In an exclusive interview with The Business Standard, Md Shirajul Islam Mollah, president of the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), speaks about the rise of the industry, its future, and the International Ceramics Expo which kicked off in Dhaka on Thursday
Although the Bangladeshi ceramic industry began its journey in the 1960s, it started gaining momentum in the last two decades. A good number of ceramic products are now being exported in the global market, after overcoming import-dependency. In the last 10 years, the industry has seen large sums of investment. Local entrepreneurs are now aiming to turn the ceramic sector into a major source of export earnings in the next five years.
In an exclusive interview with The Business Standard, Md Shirajul Islam Mollah, president of the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), speaks about the rise of the industry, its future, and the International Ceramics Expo which kicked off in Dhaka on Thursday.
TBS: The growth of the ceramic sector in the last 10 years is enviable. What is the present status of this sector?
It is clear that in the last 10 years, the ceramic sector grew by over 20 percent on average. This sector, which depends on imported raw materials, now occupies a big spot in the export market after meeting domestic demand.
There are 66 ceramic brands in Bangladesh at present, including those making tableware, tiles and sanitary ware. Every year, ceramic products worth about Tk6,000 crore are sold in the local market. At present, about 5 lakh people are directly and indirectly engaged in the industry.
TBS: What is the story behind the beginning and development of this industry?
The Bangladeshi ceramic industry started its journey during the '60s. However, no big manufacturing industry was set up in the country until 1980, facing competition from the foreign products. The sector saw a huge flow of investment from during the 1990 after advances in technology.
At that time, some companies including Monno, RAK, Shinepukur, Fu-Wang and Mir ceramics invested in the industry. However, they showed more interest in producing tableware ceramics. As demand for tiles and sanitary ware increased, investment also grew in the last decade.
Sheltech, DBL, Farr, Akij, China-Bangla, Greatwall, Dhaka-Shanghai, ATI, Abul Khair Group and other big companies invested around this time. The sector currently holds investment worth over Tk10,000 crore.
TBS: What percentage of the domestic market share do local and foreign brands hold in Bangladesh?
During the 80s, foreign brands occupied 80 percent of the domestic ceramic market. Now the local companies cater to 85 percent of the local demand. In case of tableware, local brands cater to about 97 percent of the local demand.
The foreign brands serve a small portion of the sanitary ware and tiles market. In this sector, our local entrepreneurs have to face huge competition from cheap Chinese products. However, when the 10 to 12 companies in the pipeline go into commercial production, the importers will be compelled to stop importing foreign tiles.
TBS: What is the status of Bangladeshi ceramic products in the global market. What are the future prospects of the industry?
The demand for Bangladeshi ceramic products is very high in the international market due to high quality build and aesthetically pleasing design. At present, our ceramic products are exported to 50 countries, including Italy, the US, Germany, Norway, Canada, Sweden, Spain, the UAE, the Netherlands, Poland, Greece, Tukey, India and Russia. 50 percent of the exports are concentrated to the UK, the US, Germany, Canada and Sweden.
In the last fiscal year, ceramic products worth Tk586 crore were exported from Bangladesh. As a single commodity, it occupies the seventh position in export. Big brands including Shinepukur, Monno, Bengal Fine, Standard, RAK, Fu Wang and People's Ceramics have attained a good position in the international market for tableware.
We have taken an initiative to export new products like tiles and sanitary ware. We have held discussions with a number of countries. We can start exporting these products from the beginning of 2020. I hope that by 2024, the ceramic industry will be the third largest export sector in Bangladesh, after the garment and leather industry.
TBS: How can Bangladeshi ceramic products compete in the export market despite depending completely on import for raw materials and using high-priced LNG?
Our main challenge is getting raw materials. We are lagging a little behind China, Vietnam and India in terms of pricing as we are mostly dependent on import for raw materials. However, the government's 10 percent incentive on export and duty-free raw material import facility have given us some advantages.
Our biggest advantage is that gas prices in Bangladesh are lower than neighbouring India. Also, the availability of low cost labour puts our ceramic industry ahead. Hence, we can see a scope of doing better than our competitors. But uninterrupted supply of gas is very necessary for that.
TBS: Are there other challenges for our ceramic industry?
Alongside gas and raw materials, adjusting prices is a big challenge for us. Product prices in the local market have to be hiked due to frequent rise in gas prices. Buyers do not take this easily. As a result, a section of buyers is leaning towards low-priced Chinese goods.
Secondly, we are facing a problem regarding duty. We could not bring it down to zero despite holding talks with the government. Fifteen percent supplementary duty has been imposed on ceramic products, although they are not luxury items. Value added tax (VAT) is also a burden for the industry. However, we have huge potential if these problems could be solved.
TBS: Skilled manpower and factory compliance are two very important factors for capturing the export market and sustaining an industry. What is the status of these two factors in the ceramic sector?
The buyers in Europe and America prioritise quality of products and compliance issues. All firms under our association are compliant. Almost all of them have their own Effluent Treatment Plants. Most of the firms have adopted modern technology. However, there is a shortage of skilled manpower.
Specialised departments and institutes have been established in leading universities of the country to provide opportunities to graduates from different engineering universities, with the aim of creating a skilled manpower for the sector. There are also diploma courses available in technical colleges.
Industry officials are being trained up in different countries, including China and Vietnam. Initiatives are underway to introduce specialised ceramic departments in other engineering universities. We also have plans to set up training institutes.
TBS: A three-day international expo of ceramic products started in Dhaka from Thursday. How will the ceramic industry benefit from this?
This fair has been organised to exhibit Bangladeshi goods in the international arena and to help producers network with buyers. 20 countries from around the world are participating in the fair. Products of 150 brands will be presented in 120 stalls. More than 500 buyers including 300 international delegates are also participating in the International Ceramics Expo.
The main aim of the expo is to market local ceramic goods and help introduce their own brands to the local consumers. Alongside exhibition, there are arrangements for taking orders at the fair. There will be attractive discounts on goods of all firms at the expo.