Bangladesh’s Finished Leather, Leather Goods and Footwear Exporters Association has asked the government to withdraw import duty on spare parts of capital machinery and chemicals used in leather processing in order to enable industry to move forward and become more competitive in international markets.

According to media reports, in their budget proposal for 2005-06 (July-June), the Association said that various types of chemicals are needed in leather processing and import duties on these chemicals have increased production costs and are making Bangladesh companies less competitive. As a result of this, Bangladesh's leather goods are losing out on market share due to cheaper products from neighbouring countries. 'The leather sector can earn more foreign currency if the government withdraws duty on chemical imports,' an Association spokesman said.

The proposals put to the government also include a withdrawal of the 3% income tax and a 2.5% development surcharge, lowering import duty on footwear components to 2.5% and wavering VAT in order to encourage the exports. A reduction in import duty on footwear components would help exporters add more local value to leather goods and thereby achieve more foreign exchange in real terms, the Association argued.

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