Plastic industrial estate to boost export earnings
Sunday, 12 April 2009
Shahiduzzaman Khan
IT is heartening to note that the government has taken necessary steps to build a separate plastic industrial estate on the bank of Dhaleswari river. A proposal to this effect has already been endorsed by the Ministry of Industry and awaits approval from the Planning Ministry. If approved, the plastic estate can be developed in a year and half on the outskirts of Dhaka city.
Commerce Minister Faruk Khan, while disclosing the plan to build a plastic industrial estate to the media last week, appeared upbeat about more export earnings from the plastic sector. In a meeting with the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) leaders, the minister said the problems being faced by the plastic manufacturers will be resolved soon. A taskforce has already been formed to tackle the adverse impacts of global economic recession. The taskforce will also review the problems of the plastic industry and suggest remedial measures.
Plastic industry is a vital SME sector, which is expected to be benefited from a separate industrial estate. Plastic goods have already a good market abroad and establishment of such a separate estate will further encourage entrepreneurs to set up more sophisticated high-end industries.
Plastic has been playing an important role as backward linkage for garments, medicine and food processing industries apart from direct export of the plastic products. According to the Export Promotion Bureau (EPB), 20 plastic accessories in the garment industry, including hanger, butterfly, clip, neck-board and poly-bags, are produced in the country. Earlier, Bangladesh Garment Manufacturers And Exporters Association (BGMEA) had to import all the accessories at high cost and additional time. Plastic products used for blood bags, saline bags, capsule bodies and strips, injection syringes and containers for tablets and capsules are also produced in the country.
Bangladesh earned international standard in manufacturing medicine-related plastic products. These products are also exported as backward linkage of the medicine industry. Besides, the country exports agro-technology enabling plastic goods to Germany, Russia and middle-eastern countries. Drum-seeders, widely used for sowing seeds, and poly greenhouse, used as a protector from insects and high temperature, are also manufactured in the country.
Bangladesh can save hundreds of millions of taka import of dais could be checked by setting up mould factories. Entrepreneurs of several countries, including Iran, are interested to invest in mould factories and petrochemical complexes. However, the country's policymakers are still indecisive over the prospective plastic industry although many foreign investors, especially from China, France, Malaysia and UAE, are interested to invest in the sector.
The country's plastic goods export could be doubled if the government would give incentives on the export and import of plastic raw materials, said Jasim Uddin, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, in an interview with a print media. If the exporters are exempted from the full payment of the LC deposit and if the restriction regarding the bonded warehouse is withdrawn, the country's plastic exports would go up significantly.
According to statistics, there are more than 5000 plastic industries in the country, and in the 2006-07 fiscal year, the country's plastic goods exports were worth Tk 6.82 billion with 63.24 per cent growth rate. There are huge opportunities to raise the country's plastic goods exports. Multinational super chain stores - Wal-Mart, J C Penny and Tom Hill - have used only 10 per cent of saleable commodities for readymade garments but the demand for saleable plastic products is more than that of readymade garments, which is 14 per cent of the total saleable commodities of super chain stores.
If the country's plastic goods exporters could take this opportunity to export their goods to the US based multinational super chain stores, it would boost the country's plastic industries. Plastic is being used in various forms - as shopping bags, in food packaging, for exporting fish to international markets as well as in the country's jute and textile industries. The quality of Bangladeshi plastic goods is better than that of China and India. The country needs to take the opportunity of the ongoing global economic turmoil as the US consumers might turn from the expensive products from China, India and European Union to the low-cost, but quality products, from Bangladesh.
Plastic goods manufacturers recently called upon the government to cut import duties on plastic intermediate products from 25 per cent to 15 per cent in the upcoming budget. They also urged the government to increase import duty on some finished plastic products from the existing five per cent as a measure to protect the Tk 20-billion-strong plastic industry of the country. Intermediate products are mainly non-formed plastic which is turned into items such as clothes hangers, labels and furniture.
Although local businessmen are doing very well in the plastic sector they still have to import the intermediate products and then add value to them, but the government imposed a 25 per cent import duty on intermediate products when import duty on some finished plastic products was only five per cent. This is the reason why local products are failing to compete with imported plastic products in the domestic market. The plastic industry is now the third or fourth largest export earner for the country if both direct and indirect exports are counted.
In fact, proper government support could double or triple the sector's growth. The growth of a country's plastic industry normally shadows that of other industries as most sectors such as telecom, automobile, light engineering, textile and garments and food require plastic and plastic accessories or plastic packaging.
