Booming ceramic industry faces hurdles

The country's ceramic industry, despite attaining a healthy growth over the years, is now facing some challenges, including suspension of GSP, high import duty on raw materials, and the latest gas tariff hike, industry insiders have said.
Besides, high bank interest rate, lack of skilled manpower, and non-availability of uninterrupted gas supply have also posed a threat to the sector.  
They also said if the high import duty on ceramics raw materials is reduced to a reasonable level, the annual turnover of the industry, amounting to Tk 220 billion (Tk 22,000 crore) at present, would go up significantly.
"The country's ceramics industries have the capacity to fulfil total local demand of tiles. But high import duty of raw materials, gas price hike and lack of skilled manpower might ruin opportunities of the sector," said an entrepreneur of ceramic industry.  
"At present we have to pay duty at 5-25 per cent rates for importing various raw materials for ceramics tiles. If the government reduces the duty, it will be possible to fulfil the local demand of tiles," Imtiaz Uddin, director of Farr Ceramics Ltd, told the FE.
He said the country's ceramics industries are now capable of supplying 78 per cent of the local demand for tiles.
Mr Imtiaz also said if the government reduces import duty on raw materials to a reasonable level, it will be easily possible for them to fulfil the total local demand of tiles.
He suggested the government to frame appropriate policy for the sector, and give gas connection to new industrial units quickly.
The government has raised gas and power tariff by 2.93 per cent and 26.29 per cent respectively at consumer level at the end of August.
Due to the increased gas tariff production cost of per kilogramme of ceramics products will rise to around Tk 9.0 from Tk 4.0, Mr Imtiaz said.
For captive purposes of ceramics industry the gas tariff has increased cent per cent, while for industrial (burner of ceramic industry) purposes it has increased 15 per cent.
Following the increased gas tariff, the ceramics sector entrepreneurs have to pay Tk 8.36 for consumption of per cubic metre of gas for captive purposes, which was Tk 4.18 earlier.
On the other hand, they have to pay Tk 6.74 for consumption of per cubic metre of gas for industrial purposes, which was Tk 5.86.
Bangladesh has to import ceramics raw materials from India, Japan, Thailand, Vietnam, Germany and New Zealand for producing quality ceramics products.
Mr Imtiaz said due to the suspension of generalised system of preferences (GSP) by the US government export of ceramics products has declined 60 per cent.
Before the suspension of Bangladesh's GSP on June 27, 2013 the country had exported ceramics ware worth around US$ 50 million to the US market.
The government is taking steps to get back the facility, according to the Ministry of Commerce officials. But the US did not include Bangladesh in its updated list of eligible countries for enjoying GSP facility.
Total investment in the ceramic sector is now over Tk 50 billion. It annually earns around Tk 4.0 billion by exporting various products.
The sector witnessed a cent per cent growth over the last five years. It helps to save Tk 25 billion annually, which could have been required for importing ceramics products, and also contributes around Tk 15 billion to the public exchequer.
The market share of local tableware industry is 91.55 per cent, while foreign companies 8.45 per cent. For ceramic tiles 76.29 per cent share belongs to local industries and 23.71 per cent to foreign companies. Local ceramic sanitary ware industry occupies 88.65 per cent market share, while foreign companies 11.35 per cent.
Around 0.5 million people are now involved in the sector. Out of them 40 per cent are female, according to Bangladesh Ceramic Wares Manufacturers Association (BCWMA).
"Bangladesh ceramic industry is developing day by day. Lots of changes have taken place in the industry over the last few years. To compete smartly in domestic and international markets, the companies need to adopt appropriate market strategies," Irfan Uddin Rifat, general secretary of BCWMA, told the FE.
He also said in modern world consumers' demand is changing day by day, and they switch brands frequently.
The number of tableware ceramic manufacturing companies in the country is 18, while that of tiles companies is 20, and sanitary ware is 16. The investment/ project value of tableware ceramic industry is Tk 22 billion, tiles industry Tk 25 billion, and sanitary ware Tk 6.0 billion.   
The tableware ceramic industry annually produces 250 million pieces of products, while tiles industry produces 70 million square metre, and sanitary ware industry produces 1,15,000 tonnes.
The tableware ceramic industry provides 17,800 employments directly, while tiles 16,700, and sanitary ware 5,650.
The volume of export of tableware ceramic industry was Tk 3.60 billion and local sale Tk 3.25 billion. The export of tiles was Tk 120 million and local sale Tk 18.50 billion. For sanitary ware the shipment was Tk 80 million, while local sale was Tk 3.90 billion in last fiscal year (FY), 2014-15, according to BCWMA.
The import of tableware ceramics products amounted to Tk 30 million, while that of tiles Tk 5.75 billion, and sanitary ware Tk 500 million in FY 15.   
The companies now operating in the country include - RAK Ceramics Pvt Ltd, Great Wall Ceramics Industry Ltd, Mir Ceramics Ltd, Star Ceramics Pvt Ltd, Akij Tiles Ltd, X Ceramics Ltd, China-Bangla Ceramics Ltd, Fu-Wang Ceramic Industry Ltd, Sun Power Ceramics Ltd, Hua Thai Ceramics Ltd, Dhaka-Shanghai Ceramics Industry Ltd, Madhumati Ceramics Ltd, ATI Ceramics Ltd, Farr Ceramics Ltd, Apple Ceramics Ltd, Solar Ceramics Ltd, Glory Ceramics Pvt Ltd, BISF Ltd, Sanita Ceramics Pvt Ltd, Dacca Ceramic and Sanitary Ltd etc.
Bangladesh exports ceramics products to more than 50 countries that include: the US, Canada, the UK, Germany, France, Italy, Sweden, Switzerland, Norway, Greece, Ireland, the Netherlands, Spain, Austria, Belgium, Denmark, Finland, Poland, Australia, Japan, New Zealand, the UAE, Saudi Arabia, Kuwait, Egypt, Libya, Jordan, Iran, Qatar, Oman, Syria, Lebanon, Pakistan, Sri Lanka, Nepal, India, the Maldives, Taiwan, Malaysia, Singapore, Brunei, Myanmar, Thailand, Indonesia, Argentina, Chili, Peru, Colombia and Brazil.
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