中文In 2014, Bangladesh embarked on what was meant to be a defining industrial modernisation project: relocating the country’s entire leather tanning industry from the cramped, polluted neighbourhood of Hazaribagh in Dhaka to a purpose-built industrial estate in Savar. The plan was ambitious — reduce environmental pollution, modernise production, expand exports, create employment, and build a world-class leather sector. Seven years after the bulk of tanneries moved in April 2017, the outcome is a case study in how not to execute industrial policy.
According to Mohammed Fakhrul Alam, author of All About Leather: The Science of Leather Manufacture, the Savar relocation has cost Bangladesh more than US$5 billion in lost export value between 2018 and 2024. More than 100 leather engineers and approximately 5,000 labourers have lost their jobs. Only six tanneries in the entire country hold Leather Working Group (LWG) environmental compliance certificates — and remarkably, all six are located outside the Savar cluster. The central effluent treatment plant (CETP), built at a cost of US$71 million by a Chinese contractor with limited experience in leather-specific waste treatment, has been a central point of failure. A competing Indian bid, offering US$81 million for a more complete solution that included chrome management and a solid waste dumping yard, was rejected.
The Compliance Crisis
The consequences of these decisions cascade through every link of the leather supply chain. Because Savar tanneries are ineligible for LWG audits — a prerequisite for selling to most European and North American buyers — the cluster’s products have been shut out of premium markets. Foreign buyers who purchased Bangladeshi leather for three decades have now pulled back, demanding the environmental certifications that Savar cannot provide. The irony is acute: a project designed to improve environmental compliance has instead made it structurally impossible to achieve.
The sole exception to this market exclusion has been China. More than 120 million square feet of wet blue and crust leather is exported to China annually — but at approximately one-third of the world market price. Every shipment to China generates a loss per square foot. It is not trade; it is distress sales dressed up as commerce.
Accountability Deficit
The Bangladesh Small and Cottage Industries Corporation (BSCIC), the Ministry of Industries, and the two main tannery owners’ associations (BFLLFEA and BTA) all share responsibility for the debacle. Alam points out that when other countries have relocated tannery clusters, industry experts are typically appointed to oversee the process. In Bangladesh, the government appointed civil engineers with no leather industry knowledge as consultants, and the tannery associations remained silent rather than resist. The BSCIC has also failed to construct a dumping yard for the thousands of tonnes of solid waste generated daily, or a chrome management system to stop used chrome liquor from flowing into the Dhaleshwari River.
Total government funding for the relocation reached US$125 million, with tannery owners investing an additional US$225 million across 134 facilities. For this combined US$350 million, the industry has received environmental degradation, market exclusion, and economic losses that dwarf the investment. The export figure for the 2023-24 fiscal year stood at US$1.107 billion — a fraction of what a properly functioning cluster should deliver.
The Path Forward
Alam, speaking with the authority of a published author on leather science, has outlined a detailed recovery roadmap. It includes: environmental compliance training for all leather engineers working in tanneries; countrywide rawhide preservation training; installation of filter machines for hair-save unhairing systems; mandatory adoption of cleaner technology across all processing units; interior modifications to prepare tanneries for LWG audits; construction of cold storage for preserved rawhides; renovation of the existing CETP and construction of a dumping yard; and the introduction of waterless chrome tanning technology — potentially through license from India’s Central Leather Research Institute (CLRI) or establishment of chrome recovery plants in every tannery.
The interim government led by Dr. Muhammad Yunus, which succeeded the previous administration, has been urged to investigate the full scope of incompetence that led to this outcome. Whether Yunus — a Nobel laureate renowned for his work in social business and microfinance — has the political capital and institutional bandwidth to tackle the Savar problem remains uncertain. What is certain is that without urgent intervention, Bangladesh’s leather industry, once a pillar of the national economy, faces a slow, expensive decline. The Savar story should be required reading for any government contemplating industrial relocation. The gap between policy ambition and execution reality can be measured in billions.
Source: Leather International — “The tannery crisis in Bangladesh” by Mohammed Fakhrul Alam (February 20, 2025)
