Bangladesh Moving Fast Toward Cleaner Leather Industry
April 16, 2014
Bangladesh’s Buriganga River, which flows along the southwest border of Dhaka, has long been a lifeline for this sprawling capital of over 15 million, and is today a vital economic link to the rest of the country connected by an intricate network of rivers and tributaries. However, industrial pollution that has poured into the river for decades has severely damaged its environmental health, to the point where it is now considered incapable of supporting aquatic life and unsuitable for basic cleaning purposes, let alone a source that could be treated for drinking water, which was the case in the past. Among the many negative impacts of this is that Dhaka’s water supply is now heavily dependent on underground water, making the urban population vulnerable to water crisis and natural disasters.
Much of the pollution affecting the Buriganga originates from the booming and highly productive leather industry situated on an area of about 50 acres in the neighborhood of Hazaribagh. Leather is a valuable industry in Bangladesh, but it currently creates 75 tons of solid waste and 21,600 cubic meters of liquid waste daily, the latter consisting of at least 20 types of toxic substances, including sulfuric acid, hydrogen sulfide, chromium sulfate, and several heavy metals. The health implications of regular contact with high concentrations of these substances affect not just the 50,000 leather workers, but also roughly 180,000 people living in the densely populated area. A 2012 Human Rights Watch report on the health effects of the leather tanneries found that residents in Hazaribagh reported 31 percent more cases of skin diseases, 21 percent more cases of jaundice, and 17 percent more cases of kidney-related disease than the residents in a comparable neighborhood situated farther away from the tanneries. These illnesses are a major burden on the population, both in terms of direct medical costs and lost productivity.
Bangladesh’s leather sector is critical to its economy, and estimates show that if the environmental concerns were addressed, the economic prospects could be even greater, allowing the leather sector to challenge the ready-made garment sector as the country’s most valuable export. Yet, this industry, which has the potential for achieving exports worth $5 billion, and contributing over 6 percent to GDP, could collapse if nothing is done on the environmental front. Environmental compliance is particularly urgent now because of the serious concerns that foreign customers have expressed over the environmentally damaging practices of the leather industry in its current location, which have even led them to consider suspending sourcing of leather from Bangladesh.
To improve environmental compliance and save thousands of jobs, The Asia Foundation has been working since 2012 with a public-private leather sector coalition to facilitate the relocation of the leather industry to a new environmentally compliant industrial estate in Savar on the outskirts of Dhaka. The relocation was first proposed in 2003, but political divisions within the leather industry associations and disagreements between the government and the leather sector representatives over binding constraints such as the funding of a central effluent treatment plant, compensation to leather factories for production losses during relocation, and the costs related to upgraded layouts of factories at the new estate, delayed the relocation project. To counter these obstacles, the Foundation brought together a reform coalition made up of technical experts, leather industry leaders, government officials, and senior policymakers of the government. This coalition played a pivotal role in dissolving barriers of trust and communication between the key players, convinced the policymakers to approve budget provision for the relocation, and has successfully revived the relocation project from the state of stagnation that it has lingered in since 2003. A major breakthrough was made in October 2013 with the signing of a Memorandum of Understanding between the two primary leather industry associations and the government.
Since then, the coalition has played an integral role in bringing together relevant stakeholders, culminating in a high profile discussion event with the Minister of Industries on April 6, 2014, which was the first event to comprehensively cover all aspects of the relocation, including the financial compensation that will be offered by the government to relocating factories, the prospect of soft loans and international investment in the sector, the process of physical relocation of heavy machinery, and the construction of the central effluent treatment plant (CETP) in the new industrial estate. Three government ministers, from the ministries of industries, environment, and inland water transport are strongly supporting the reform agenda, acknowledging its importance to Bangladesh’s economy and the environmental gains for citizens.
The CETP, in particular, was a focus point of the April 6 discussion, as it is the primary waste management facility of the new industrial estate, and without it, environmental compliance of the leather industry in Savar will not be achieved. It is encouraging that construction of the CETP officially began on March 30, 2014, after numerous conflicts between the foreign and local construction contractors and Bangladesh Small and Cottage Industries Corporation (BSCIC, which is the government implementing agency overseeing the relocation) were resolved. It was announced at the meeting that construction should be complete in 15-18 months, meaning the overall relocation project is well on track to be completed by late 2015.
The coalition also developed a new website, launched at this meeting, to promote the Bangladesh leather industry and document the progress of the relocation. The website is part of the coalition’s efforts to bring the relocation progress to the attention of international clients, to encourage foreign buyers to continue their trade relations with the Bangladesh exporters, and to secure new foreign and domestic investment. As part of these efforts, the Foreign Ministry will be brought into the loop so that the Bangladesh embassies can promote the progress to the overseas market.
Despite the major advances that have been made recently, there is still much work to do before the vision of environmentally compliant leather production in Bangladesh becomes a reality. Experiences from regional neighboring countries (particularly India) have shown that simply installing a CETP is no guarantee of environmental compliance; instead, proper management of the CETP and discipline at the enterprise-level must be ensured for long-term sustainability. Otherwise, the CETP will be rendered inoperable by individual firms’ neglect in conducting preliminary treatment of their waste before delivering it to the CETP. The coalition will organize regional best practice sharing opportunities for the main actors’ involved in the CETP construction and supervision as a safeguard for quality assurance.
This week marks the first day of the Bangla calendar month “Baishakh” and the celebration of the Bangla New Year. It’s our hope that that this year will bring good news for Dhaka residents and that they will be a step closer to once again being able to use the river Buriganga – the lifeline of Dhaka.
Syed Al-Muti is The Asia Foundation’s associate director for Economic Development Programs and Nayef Ahmad is a program officer for the Bangladesh Economic Development Program, both based in Dhaka. They can be reached at email@example.com and firstname.lastname@example.org, respectively. The views and opinions expressed here are those of the individual authors and not necessarily those of The Asia Foundation.
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