Bangladeshi tannery gets 400 crore from state owned bank

Three state- owned banks are disbursing over Tk 400 crore in loans among the leather industries to help them purchase hides during the coming Eid-Ul-Azha. The banks are offering the sector more loans this year to overcome impact of global economic recession. But loan defaulters will not be eligible for this loan, banks officials said They said the loan will be made available to the tannery owners by Nov 26. Last year, the three banks disbursed Tk 336 crore among the leather industries, of which Janata Bank gave Tk 163 crore,Agrani Bank Tk 125 crore and Sonali Bank Tk 48 crore. Janata Bank will disburse Tk 180 crore this year and it has already decided to give three large leather industry Tk 65.50 crore. Board of directors of Agrani Bank will sit on Tuesday to select the industries it will give loan Leather and leather products are among the major export items that are affected by global recession. Chief executive officer cum managing director of Janata Bank SM Aminur Rahman told bdnews24. com: "The banks are disbursing more loans than before to protect recession-hit leather industries, stop smuggling of leather and increase leather collection inside the country." Aminul said: "Like every year, banks have prepared to disburse loan among the large leather factories. Both state–owned and private sector banks are offering loan for purchasing hides and skin, he said Some 80 percent of the demand for hides by the tannery industries is met during Eid-Ul-Azha. Former chairman of Bangladesh Tanners' Association Harunur Rashid told bdnews24 that the leather industries had been badly hit by recession. Export of leather and leather products dropped by 60 percent during the first quarter of FY 2009-10 , he said It will be difficult for the industries to survive unless government extends financial support to the sector, he said Aminur Rahman told bdnews24. com: "Our tannery factories might turn sick in absence of financial support. So, banks must come forward to protect the industry." An official of Sonali Bank on condition of anonymity told bdnews24 that his bank had decided to give the industries loans amounting to Tk 65.50 crore. Any good entrepreneur seeking loan ahead of Eid will receive the funding, he said CEO cum managing director of Agrani Bank Syed Abu Naser Baktiur said: "Default loans have accumulated as most of the companies failed to repay previous loan." Yet companies will receive the loan equal to the amount repaid last year, he said He said: "The board of directors in its Tuesday meeting will decide about how much loan will go to which company." An Agrani Bank official said the bank has decided to disburse loan amounting to Tk 150 crore this year while the figure was Tk 100 crore last year. As per statistics of EPB, the export of leather and leather products has shrunk by 24.55 percent during the first quarter of current fiscal year. The sector earned foreign exchange worth Tk 3000 crore during 2008-09 fiscal year.

Bangladeshi leather industry look for Eid bonus

The leather industry, hit by the global recession, is looking to shake-off the lull with Eid-Ul-Azha this year, but will local and international markets allow a recovery? Bangladesh processes around 220 million square feet of leather every year, half of which is sourced during this time, when millions of sacrificial animals are slaughtered across the country as part of the Eid ritual. A sharp fall in international demand for animal- hide last year, in the wake of the global recession, triggered a slump for the local hide and leather industry, which they hope will pick up this year. Industry leaders expect supply of hide will surge this Eid compared to the last two years of interim government. "Many political leaders, and businessmen, could not sacrifice animals as they were passing a tough time over the past two years. Or they felt it didn't really matter during the emergency period from a 'public relations' point of view," Rezaul Karim Ansari, head of the industry's top trade body, said. "Cyclone Sidr in 2007 also caused deaths of a huge number of animals as well as creating lots of financial woes, which contributed to the lower supply of hide too," said Ansari, chairman of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLGFEA). "And like every other industry, we are suffering due to the financial meltdown as international market price has been falling significant since last year," he added. Prices of finished leather declined 30-40 percent in the last one year in the global market, causing a huge loss to local tannery owners. Figures from the government's Export Promotion Bureau show that leather exports amounted to $45.56 million in the first quarter of the current fiscal year, crashing almost 24 percent compared to the same period last year. Footwear exports, however, fell less steeply— by just 2.95 percent in the first quarter of the current fiscal, earning $56.22 million—boding better for local leather sales. But the good news is demand for finished leather has also bounced back thanks to buyers in Hong Kong and China, say tanners. "China and Hong Kong bought a huge amount of leather over the last two months," Shahin Ahmed, president of the Bangladesh Tanners Association, told bdnews24. com. He said the fact led them to plan for procuring as much raw hide as they can store during Eid-ul- Azha this year. Meanwhile, increased demand from local footwear-makers for finished leather will also cause local tanners to buy more hides this year, says Tipu Sultan, a former chairman of BFLGFEA. Footwear and leather goods manufacturers echoed the same, saying their consumption of domestic finished leather has been rising. "We used to consume around 15 percent of domestic finished leather on average, now we use around 35 per cent," Saiful Islam, chairman of Bangladesh Leather Goods and Footwear Manufacturers Exporters Association told bdnews24. com. He added that earnings from footwear export surpassed leather exports in 2008-09 fiscal. Bangladesh exported around $170 million of finished leather in the last fiscal while shoe manufacturers bagged about $204 million, according to the Export Promotion Bureau. But, despite expectations of brisk business, the BFLGFEA has cut the maximum buying price for raw hide this Eid. Price per square feet of raw cowhide was fixed at Tk 30 in Dhaka and Tk 25 outside, dropping from Tk 30 and Tk 35 respectively last Eid-Ul- Azha. The announcement came just ahead of Eid. BFLGFEA chairman Rezaul Karim Ansari told the media that prices have been fixed low due to a fall in prices of leather and leather products on the international market. But, he told bdnews24. com, exports are expected to turn around in coming months as the shocks of recession are easing in parts of the world.