A major footwear manufacturer is setting up a footwear industrial park, the first of its kind in Bangladesh, to provide producers with import-substituting raw materials and accessories, boost exports and attract foreign investment.
The Bangladesh Investment Development Authority (Bida) authorized the establishment of Bangladesh Shoe City Ltd in September. Nasir Khan, Chairman and Managing Director of Jennys Group, is the founder of the park.
The park, which is being set up in Gazipur, would cost around $100 million or Tk 900 crore. Of the sum, Khan’s equity is 46% and a global lender will provide the rest.
“I have already received the green signal from the global lender regarding funding,” he said. He did not disclose the name of the lender as no agreement has yet been signed.
The park is located on 35 acres of land where 24 factories could be housed. The land has been landscaped.
Jennys Group has already set up three factories, including a shoe manufacturing unit.
The footwear sector needs at least 152 articles to manufacture a shoe. Among them, 50 major items will be produced in the park, Khan said.
Bangladesh has yet to establish a supply chain for the leather and footwear sector, although the Asian Development Bank (AfDB) believes there are strong backward linkages through raw materials mainly of local origin, an abundant supply of cheap and trainable labour, and its location advantage.
Khan says buyers want fast product delivery aside from quality and compliance. But the export-oriented shoemakers in Bangladesh find it difficult to keep up with the deadlines because there is no upstream tying industry.
Thus, manufacturers have to import raw materials, accessories and leather to produce products for international buyers, which takes time.
“As a result, global brands do not feel interested in placing orders from Bangladesh, although our manufacturers are able to assure quality,” Khan said.
The establishment of the park would help to change the situation.
Manufacturers will get all accessories from the fleet, which will help reduce lead times and minimize production costs by at least 20%.
“It will make the sector competitive and boost exports,” Khan said.
The tanning industry in Bangladesh does not have certification from the Leather Working Group (LWG), a non-profit organization responsible for the world’s leading environmental certification for the leather manufacturing industry. This is a major barrier as exporters cannot use local leather for global markets.
“So I decided to supply all raw materials under one umbrella,” Khan said.
Construction of the Effluent Treatment Plant (ETP) is complete. Bangladesh Shoe City Ltd must meet some additional requirements to obtain LWG certification.
Already 19 companies from Japan, Russia, Italy, China, Portugal, Sri Lanka and Taiwan have signed a memorandum of understanding with Bangladesh Shoe City Ltd to make investments.
The park has received investment proposals from foreign investors involving Tk 450 crore and it can go up to Tk 1,000 crore. It will directly create 26,000 jobs.
Md Ziaul Huq, managing director of Bida, says the project has potential.
“We need this kind of industrial park to boost footwear and leather sector exports,” he said.
Investors planning to invest in the park will need to register with the Bida. Next, they will be recommended to secure all investment facilities, including the bonded warehouse.
Bangladesh has major assets to develop its leather industry, according to the AfDB.
Bangladeshi leather is highly regarded for its good quality, and leather goods and footwear factories are able to meet the high demands of overseas buyers, it said in a 2018 analysis.
The leather industry has the potential to develop the entire supply chain, from rawhide to leather processing, footwear and leather goods production, domestically, the based lender said. in Manila.
According to the feasibility study, the industrial park will help recoup an additional $1 billion from exports of leather and footwear products.
The sector earned $941.67 million from the shipment of leather, leather goods and footwear in the fiscal year 2020-2021.
