"Shifting of tanneries to Savar is scheduled to be completed by 2005 and we don't want to include the sick units in this process," Commerce Minister Amir Khosru Mahmud Chowdhury told reporters after a meeting with leather exporters yesterday.

Leaders of Bangladesh Finished Leather, Leather Goods and Footwear Exporters Association (BFLLFEA) and Bangladesh Tanners Association (BTA) attended the meeting held at the commerce ministry conference room .

At present, a total of 170 leather processing units are in operation. Of the 79 industries identified as sick, 44 have already been shut down. These industries were closed down after the government banned export of wet blue leather in 1990.

"The leather industries that have little prospect to become viable should exit through the package," Khosru said, adding, "The viable industries also need support to survive."

Terming the present lending rate "too high" the minister said the export-oriented industries should get loans at not more than seven per cent of interest rate.

Leather industries are entitled to get loans at this rate under an incentive package offered by government to encourage exporters.

"But the nationalised commercial banks implemented the package for a few months and then stopped it. They later charged higher rate of interest," Md Rezaul Karim Ansari, chairman BFLLFEA, told reporters after the meeting.

The government has decided to impose a ban on export of crust leather with effect from July 2004 to encourage export of value added products. The deadline may be extended till relocation of the leather industries , sources said.

Presently, crust leather accounts for around 65 per cent of the total export.

Leaders of BFLLFEA and BTA while meeting with the commerce minister pleaded for rescheduling their default loans amounting to around Tk 1,200 crore.

"Besides, we told the minister that the government should ensure that the exporters get long term finance at comparatively lower interest rate," Ansari said.

"We also prefer manufacturing finished goods as per the government policy but we don't have sufficient modern technology as well as financial ability to do so," he added.

Leather is the fourth largest export earner after readymade garment, frozen food and jute goods. In the last financial year (2002-03), leather sector had a negative growth of around eight per cent fetching only $191.23 million.