Bangladeshi toys: Prospects in local and global markets

The history of plastic is very recent. It gained momentum with the development of polyethylene by a German chemist named Karl Ziegler in 1953, and polypropylene by the Italian chemist Giulio Natta in the following year. They were awarded Nobel Prize jointly in 1963 for their researches. Apart from engineering plastics such as polycarbonate, ABS, PMMA and SAN etc., polyethylene and polypropylene are the most commonly used plastics now-a-days.
The global market of engineering plastics is growing very fast as alternatives of other materials like rubber, iron and wood. With time, it has become the most preferred material. Plastic has been used as pipes, valves, decorative elements, doors, windows and so on in the global real estate and construction industries. It is commonly found in flooring, siding, gratings, railings, glazing, plumbing fixtures, bathroom units, panels and insulations. Plastic has been used as a substitute of iron and rubber materials in aerospace technology. In this modern age, plastics are being used in rockets as part of solid fuel boosters and also in space shuttles. This is also one of the materials used while manufacturing helicopters because of its rigidity, flexibility and durability.
The most important fact about plastic is that it is very lightweight and strong making it useable as raw material in the field of aerospace. Now-a-days the weight of the aircraft is reduced by using plastic. It has been said that reducing one pound of a jetliner's weight by using plastic can save fuel of more than US $ 1,000 during its lifetime.
Prior to 1971, Bangladesh had a very small plastic market. At present, there are 3,000 plastic manufacturing units, 98 per cent of which belongs to the small and medium-sized enterprises (SMEs). The domestic market size is Taka 70 billion. Per capita consumption of plastic in Bangladesh is five kilogrammes per year. The plastic sector constitutes 1.0 per cent of GDP (gross domestic product) and provides employment to half a million people directly.
A study by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) in 2012 estimated that the Bangladesh plastic industry could raise its turnover to US$ 2.0 billion by 2015 and US$ 4.0 billion by 2020, if proper policies are implemented and followed. As of now, direct export is not significant when compared with other Asian countries. In 2016-2017 fiscal year, China exported plastic items worth US$ 70 billion, Thailand US$ 12.7 billion, Malaysia US$ 7.5 billion and Vietnam US$ 3.0 billion, while Bangladesh exported only US$ 900 million.
Bangladesh's ranking in the list of global plastic exporters is at 89.
Demand for Bangladeshi plastic products has been increasing as the international buyers are now shifting more to Bangladesh from China and India. Bangladesh has a huge range of diversified products in its export basket like PVC pipes, polythene sheets, plastic wastes, shopping bags, injection moulding products, garment bags, plastic hangers, PET/PE bottles, laminated packs, cosmetics, medicine packs and household accessories.
According to Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), nearly 250-300 units are currently involved in the export market. The sector earned US$ 98.48 million in the FY 2017-18 while the figure was US$ 116.95 million in the FY 2016-17, according to the Export Promotion Bureau (EPB) data. Export earnings from plastic products dropped by about 16 per cent in the last fiscal year mainly due to high price of raw materials.
Bangladesh could emerge as a global player in the plastic industry by hiking its annual turnover to Taka 322.36 billion (US$ 4 billion) by 2020, according to a study conducted by the United Nations ESCAP. Withdrawal of Generalised System of Preferences (GSP) by USA partially decreased the competitiveness of Bangladeshi products that face duty from three to 15 per cent depending on the product.
In fiscal year 2017-18, the domestic market size of plastic products hit Taka 250 billion, according to BPGMEA. The sector is growing at about 20 per cent a year on the back of spiralling demand from domestic and export markets.
Bangladesh had a good export market of plastic waste till the Chinese government announced a ban on imports of 24 categories of solid wastes, including certain types of plastics, papers and textiles in July 2017 which came into force from January 01, 2018. Following the ban, export of plastic PET bottle waste declined sharply. Earnings from the plastic waste sector were US$ 13.53 million in the FY 2017-18 while they were US$ 30.65 million in the FY 2016-17, EPB data showed. Bangladesh exported 99 per cent of its PET waste flakes to China before the restrictions were imposed, according to sector insiders.
Bangladesh needs some more time to enter the high-tech engineering products market. The most promising plastic product sector is toys for home and export markets. Before 2010, Bangladesh imported toys worth US$ 600 million annually, 95 per cent of which was from China. Now imports have reduced to US$ 360 million a year, according to traders of Bangladesh.
Bangladesh is now manufacturing toys for local and export markets, which are expanding gradually. Export of toys, games and sports requisites from Bangladesh to Hong Kong was worth US$ 1.38 million during 2015, according to the United Nations Comtrade database on international trade.
However, the challenge of exporting toys is safety, compliance and patent etc. In Europe, toy safety is governed by the Toy Safety Directive (TSD). The TSD obliges manufacturers, importers and suppliers to ensure that their products meet the requirements in the field of toy safety, including mechanical, physical and chemical safety. Prior to being placed in the market, each toy is submitted so that it can undergo a conformity assessment procedure. When a toy is placed on the market, the manufacturer must draw up a European Community Declaration of Conformity (EC DoC). By doing so, the manufacturer certifies and assumes responsibility for the compliance of the toy with the essential requirements of the TSD.
The second-most important framework condition is the protection of intellectual property right (IPR). Toy manufacturers face competition from counterfeit toys. In 2010-2011, Directorate-General for Taxation and Customs Union (DG TAXUD) registered 872 infringement cases for toys with a retail value of €16 million and 2,585 infringement cases for games with a retail value of €20 million. The two main countries of origin were China (88 per cent) and Hong Kong (10 per cent).
Bangladesh faces many other challenges as polymers are not produced in the country. The plastic industry uses imported raw materials of polymer granules. However, industry insiders believe that this not a disadvantage. The availability of cheap labour and the fast developing recycling industry of postconsumer plastic wastes in Bangladesh are potential advantages to provide competitiveness in the global market (Katalyst-2005). Given the scarcity of skilled workers and professionals, extended level of training for workers is required. Different kinds of training particularly on use of CAD/CAM (computer aided designing and computer aided manufacturing) and design of software need to be arranged for improvement of product design. Bangladesh Standard Testing Institute (BSTI) should be equipped with modern amenities and trained professionals in order to facilitate industry for standardisation and quality improvement issues.
Bangladesh is now making non-brand toys in small numbers. The most common toys exported are tricycles, electric or battery-operated cars, dolls, electric dolls, pedal cars and similar items. It must try to make toys for global brands and also develop own brands in order to get higher price for products. The design and development of toys also need huge investment in laboratory and human resources.
Toy industry imports a few hundred components mostly from China and faces problems of Harmonised (HS) Code and customs duty as these are imported in mixed consignment. Customs office also has no experience of price and determination of taxes for these components. National Board of Revenue (NBR) can identify the components and determine single HS Code for such components and spare parts to resolve the confusions.
The entrepreneurs in the plastic sector have developed the plastic industry through their own initiatives and finances. Now, the government should come forward to support the sector so that it can enter global market with high value products like toys and also increase capacity to comply with IPR and safety issues.

M S Siddiqui is a legal economist.
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