75% which is huge saving and any foreign company also can avail this fund. In all aspects i can say that the environment is friendly for the foreign investor.
Q : How does one address the concern of availability of trained labour as capacity gets expanded?
A : We created Centre for Excellence (COEL) 10 years ago. Till today about 15,000 upto the mid level workers have been trained. Capacity is growing. Every year 2.5 million people are coming into the labour market of the country. Out of that a small portion is coming into our leathergoods and footwear sector. Now-a-days there are many training programmes from COEL and we have project known as SEIP Employment Investment Programme which is a training programe funded by ADB under the guidance of the ministry of finance. Here we do training programme from unskilled to semi skilled and there is also upscaling project which is taken up.
Not only that reently we will be working with 5 universities where they will be giving Post Graduate Diploma which is a 9 month course that will focus on the mid level management who can go into the leadership cadre. This is a programe we have taken up not only for the workers level but from mid level to the senior level so that leadership can be taken by the young generation as 65% of the population belongs to the age group below 35 years. We want to take advantage of this situation. As a whole the country is moving towards manufacturing and the government has emphasised that we should have the export led growth. I can see lot of development and progress on that front.