Promising prospect of furniture industry

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The prospect of furniture sector of the country is promising since the exports begin to grow with wide variety of international standard and quality furniture.

The different varieties of furniture are produced in Bangladesh from wood, processed wood, melamine board, Medium Density Fibre Board (MDF), particleboard, steel.

Industry insider said there is bright potential for export of furniture and Bangladesh's furniture industries are ready for that. With net export earnings of approximately $75 million in FY2018-19, furniture export increased significantly on a year-on-year basis, if the sector gets policy support, it will flourish further.

They said innovative design and quality, rising local investment, exploration of new markets, affordable labour force, modern technologies contributed to increase in the export earnings.  

According to the Export Promotion Bureau (EPB), the furniture sector recorded export earnings of USD74.89 million in FY2018–19. This was up from the USD63.18 million recorded for the same period in FY2017-18. This records a growth of 18.53 per cent.

“We want bond facilities. It's a facility provided to export-oriented industries for importing raw materials without paying any duty or tax. Availing the bonded warehouse facility is essential for export-oriented industries as it enhances their export and price competitiveness. The export earnings will grow four times more than what it is now,” says an industry insider.  

The experts expressed their views at the 16th National Furniture Fair, organised by the Bangladesh Furniture Industry Owners Association (BFIOA), at the International Convention City Bashundhara (ICCB) that ended yesterday.

The main purpose of organising the fair was to showcase the products traders created through the year, said organisers.

Under the same roof, 32 brands displayed their furniture. Up to 20 per cent discounts on purchases was offered at the fair. Besides, buyers were also given the opportunity to pay in installments over three to 12 months.

Senior sales executive of Omega Home Solutions Ltd, Kamrul Islam, said that their company was offering buyers the opportunity to pay in installments spread over three to 12 months without any interest.

Those at the New Haji Enterprise stall said customers were showing good interest in quality leather sofas, Rexin sofas and L-shape sofas.

Participants at the fair said they were optimistic about the future of modern technology in the furniture sector.

Selim H Rahman, president of the Bangladesh Furniture Industries Owners’ Association (BFIOA) and also the owner of Hatil Complex, told The Independent that Bangladesh had started penetrating and exporting their products to new markets, such as India, which is eventually helping the increase in export earnings.

Hatil has brought automatic machinery and invested over Tk 200 crore to renovate its factory in Savar. The machines include automated robotic systems in order to increase manufacturing efficiency and enrich Hatil’s global popularity. These machines help to double production rather than increasing job cuts.

Hatil has been exporting furniture to different places in India for the past couple of years. “We have already opened 13 showrooms in India. We want to grow four times within five years. We are also doing business in Nepal and Bhutan. We do business of approximately USD 5 million yearly in the Indian market. Five more showrooms are to be opened in India soon. Within one year, we are expecting to open 50 more showrooms,” said Rahman.

“Another reason for India importing products from us is they don’t have to pay import duty, whereas they have to pay 10 per cent duty if they import products from China,” he added.

Rahman said that given the advantage of short distance, it was convenient for Bangladesh to export products to India.

Rahman explained that China used to be the highest furniture-sourcing country in the world. “Now, it has shifted from labour-intensive to high-tech industries because their labour cost has gone up. This has opened up opportunities for Bangladesh in this sector,” he said.

Also, more and more brands are investing in the sector to avail the 15 per cent cash rebate declared by the government on the export of furniture. “So, it’s high time for us to invest more in this sector,” he said.

The BFIOA president said around 15–20 full-fledged furniture factories were coming up every year. Bangladesh exports furniture to Middle East countries, India, Canada, Nepal, Bhutan, Malaysia, the US, Belgium and other European countries.

The products have become famous because of their fine quality and innovative designs, said Rahman.

Hatil Furniture exports products worth around USD 150,000 to Bhutan, the Middle East, Canada, and Nepal every month, he added.

Rahman said the domestic furniture market had shown an annual growth rate of 20 per cent. “The local furniture industry was growing fast because of the rising purchasing capacity of consumers. Researchers are trying to understand their needs, demand, and affordability,” he added.

New designs, modern technology and innovative products have jacked up the demand for furniture in the local market, he noted.

Asked about the local market size, Rahman said that though there was no statistical data, it would be approximately Tk 4–4.5 thousand crore.

The Hatil chairman also said that furniture was no more a luxury product. It has now become an essential product all over the world and the government should formulate policies keeping the global changes in mind to boost export in this sector.

Describing the challenges faced by furniture exporters, Rahman said, “Raw materials are still being imported. We pay 55–60 per cent import duty on these materials. This hikes the production cost and consequently the final prices of the products are increased.”

“We need more investment in the backward integration sector of furniture so that raw materials could be sourced 100 per cent locally and the cost could be reduced as well,” he explained.

Furniture was the most labour-intensive sector after readymade garments and if the government provided proper policy support, the sector could well become the second highest foreign exchange earning sector, said Rahman.

He pointed out inadequate infrastructure, poor port management and long lead time as other impediments to attracting orders from the EU and US markets.

According to industry insiders, the global furniture market is worth Tk. 23,000 crore and China meets 60 per cent of the demand.

EPB director general Avijit Chowdhury said that special emphasis had been given on the Seventh Five Year Plan on transforming the furniture industry into a major export earner. “Initiatives have been taken for creating new markets for furniture. Alongside, businessmen are being given the stimulus to create diversified products and boost exports,” he added.

Export Development Bureau joint secretary Abu Hena Morshed Zaman said the furniture industry had reached this position after quite a long time.
Source: http://www.theindependentbd.com

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