Among the export products developed in Bangladesh are garment accessories, toys, toothbrushes, ballpoint pens, pharmaceutical packages and plastic wrapping for food items. The export of plastic products is three times higher than the import of plastic materials using the bonded facility. Bangladeshi plastic goods are exported to 23 countries in North America, Europe, Asia and the Pacific and the Middle East. The country exports plastic goods also to India, Sri Lanka and Nepal, the major markets being Poland, China, the UK, Belgium, France, Germany, the USA, Canada, Spain, Australia, Japan, Malaysia, the UAE, Hong Kong, Bahrain, Italy, New Zealand and the Netherlands.
Bangladesh plastic products experienced a healthy 40 per cent growth during the last two years and is now poised to become one of the country's top ten export items. This industry is set to earn more than 8.0 billion worth of foreign currencies -- both from direct and indirect exports -- by the end of this year.
Yet, lack of policy support, inadequate port facilities and an unfair image, driven by misleading propaganda, work as main hindrances to the full growth of its potential. The country is capable of producing world class plastic products to capture a sizeable portion of the 500-billion dollar global plastic market. If the quality of products is ensured and the cost of production cut, Bangladesh plastic sector can earn billions of dollars every year and reduce import of many other products. Encouraged by bond facilities in 1992, Bangladesh plastic sector now stands on a sound footing with more than 2000 factories all over the country.
More than 0.2 million skilled and unskilled manpower are employed in this sector and contributed Taka 12 billion revenue to the government's exchequer in 2004. However, some indiscriminate policies like mandatory bank guarantee provision have created serious setback to the export of plastic products.
The plastic sector is also facing difficulties due to image crises driven by ban on polythene bags. But the fact is, plastics may be treated to become the most eco-friendly materials. Unfortunately, propagation of half-baked information and ill-founded concepts against plastics tend to malign the sincere efforts of the plastic industry.
Various uses of plastic products are being tested around the world. Of late, experts have witnessed that blending plastic waste with bitumen in laying tarmac could enhance road durability, drastically reduce maintenance costs, and save the country Tk 15.08 billion in maintenance cost a year. Less cracks and potholes will develop on roads and recycling of plastic waste can reduce the amount of hazardous non-biodegradable materials in the environment.
.........................................................
szkhan@thefinancialexpress-bd.com
IT is heartening to note that the government has taken necessary steps to build a separate plastic industrial estate on the bank of Dhaleswari river. A proposal to this effect has already been endorsed by the Ministry of Industry and awaits approval from the Planning Ministry. If approved, the plastic estate can be developed in a year and half on the outskirts of Dhaka city.
Commerce Minister Faruk Khan, while disclosing the plan to build a plastic industrial estate to the media last week, appeared upbeat about more export earnings from the plastic sector. In a meeting with the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) leaders, the minister said the problems being faced by the plastic manufacturers will be resolved soon. A taskforce has already been formed to tackle the adverse impacts of global economic recession. The taskforce will also review the problems of the plastic industry and suggest remedial measures.
Plastic industry is a vital SME sector, which is expected to be benefited from a separate industrial estate. Plastic goods have already a good market abroad and establishment of such a separate estate will further encourage entrepreneurs to set up more sophisticated high-end industries.
Plastic has been playing an important role as backward linkage for garments, medicine and food processing industries apart from direct export of the plastic products. According to the Export Promotion Bureau (EPB), 20 plastic accessories in the garment industry, including hanger, butterfly, clip, neck-board and poly-bags, are produced in the country. Earlier, Bangladesh Garment Manufacturers And Exporters Association (BGMEA) had to import all the accessories at high cost and additional time. Plastic products used for blood bags, saline bags, capsule bodies and strips, injection syringes and containers for tablets and capsules are also produced in the country.
Bangladesh earned international standard in manufacturing medicine-related plastic products. These products are also exported as backward linkage of the medicine industry. Besides, the country exports agro-technology enabling plastic goods to Germany, Russia and middle-eastern countries. Drum-seeders, widely used for sowing seeds, and poly greenhouse, used as a protector from insects and high temperature, are also manufactured in the country.
Bangladesh can save hundreds of millions of taka import of dais could be checked by setting up mould factories. Entrepreneurs of several countries, including Iran, are interested to invest in mould factories and petrochemical complexes. However, the country's policymakers are still indecisive over the prospective plastic industry although many foreign investors, especially from China, France, Malaysia and UAE, are interested to invest in the sector.
