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Bangladesh Furniture hold shining future

fBangladesh’s share in the global wooden furniture market is quite insignificant, despite the fact that the people of the country have a long history of carving wood. But the scenario started changing rapidly since the mid-Nineties, when the country began furniture exports. Bangladesh exported furniture worth USD 31.41 million in fiscal 2012-13, up 15.73 per cent from the previous year. Sources said the demand for furniture from Bangladesh has been rising in the international markets, especially in the US and the EU.

Exports of wooden furniture from Bangladesh has jumped by 253 per cent during the last five years, rising from a modest USD 8.89 million during 2008-09 to USD 31.41 million in the last fiscal (2012-13). This phenomenal rise in furniture exports is being attributed to the effective marketing drive by the country’s exporters in recent years.

Though the value of furniture exports is rather nominal, but a beginning has been made, and with an aggressive marketing strategy, the value of exports can be increased further in a short span, said an official of the ministry involved.

The total world trade in furniture is estimated at USD 130 billion, with the US being the leading importer while China is the major exporter. Bangladesh’s share in the total world market is quite negligible. “But the country can grab at least 10 per cent of the global demand for furniture if we can provide proper policy support,??? said Export Promotion Bureau (EPB) vice-chairman Shubhashish Bose recently.

Industry sources said the soft furniture exporters in Bangladesh are experiencing steady growth in sales to Japan, the EU and the US. As China, the Philippines and Vietnam are shifting to more industrialized methods of production, it has created huge opportunities for Bangladesh. The labour cost, which is comparatively low, is an added advantage for Bangladesh.

But the country has failed to reap the benefits as there is a dearth of educated, certified and professionally trained workers, the sources added. The shortage of manpower skilled in handling modern equipment and machinery is limiting the growth prospects of this industry, which should be addressed by setting up more technical schools with a curriculum of short-term trade courses, for which, along with government initiatives, the private sector should also come forward.
Exporters are also suffering from multifarious problems while local manufacturers are facing challenges resulting from furniture imports. Imported foreign furniture, especially from China, Korea, Thailand and Malaysia, has hit the local industry and sales of locally manufactured household furniture have gone down.

At the same time, the high cost of the furniture business threatens the sector as a whole. The prices of all raw materials used in making furniture, including chipboard, timber, foam, polish, chemicals, colour paints and hardware, have increased. Around 60 per cent of raw materials, including hardware, accessories and fabrics, are imported from countries such as Myanmar, Nigeria and Ivory Cost. One of the leading companies, HATIL, imports 100 per cent of its raw materials from North America.
Despite its huge potential, Bangladesh faces a difficult challenge from other manufacturing countries as the industry was fully dependent on imported raw materials. “The export earnings from the furniture industry would witness a significant growth spurt if the government provides proper policy support, such as by reducing duty on raw materials and giving cash incentives,??? said Bangladesh Furniture Industries Owners’ Association (BFIOA) president Selim H Raman.

“We are paying in the range of 54 to 100 per cent to the government’s exchequer in the form of VAT, taxes and supplementary demands, which is very high for stakeholders,??? argued the BFIOA president, who is also the managing director of HATIL Complex Ltd.

HATIL’s managing director demanded an affordable import tax on imported raw materials. The import tax on raw materials should be 15 per cent to ensure the further expansion of the furniture sector, Rahman said. He also demanded an easy and hassle-free duty drawback system.

“Cash incentives on exports and low import duties on raw materials for the furniture sector would help bring in remarkable export earnings through diversification of products and markets. This would boost the country’s economy,??? pointed out the BFIOA president.

“Furniture exports have already added a new dimension to our export basket, imparting a new thrust to furniture-making in the country for the global market,??? he explained.

“The country has a lot of potential and can increase furniture exports because it has cost competitiveness,??? pointed out Rahman. China’s labour costs are gradually increasing, which has already created a vacuum in the furniture manufacturing sector. The country’s furniture exporters can easily fill this vacuum, asserted the HATIL managing director.

In Bangladesh, wooden furniture is manufactured by a large number of cottage industries, spread over villages, small towns and cities. Traditionally, furniture has developed as a cottage industry in Bangladesh. In the early Nineties, the furniture industry in Bangladesh was transformed from a cottage industry to a mechanized mass production-oriented industry. Since then, furniture businesses have begun to grow, with modern machinery, innovative designs and the use of diverse materials. The main varieties of furniture are now produced from wood, processed wood, melamine board, medium density fibre board (MDF), particleboard and steel.

Exports of furniture and allied products from Bangladesh started in 1995. There are now 41,560 wooden furniture units in the country and nearly two lakh skilled and semi-skilled people are engaged in this sector. Among the employees working in the furniture sector, 20 per cent are working in large industries and 80 per cent are working in small and medium industries (SMEs). The sector accounts for around 0.29 per cent of the gross domestic product (GDP), according to the Bangladesh Furniture Export Association (BFEA).

Apart from the large export-oriented enterprises, there is a number of furniture clusters in Dhaka at Badda, Sutrapur and Mirpur areas. A number of large companies has factories in Savar and Gazipur areas.

At present two associations — the BFEA and the BFIOA — are closely working to realise the potential of this sector. At present, several members of BFEA are involved in furniture exports: Otobi, Akhtar, Hatil, Brothers, Partex, Navana and Furnitec, as well as others.

“The furniture market can expand further, both at home and abroad, by blending technology, skilled manpower, good raw materials and quality designs,??? said HATIL’s head of marketing Md. Firoz-Al-Mamun. HATIL very recently opened a showroom in Australia, which has already proved to be popular among local patrons.

Considering the immense potential of this sector, the government plans to establish a separate furniture exhibition zone at Purbachal at a cost of Tk. 1.75 billion. The construction of the exhibition zone is expected to be completed within the next two years. The works ministry has already allocated 10 acres of land at Purbachal for developing the exhibition zone on the instructions of Prime Minister Sheikh Hasina. The establishment of a separate furniture zone, explained the EPB vice-chairman, will help in expanding the sector in both the local and international markets.

Source: Daily Independent

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