After a promising jump in FY22, Bangladesh's furniture exports dipped significantly last year on market competitiveness. However, local manufacturers believe they can still turn the tide within the next five years and propel earnings as high as near to garment shipments.
To compete more effectively with global peers, they say all they need is a bonded warehouse facility to offset the high import duty on raw materials, which currently ranges from 55 per cent to 100 per cent.
"We are now looking to secure a larger pie of the global market, but our products are priced out of competition," said Salim H Rahman, chairman of the Bangladesh Furniture Industries Owners Association.
Mr Rahman, who is also the chairman and managing director of local furniture exporter Hatil Furniture, believes a bonded warehouse facility would lead to the export earnings increase manyfold within the next five years, driven by strong international demand.
The global furniture export market is worth roughly $328.64 billion. China is the leading exporter, with annual earnings of around $139.48 billion. Bangladesh ranks 36th, exporting an average of $100 million worth of furniture per year.
The country shipped furniture worth $90.67 million in FY23, down by 18 percent from $110.36 million in FY22, according to the Export Promotion Bureau.
Bangladeshi furniture is mainly exported to India, the US, Japan, Spain, South Korea, Canada, Norway, France, Saudi Arabia, Qatar and the UK.
Wood, board, plywood, lacquer, hardware, fabrics and microfiber foam are the main raw materials used for furniture production. These materials are mainly imported from China, Malaysia, South Korea, India, Australia, New Zealand, Germany and the USA.
"The high import duty, ranging from 55 per cent to 100 per cent including VAT, is our main difficulty," said Salim H Rahman, president of the Bangladesh Furniture Industries Owners Association.
There are currently around 40,000 small and large furniture companies in Bangladesh. These companies cater to 95 per cent of domestic demand, while some ten brands such as Hatil, Akhtar, Otobi, Brothers, Partex, Navana and Regal export their products.
For the past five years, furniture manufacturers have been requesting a bonded warehouse facility, but their requests have not been successful, Salim H Rahman said. Besides, cash incentives for exports have been reduced from 15 per cent to 10 per cent. Recently, the trade body requested the National Board of Revenue (NBR) to include a bonded warehouse facility in the upcoming national budget.
"With policy support, the sector has the potential to become a major forex-earner after textiles," added Mr Rahman.
Kamruzzaman Kamal, marketing director of Pran-RFL Group, which exports under the Regal Furniture brand, said India is currently their main export destination. The Gulf region also holds potential.
"But, price competitiveness hinders us from entering the Arab market," he added.
He said the sector is labour-intensive but faces a skilled worker shortage. Moreover, an institutional framework for furniture design and research is necessary to meet international standards and requirements.
Sheikh Abdul Awal, vice chairman of the Bangladesh Furniture Industries Owners Association, said they are also facing challenges in the domestic market too due to persistent inflation and a dollar shortage.
According to Mr Awal, the domestic furniture market was worth around Tk 300 billion annually before the Covid-19 pandemic. Since then, local demand has fallen by at least 20 per cent, due mainly to inflationary pinch.
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