The country's plastic goods export could be doubled if the government would give incentives on the export and import of plastic raw materials, said Jasim Uddin, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, in an interview with a print media. If the exporters are exempted from the full payment of the LC deposit and if the restriction regarding the bonded warehouse is withdrawn, the country's plastic exports would go up significantly.
According to statistics, there are more than 5000 plastic industries in the country, and in the 2006-07 fiscal year, the country's plastic goods exports were worth Tk 6.82 billion with 63.24 per cent growth rate. There are huge opportunities to raise the country's plastic goods exports. Multinational super chain stores - Wal-Mart, J C Penny and Tom Hill - have used only 10 per cent of saleable commodities for readymade garments but the demand for saleable plastic products is more than that of readymade garments, which is 14 per cent of the total saleable commodities of super chain stores.
If the country's plastic goods exporters could take this opportunity to export their goods to the US based multinational super chain stores, it would boost the country's plastic industries. Plastic is being used in various forms - as shopping bags, in food packaging, for exporting fish to international markets as well as in the country's jute and textile industries. The quality of Bangladeshi plastic goods is better than that of China and India. The country needs to take the opportunity of the ongoing global economic turmoil as the US consumers might turn from the expensive products from China, India and European Union to the low-cost, but quality products, from Bangladesh.
Plastic goods manufacturers recently called upon the government to cut import duties on plastic intermediate products from 25 per cent to 15 per cent in the upcoming budget. They also urged the government to increase import duty on some finished plastic products from the existing five per cent as a measure to protect the Tk 20-billion-strong plastic industry of the country. Intermediate products are mainly non-formed plastic which is turned into items such as clothes hangers, labels and furniture.
Although local businessmen are doing very well in the plastic sector they still have to import the intermediate products and then add value to them, but the government imposed a 25 per cent import duty on intermediate products when import duty on some finished plastic products was only five per cent. This is the reason why local products are failing to compete with imported plastic products in the domestic market. The plastic industry is now the third or fourth largest export earner for the country if both direct and indirect exports are counted.
In fact, proper government support could double or triple the sector's growth. The growth of a country's plastic industry normally shadows that of other industries as most sectors such as telecom, automobile, light engineering, textile and garments and food require plastic and plastic accessories or plastic packaging.
Among the export products developed in Bangladesh are garment accessories, toys, toothbrushes, ballpoint pens, pharmaceutical packages and plastic wrapping for food items. The export of plastic products is three times higher than the import of plastic materials using the bonded facility. Bangladeshi plastic goods are exported to 23 countries in North America, Europe, Asia and the Pacific and the Middle East. The country exports plastic goods also to India, Sri Lanka and Nepal, the major markets being Poland, China, the UK, Belgium, France, Germany, the USA, Canada, Spain, Australia, Japan, Malaysia, the UAE, Hong Kong, Bahrain, Italy, New Zealand and the Netherlands.
Bangladesh plastic products experienced a healthy 40 per cent growth during the last two years and is now poised to become one of the country's top ten export items. This industry is set to earn more than 8.0 billion worth of foreign currencies -- both from direct and indirect exports -- by the end of this year.
Yet, lack of policy support, inadequate port facilities and an unfair image, driven by misleading propaganda, work as main hindrances to the full growth of its potential. The country is capable of producing world class plastic products to capture a sizeable portion of the 500-billion dollar global plastic market. If the quality of products is ensured and the cost of production cut, Bangladesh plastic sector can earn billions of dollars every year and reduce import of many other products. Encouraged by bond facilities in 1992, Bangladesh plastic sector now stands on a sound footing with more than 2000 factories all over the country.
More than 0.2 million skilled and unskilled manpower are employed in this sector and contributed Taka 12 billion revenue to the government's exchequer in 2004. However, some indiscriminate policies like mandatory bank guarantee provision have created serious setback to the export of plastic products.
The plastic sector is also facing difficulties due to image crises driven by ban on polythene bags. But the fact is, plastics may be treated to become the most eco-friendly materials. Unfortunately, propagation of half-baked information and ill-founded concepts against plastics tend to malign the sincere efforts of the plastic industry.
Various uses of plastic products are being tested around the world. Of late, experts have witnessed that blending plastic waste with bitumen in laying tarmac could enhance road durability, drastically reduce maintenance costs, and save the country Tk 15.08 billion in maintenance cost a year. Less cracks and potholes will develop on roads and recycling of plastic waste can reduce the amount of hazardous non-biodegradable materials in the environment.
.........................................................
szkhan@thefinancialexpress-bd.com