A four-day trade show of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) began on January 15 at the International Convention City in Bashundhara in the capital. On the occasion, our correspondent talked to Kader Khan, the president of the association, on how the apparel accessories and packaging industry has developed, the problems currently confronting the sector, the challenges it is facing and the prospects for the industry.
The Business Standard (TBS): Bangladesh's packaging and accessories sector started its journey as a backward linkage industry for the apparel sector. Is the sector still a backward linkage industry or has it been developed as a full-fledged industry?
Kader Khan: In the initial stages of the apparel sector, all necessary accessories, including fabrics, had to be imported. We faced various problems, such as the sizes of cartons and polybags, which were not perfect. In packaging, the sizes did not match our requirements. Then we had to take them to Nayabazar to have them fixed manually. It was in 1985 that several businessmen, including me, went into the job of reconfiguring the cartons and polybags. Then it occurred to us as to why we were not manufacturing these products in our country. In this way, the apparel accessories industry started out on its journey in Bangladesh. In the beginning, we had small factories. In the early 1990s, big business groups stepped into the sector. Gradually, factories of other accessories were built. But after 2000, the industry saw a big expansion. We began to make profits anywhere from 50 percent to 100 percent. So, many businessmen began setting up accessories factories.
Today, we have the capability to supply accessories to almost all types of industries in the country. After meeting local demand, 20 to 30 percent of our capacity remains unused. We will export our products if we get orders from abroad. So, overall, it is a full-fledged industry now.
TBS: But, to call it a full-fledged industry, some requirements need to be met. Do you think the sector has fulfilled all the requirements?
Kader: Look, our association now has 1,733 members. Total investment in the sector is more than Tk35,000 crore. Around seven lakh people are engaged in the industry. Export earnings amount to more than $7.5 billion. However, we do not have accurate statistics. Actually, nobody has, because there is no separate HS (harmonisation system) code for our products. The Export Promotion Bureau (EPB) does not keep data on accessories exports separately. But, we have a share in the export earnings from apparel sector. It is around 15 percent because buttons, stickers and polybags are required for exporting ready-made garments. Later, the products get packed in cartons. Last year, Bangladesh's total apparel exports were worth $34.13 billion. We have a 15 percent share in it. So, there is no scope for underestimating us. We only import the raw material and all the processes needed to manufacture products take place in the country.
TBS: Has the government given the accessories and packaging industry the status of a formal industry?
Kader: No, we have not got that recognition. If we get the status, it will benefit the industry. Then there will be a separate HS code for our products. We will get branding and promote our products in the global market. In fact, the policy makers in the government do not know that such a big industry has flourished in the country. Possibly it is our failure that we could not make them realise it.
TBS: Commerce Minister Tipu Munshi started his business career in the accessories business. Later, he became an entrepreneur in the RMG sector. As commerce minister, could he not convince the policy makers?
Kader: We have informed the minister of our problems. He gave us assurances of solving the problems one after another.
TBS: How far do you want to move with this industry?
Kader: In fact, many people of our country do not know how big the global market for these products is. Only the packaging industry has a global market of more than $700 billion. We have already the capability to enter the market. But the problem is that nobody knows about it. China holds the first position in the apparel global market and Bangladesh ranks just after China. We can clinch the same position in the global apparel accessories market only by branding our products. All the big buyers of accessories buy their products from China because they know China has the capacity to supply the products to them. But we do not get orders as international buyers do not know about us.
TBS: Why are you not raising the issue before the policy makers?
Kader: Actually, the government can do us the biggest favour. For example, various big international trade shows of RMG products are held, where Bangladesh participates. The EPB organises it. We requested the EPB to allocate at least one stall for us. If it is ensured, we will be able to reach the big buyers of the accessories. If we can participate in four to five international trade shows a year, we will be able to make a place in the global market gradually. Though the EPB wants to give us 20 to 30 percent subsidy in stall fees, still it takes $3,000 to $4,000. Bearing the cost is difficult for us.
TBS: You have arranged Gapexpo this year as you did in previous years. What do you expect from the trade show this year?
Kader: This is not only a trade show for accessories and packaging products. This is actually a trade show of the necessary equipment and raw material for the entire RMG industry.We have to import the machinery and raw material we need for the RMG industry. The international manufacturers of this machinery and raw material providers take part in this show. So, we do not need to go abroad to purchase the products. Besides, it becomes easier for us to judge the quality of the products and bargain on their prices, as all the big foreign companies are under the same roof in the show. The same thing is applicable for the RMG industry. Accessories and machinery suppliers to the RMG manufacturers take part in the show. However, the main objective of the show this year is to adopt the technology which will help us manufacture products by using less manpower at low cost. Besides, green technology is an important issue nowadays. We will be able to incorporate new kinds of green technologies through this show.
TBS: Can't you invite foreign buyers to this trade show?
Kader: If we could arrange this show like the BGMEA organised Batexpo, it would be more beneficial. For Batexpo, big foreign buyers were invited and accommodated at Hotel Sonargaon and Hotel Ruposhi Bangla. Then the buyers came to the show and gave orders for the products. But we do not have that financial ability to invest for the buyers.
TBS: Your accessories and packaging products all are RMG-based. But all types of industries in the world need accessories. Have you attained the capability to make a place for yourself in the international market of accessories for other sectors?
Kader: Yes, all types of industries need accessories. Suppose, in the developed countries, in packaging of ice cream, chocolate and various gifts items expensive stuff is used. But in our country, the number of the factories which can manufacture such expensive and good quality packaging is from eight to ten. If we get orders and a big market, many entrepreneurs will invest a huge amount in this sector.
TBS: Compliance is a big issue in the RMG sector. What is about your industry?
Kader: In the beginning, all the factories in the accessories and packaging sector were established by defying proper rules and regulations. But now most of the factories are being shifted from Dhaka to other parts of the country.At present, building safety, fire safety and environment issues get priority when a factory is set up. In future, the compliance issue will not be a problem for us in the global market.
TBS: From where do you collect your raw materials?
Kader: All the necessary raw materials, except some paper for cartons, are imported from abroad. It is not possible to produce the raw materials in Bangladesh. The same is true of other necessary chemicals .We do not have big capital and technology, which are required to build chemical factories.
TBS: There is a crisis of skilled manpower in our country. What about the problem in your industry?
Kader: We are facing the same problem. We have not been able to build any institute to develop skilled manpower as yet. Our entrepreneurs hire skilled foreign workers, who give training to our workers. We have been trying to set up an institute for building skilled manpower. A plot has been allocated in Rajuk's Purbachal for this purpose. But it will take several years to get the land. However, a course can be introduced in government vocational training institutes. Then we will get some skilled workers every year.
TBS: You have a testing lab. What about it?
Kader: Only tests of cartons are done in the lab, which was set up in association with the EU in Tongi. But it requires a huge amount of money to build a lab, where tests of all types of products can be done. It is not possible for us to invest such a huge amount. The government must come forward in this regard. If we want to make the accessories and packaging sector an export oriented industry, there is no alternative to establishing a lab of international standard.
TBS: A feasibility study was conducted by International Trade Centre with the financial aid of the EU several years ago. What was the outcome of the study? How far have the recommendations of the study been implemented?
Kader: The study has made us more optimistic. The study mentioned the accessories and packaging industry as a potential sector. Whatever I told you about the testing lab or training institute is because of that study. We sent the report of the study to all ministries and departments of the government. But it is very disappointing that we have not seen any reflection of the study at the policy making level of the government as yet.
TBS: Thank you for giving us your time.
Kader: Thank you too.