Rapidly growing plastic industry
BANGLADESH plastic products experienced a healthy 40 per cent growth during the last year and now is poised to become the country's one of the top ten export items. This industry is set to earn more than 8.0 billion worth foreign currencies -- both from direct and indirect exports -- by the end of this year.
Yet lack of policy supports, inadequate port facilities and an unwanted image problems driven by misleading propaganda are the main hindrances to the growth of a potential plastic sector in the country. The chief of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGME) said recently that Bangladesh is capable of producing world class plastic products to capture a sizeable portion of the 500 billion dollars global plastic market. If the quality of products is ensured and the cost of production cut, Bangladesh plastic sector can earn billion dollar 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.
Some indiscriminate policies like mandatory bank guarantee provision have created serious setback to the export of plastic products. Currently, plastics are being exported from Bangladesh as accessories of various export items like garments, tea, jute etc. and finished goods. Plastic packaging material for export-oriented readymade garments, jute, tea leather, fish and the packaging for all other export items are now being manufactured by the local plastic industries.
The main problems with the country's plastic industry are higher production costs driven by high import duty and mandatory bank guarantee provision in case of import of raw materials. For exporters of plastic goods, the government has set a provision for 25 per cent bank guarantee on consignment basis in case of import of raw materials which has raised the cost of production and also cash crises.
It is thus necessary that the government should withdraw bank guarantee provision and consider the plastic industry as a 'thrust sector' providing all facilities to exporters in line with its policy. In order to boost export of plastic products, the government must cut the production and shipment costs. But the concerned authorities are yet to take such steps. During the last 32 years Bangladesh could not reduce lead time, raise shipment facilities due to absence of a proper planning.
For its tremendous growth and inevitability, plastics sector has already been recognised as a major sector worldwide like textile and steel. The growth of plastic industry and the export of plastic items form the Asian countries have increased by more than 10 per cent each year on an average for the last 10 years. Currently, par capita yearly consumption of plastic product in Bangladesh is only 1.5 kg while in the USA, it is 165 kg and in China 4.0 kg. This is because the developed nations are enjoying the advantages of plastic technology at a rate much higher than those of under developed ones.
Bangladesh, China and Malaysia are among others, taking advantages and earning the lion's share of US plastic market. As China recently has come under the US criticism for dumping products, a window of opportunity has opened up for Bangladesh to export its products to the US.
However, the plastic sector is facing difficulties also due to image crises driven by ban on polythene bags. But the fact is -- plastics are the most eco-friendly materials, and the most misunderstood too. Unfortunately, propagation of half-backed information and ill-founded concepts against plastics tend to malign the sincere efforts of the plastic industry.
Meanwhile, the government has taken up a scheme to set up exclusive industrial estates for plastic and automobile industries. The proposed industrial estates, expected in suitable places near Dhaka, will provide land and infrastructure facilities to manufacturers of plastic goods -- both for local and export markets.
The Bangladesh Small and Cottage Industries Corporation (BSCIC) has already sent a project concept paper to the Planning Commission. Private sector leaders have welcomed the government initiative to develop separate estate for plastic goods. Plastic industry is nevertheless, 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 industry is growing rapidly and contributing a lot to the national economy but the government's attitude to this promising sector is not positive, according to the manufacturers. Businessmen involved in it have not been able to improve goodwill of the sector and also failed to inform the policymakers of the positive sides of the industry as their attitude is negative about this sector. There are about 3,000 plastic industrial units in Bangladesh of which 80 per cent are located in the old part of Dhaka. Of the total units, 30 are engaged in direct export, 300 in indirect export and rests serve the domestic market of Tk 8.0 billion.
The plastic products include tooth brush, ball point pen body, overhead tank, shopping bag, garbage bag, garbage bin, crockeries, plastic furniture, toys, garment accessories, household items, sanitary fittings, spare parts of textile and jute mills and packaging items. The high duty on raw materials is pushing the price of locally manufactured plastic goods higher. So, the products are struggling to compete with the cheap Chinese and Indian imports. The manufacturers demanded the import duty on raw materials be slashed to 7.5 per cent from present 15 per cent to keep the foreign imports at bay.
Potential exporters are also failing to provide plastic products like polybag and hanger, which are used by the garment industry, in a competitive price. Of the total export, direct exports earned Tk 1.0 billion while indirect exports by the exporters fetched Tk 5.0 billion untied last year. Not having any separate industrial plots for plastic manufacturers, the factories are scattered at different places.
The government should not have slapped ban on polypropylene products measuring below 100 micron. All types of plastic materials used for wrapping or packaging export items came under the purview of the ban. As a result, many garment accessories manufacturing industry are being shut down. Surprisingly, there is no restriction on wrapping materials that are imported or coming from abroad as usual with imported goods. As such, the government should withdraw the restriction especially for the plastic products manufactured for export or used for packing export items. A testing laboratory to maintain the quality of plastic products should be set in the country for the healthy promotion of the fledgling industry.