Tanners move to set up ETPs at own cost to catch up with world market

Tannery owners, frustrated with the faulty central effluent treatment plant (CETP) at the Tannery Industrial Estate in Savar, have taken steps to set up ETPs on their own to boost the leather sector.

ETP, which treats industrial wastewater for its reuse, and safe disposal, is necessary to achieve compliance, attract new buyers, retain existing foreign buyers, and get fair prices for leather and leather products, they said.

They took matters into their own hands after the Bangladesh Small and Cottage Industries Corporation (Bscic), in charge of the tannery estate, failed to fix the CETP despite repeated calls from the tanners. 

Because of this non-compliance, tanners are not getting the certification from the Leather Working Group (LWG) — the largest leather industry-specific stakeholder organisation in the world.

According to Bscic sources, out of about 150 tanneries, five have already taken the initiative to build their own ETPs. 

Of the five, two tanneries — Bay Footwear and Apex Tannery — have received final approval from the Ministry of Industries and are currently building the treatment plants.

The other three tanneries, which export leather and leather products to the European market, are waiting for approval to set up ETPs.  They are Samina Tannery (Pvt), Sadar Tannery Ltd and Bengal Leather Complex Ltd.

According to tannery owners, Tk5-10 crore is needed to build an ETP and the cost depends on the plant's capacity.

Masud Chowdhury, the managing director of Sadar Tannery Ltd, told The Business Standard, "We have been doing business in the tannery sector for a long time, but now we are losing business due to the non-functional CETP. Foreign buyers are not willing to buy products without the certificate of the Leather Working Group. So, even if it costs us a few crores of taka, we will set up the ETP on our own."

An official of Bscic Savar Industrial City told TBS that the application of Bengal Leather Complex is now in the final stage and it was sent to the Ministry of Industries for final approval. Samina Tannery and Sadar Tannery have applied this week."

Bay Footwear and Apex Tannery received final approval to set up their own ETPs in 2020. 

Bay Footwear started construction last year after getting ancillary clearance and approvals. 

"An Italian company has designed our ETP. The construction is underway and the plant could be launched by the end of this year or early next year," said Ziaur Rahman, the managing director of Bay Footwear.

Apex Tannery's ETP is still under construction, officials in charge of Bscic Industrial City said.

The publicly listed Apex Tannery Limited, a 100% export-oriented company, is engaged in processing and finishing cow and goat leather. It exports products to Europe, China, South America and all major leather markets of the world.

In its annual report for 2021-22, Apex Tannery said, "The central effluent treatment plant (CETP) is a total failure on the part of the Bscic. We have several meetings with the industries ministry in this regard but the matter is still unsettled."

"If the situation does not improve in the near future, the future of the entire leather industry of Bangladesh will face severe problems," Apex said in its report.

To protect the Buriganga River and the environment, in 2003, the government took the initiative to build a planned Tannery Industrial Estate at Savar on 200 acres of land to bring all the tanneries of Hazaribagh under one umbrella.

The project took about 19 years to complete. In June 2022, tanneries were shifted to Savar from the capital but the industrial city's CETP is not fully functional. Besides, there is no proper management facility for solid waste. Waste is dumped on the bank of the Dhaleswari River. Tannery owners have long been dissatisfied with the CETP.

Tanners dissatisfied with Bscic 

In a business conference organised by the FBCCI on 15 July, Syed Nasim Manzur, the president of Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh (LFMEAB) and MD of Apex Footwear, also expressed his displeasure over the CETP.

In the presence of Prime Minister Sheikh Hasina, Nasim Manzur said, "The CETP of Savar Industrial City is a major obstacle in the export of leather products.

He requested to remove the Bscic and give the responsibility of managing the CETP to the Bangladesh Export Processing Zone Authority (Bepza) or any international organisation, especially a European company.

Bay Footwear MD Ziaur Rahman told TBS, "A functional CETP would have attracted foreign buyers. We could also get fair prices for our products. But now we are unable to sell products to branded buyers."

"Only non-branded buyers, who do not care much about compliance, are buying Bangladeshi products. We are not getting competitive prices. As a result, this sector is not growing as expected despite having a lot of opportunities," Ziaur Rahman said.

In response to the question of why Bay Footwear started the ETP construction so late even after getting the approval in 2020, he said "Work cannot be started right after getting the approval. A design has to be made, which has to be passed by the Department of Environment."

Why is LWG certification important?

Certification by the Leather Working Group (LWG) has become very important to global buyers in the leather industry.

LWG is a not-for-profit membership organisation, working to create meaningful change across the global leather supply chain.

Formed in 2005, LWG was created as a collaborative initiative between footwear, apparel and upholstery brands and leather manufacturers, including founders: Adidas, Clarks, Ikea, Nike, Marks & Spencer, New Balance, Timberland, and PrimeAsia Leather Company.

Since then, it has evolved to become the world's largest leather industry-specific stakeholder organization, representing over 2000 stakeholders in over 60 countries.

In Bangladesh, only three tanneries secured LWG certification to date. Bangladesh's major competitors in south-east Asia Vietnam and India have a large number of LWG-certified institutions. There are 247 LWG-certified establishments in India and 17 in Vietnam.

Is it possible to fix the CETP?

Speaking at a seminar titled "Bangladesh Tanneries: Towards Compliance Sector" held on 22 July, Mustak Ahmed, managing director of Dhaka Tannery Industrial Estate Waste Treatment Plant Company Ltd, said rectification and modification will be required to make the CETP fully functional.

"Initially, there were flaws in the CETP. The chrome recovery unit is disabled from the start. It needs to be modified. And 18 pumps and the tank need to be changed," he said.

"There have been shortcomings regarding the CETP compliance," he said, adding his company is in discussion with a foreign firm about CETP modification. 

"Compliance is possible within six months but that requires an investment of $10 million," Mustak Ahmed said, adding: "The sooner this is done, the better it will be for the industrial city."