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Revolution: after the ‘Green’, the ‘Brown’ |
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July 3, 2000
Dhaka
(UNB) – Noticing a growing leather and leather goods market worldwide,
business experts identified the sector for a “Brown Revolution” in the
country as it has all the potential for a boom. But,
they sought integrated policy support from the government and other
stakeholders in penetrating the potentialities of the global market where
demand for shoes, the major leather product, would rise to 14.5 billion
pairs for about 7 billion people by year 2005. The
global per-capita shoe use would increase to 2.2 pairs in 2005 against 2.0
pairs in 2000, it was informed at seminar where a government minister
agreed with businesspeople as they pointed out some policy and monetary
factors as export barriers. Dhaka
Chamber of Commerce and Industry (DCCI) organized the seminar on “Leather
and Leather Goods” at its auditorium. DCCI president Aftab ul Islam
moderated the seminar. The
manufacturing of shoes has no advantage now in Bangladesh due to
discrepancy in the import policy, said keynote speaker Syed Nasim Manzur,
managing director of Apex Footwear Ltd. He
said the import duty on finished shoes and on shoe components and
accessories is almost the same, and as a result, the local footwear
industry is being severely threatened by cheap imports that were being
smuggled and dumped from neighbouring countries such as Myanmar and India. “It’s
a special barrier … if the barrier continues, it will act against a
planned economic development,” candidly said State Minister for Planning
Dr Mohiuddin Khan Alamgir addressing the function as chief guest. Assuring
his government’s full support, he said the entrepreneurs are more
responsible for the “Brown Revolution.” The
State Minister said the nation accrues loses to the tune of 10 per cent of
the total export value due to port congestion that delays shipment of the
export goods. “We can’t accept the loss for a few vested-interest
groups … we should collectively look for an alternative.” In
a critical appraisal of the monetary situation he termed the current
exchange rates of the Taka with foreign currencies as “anti-export”
and said the rates should be examined in the context of country’s
economic situation. He
called for united effort of the nation for establishing a good power-base
in the country, utilising its natural gas, which is the main input of an
industry. About
industrial development, the minister observed interest rates still
remained as major barrier. In Japan, banks charge only 2 per cent on
working capital and less than 2 per cent for term loan. “Who will invest
here with 16 per cent interest.” Addressing
the function, Prime Bank managing director Kazi Abdul Majid said the
commercial banks are really interested to finance a viable project. “Banks
are now considering lower interest rate for a good customer on bank-client
relationship,” he said adding that some banks have already cut their
interest rates to 10 per cent. Identifying
the problems of the sector, Nasim said most foreign buyers no longer
operate on Letter of Credit while most banks in Bangladesh insist for
master LC and back-to-back LC procedures as an alternative to working
capital financing. “Our
competitors offer much easier payment terms such as open account, D/A
basis delivery, etc,” he said. He
said lack of easy access to the local market for exporters made them
highly vulnerable to the perils of stock lots and cancellations. In China
as well as India up to 50 per cent of the total output can be sold onto
the local market, whilst still enjoying exporter status. In
Bangladesh, local sales are taxed at such high rates of duties as make the
price too high for the mass market, Nasim added. “If
Bangladesh insists on these points, its potential buyers will merely say
that they do not need to deal with all these if they buy from China,
India, Thailand, Indonesia or Eastern Europe and so that is where they
will go,” he warned. |