CETP Crisis at Savar Tannery Threatens Bangladesh Leather Export Ambitions

Star Business Report, Dhaka — Bangladesh's plan to turn its leather and footwear industry into a $5 billion export sector by 2030 could remain out of reach unless long-standing environmental and compliance problems at the Savar tannery estate are fixed, industry leaders said — prompting the government to announce plans for a new world-class Central Effluent Treatment Plant (CETP).

Commerce and Industry Minister Khandaker Abdul Muktadir announced the government's plan at a policy dialogue titled "Advancing Bangladesh's Leather Sector: Challenges, Opportunities and Reform", jointly organised by the Footwear, Leathergoods and Accessories Exporters Association (FLAXA) and the South Asian Network on Economic Modeling (SANEM) at BRAC Centre Inn on 4 September 2026.

🚠 CETP Capacity Crisis

At the centre of the problem is the Central Effluent Treatment Plant (CETP) at the Savar tannery estate:

• 📊 Designed capacity: 25,000 cubic metres per day
• 📊 Actual operating capacity: only 14,000-18,000 cubic metres
• 📊 Eid-ul-Azha waste volume: 40,000-45,000 cubic metres per day
• 📊 Capacity gap: 7,000-11,000 cubic metres shortfall (normal)
• 📊 Eid capacity gap: 15,000-20,000+ cubic metres shortfall

"The existing CETP has several shortcomings," Muktadir said, adding that the government would build a new CETP through a transparent bidding process and appoint a world-class operator.

🏢 New CETP Plan

The government is planning to build a new global-standard CETP at the Savar Tannery Industrial Estate while also remediating the existing facility:

• 🏢 New CETP: world-class institution to be selected through transparent tender
• 🏢 Existing CETP remediation: separate proposals from Italian company and Chinese state-owned enterprise
• 🏢 Comparative assessment: proposals to be evaluated before decision
• 🏢 Leather industry associations: to be involved throughout the process

👥 Compliance Requirements for Tanneries

Under the plan:

• 🏢 Larger tanneries: must install own effluent treatment plants (with government technical and financial support)
• 🏢 Smaller units: must meet compliance requirements and use central facility (paying charges)
• 🏢 Struggling/non-compliant tanneries: government will help them leave the sector gracefully
• 🏢 Remaining tanneries: must become fully compliant and obtain LWG (Leather Working Group) certification

🏛 SANEM Executive Director's Proposals

Selim Raihan, Executive Director of SANEM, proposed:

• 🔍 Technical review of the CETP
• 💰 Emergency funding to restore treatment capacity
• 🔍 Independent monitoring with public findings
• ⚖️ Stronger penalties for polluters
• 💰 Government incentives linked to LWG and ZDHC compliance
• 🏛 Leather sector development authority involving government, industry, and labour
• 📜 5-10 year policy framework with clear measurable targets

👥 Industry Leader Concerns

Ziaur Rahman, Managing Director of Bay Group, said fixing the CETP alone would not solve the industry's problems: "Fixing the CETP is not enough; the environmental limits must also be revised." He said current environmental rules make it difficult for local leather processors to meet LWG certification requirements.

Additional challenges at Savar estate include:

• 🚧 Poor roads at the estate
• ⚡ Gas shortages affecting production
• 💰 High solid-waste disposal costs (Bay Group spent Tk 3 crore last year alone)

📊 Current Leather Export Position

• 👕 Current exports: ~$1.76 billion in footwear and leather goods
• 🌏 Export markets: 105+ countries
• 🌏 Global ranking: 7th largest footwear producer
• 📊 Crust leather share: ~65% exported as semi-finished (crust)
• 📊 Value loss: much of industry's potential value created abroad

🏛 Minister's Vision: Stop Raw Leather Export

Muktadir said he wanted Bangladesh to eventually stop exporting raw and semi-finished leather. "Not a single piece of leather should go abroad," he said, arguing that producing finished leather goods locally would create more value and jobs.

The minister also pledged to:

• 📜 Simplify business and customs procedures
• 🇯🇵 Negotiate with Japan for wider market access
• 👥 Attract foreign tanners to Bangladesh's underused capacity

Syed Nasim Manzur, President of FLAXA, said: "We need to focus more on finished products." He said the industry had discussed its potential for years but had failed to translate discussion into action.

🌏 Strategic Implications

• ⚠️ CETP capacity gap: only 56-72% of designed capacity operational
• ⚠️ Eid crisis: 40,000-45,000 cu.m vs 25,000 designed capacity
• ⚠️ $5b target at risk: current exports only $1.76 billion
• ⚠️ 65% crust leather export: value created abroad, not domestically
• ✅ New CETP planned: world-class facility through transparent tender
• ✅ Existing CETP remediation: Italian and Chinese proposals under review
• ✅ Larger tanneries to install own ETPs: with government support
• ✅ Graceful exit for non-compliant tanneries
• ✅ LWG certification requirement for remaining tanneries
• ✅ Japan market access negotiation planned

The CETP crisis at Savar represents one of the most critical bottlenecks for Bangladesh's leather sector ambition to reach $5 billion in exports by 2030. The government's plan to build a new world-class CETP, remediate the existing facility, require larger tanneries to install own ETPs, and enforce LWG certification represents a comprehensive reform framework — but the success will depend on the speed of implementation and the willingness of tanneries to invest in compliance upgrades ahead of the LDC graduation transition period beginning November 2026.