Industry insiders say the ceramic sector can play a pivotal role in the country’s economy through earning foreign currencies after exporting environment-friendly products to different countries of the world if it gets policy support from the government like the ready-made garment (RMG) industry.

Mentioning that Bangladesh ranks 2nd in the global RMG exports even after sourcing raw materials from abroad, they said the ceramic sector has also the possibility of becoming a major source of earning foreign currencies.

The businessmen urged the government to rationalise the tax policy and reduce import duties on the raw materials of ceramic products.

Rapid growth in industry

Before 2000, Bangladesh had to spend a huge amount of foreign currency on importing over 80% of the ceramic products used in Bangladesh. By producing ceramic products, particularly tiles, tableware and sanitary ware locally, the sector not only reduced the import dependency but also added value and created huge job opportunities in the country, the industrialists say.

According to the latest data of Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA), over 70 ceramic companies have invested a total of US$1.80 billion in the sector.

Besides, top five foreign companies that invested in Bangladesh are RAK Ceramics (BD) Ltd with Tk728 crore in tiles and sanitary ware, Bangladesh Hardland Ceramics Co Ltd with Tk650 crore in tiles, Star Ceramics Ltd having Tk600 crore in tiles and sanitary ware, Star Porcelain Ltd with Tk272 crore in tableware and Sun Power Ceramics Co Ltd having Tk100 crore in tiles.

The country exported ceramic products worth $43.39 million in 2022-23 fiscal year. Of them, 97% were tableware and 2% tiles. Bangladesh’s ceramic products are exported to over 50 countries in the world.

According to the BCMEA, around 5 lakh people are engaged in the sector, which is contributing 0.23 % to the country’s GDP.

Meanwhile, the size of the global ceramic market was valued at $239.53 billion in 2022 and it is expected to expand at a compound annual growth rate (CAGR) of 5.2% from 2023 to 2030, according to the Grand View Research, a business consulting firm.

Bangladesh Investment Development Authority (BIDA) data said the ceramic sector has 20% average annual growth rate in the domestic market and 26% average annual growth in the export market as well as 200% investment and production growth in the last 10 years.

Talking to the Daily Sun, BCMEA Vice-President and Deputy Managing Director of Mir Ceramic Ltd Engineer Ruslan Nasir said his father Mir Nasir Hossain, one of the country’s prominent business leaders, inspired him to enter the tiles manufacturing business in 2001 observing the market potential.

“There’s huge potential for ceramic products in local and global markets following urbanisation and increased purchasing power of people as well as change in the lifestyle,” he said.

Country’s ceramic products, particularly tableware, are used in different presidential palaces like Bangabhaban of Bangladesh, Rashtrapati Bhavan of India and President’s House of Pakistan as well as five-star hotels around the world.

Currently, Bangladesh exports ceramic products to over 50 countries, including the US, Canada, the UK, Germany, France, Italy, Greece, Spain, Australia, New Zealand, Japan, Russian, the United Arab Emirates, Saudi Arabia, Egypt, Turkey, India, Pakistan and Singapore.

Shinepukur products are exported to over 35 countries like the USA, Canada, the UK, Germany, France, Italy, Sweden, Russia, Australia, Brazil and New Zealand.

“We supplied our products for official souvenir of London Olympic 2012. Our products are also used in restaurants operated by world’s top hotel chains in many countries,” said Mohammed Humayun Kabir, chief executive officer (CEO) of Shinepukur Ceramics Limited.

He, however, said they are unable to tap the full export potential for various reasons. “Despite having a lot of export potential, we’re losing it due to incoherent fiscal laws and practices, inconsistent gas pressure, erratic power supply, abnormal increase in gas price, frequent increase in electricity tariff and prevailing foreign exchange (dollar) crisis,” he said.

“Besides, the imposition of customs duty, value-added tax (VAT) and advance income tax (AIT) at import stage on estimated tariff value is making the cost of manufacturing in Bangladesh non-competitive for the export market. Unlike the RMG sector, the AIT is collected twice — at import and export stages,” he said.

Humayun said the government should rationalise the AIT rate at import stage and impose duties on actual transaction values for the imported raw materials.

Shinepukur exported tableware worth $10.8 million or 25% of the total exports of $43 million in the FY23.

According to the BCMEA annual report 2021-22, the export share of Shinepukur was 26% in the FY22 while that of Star Porcelain Ltd 21%, FARR Ceramic Ltd 18%, Artisan Ceramic Ltd 13%, Paragon Ceramic Industries Ltd 12%, Monno Ceramic Ltd 4%, Protik Ceramics Ltd 3%, Monno Bone China Ltd 2% and Akij Ceramics Ltd 1 %.

High taxes barriers to exploring market

Ceramic manufacturers are reluctant to go for exports due to ‘unfriendly’ taxation system. Many companies are under pressure due to unfavourable Advanced Income Tax (AIT) and VAT system.

The CEO of Fu-Wang Ceramic Industry Limited (FWCIL) Rafiquzzaman Bhuiyan said their business is now going through a challenging period due to various reasons, including difficulty in opening letter of credit (LC), high price of natural gas and its low pressure, as well as the electricity crisis.

“Even the sales of many tile companies have recently come down due economic headwinds. To sustain the business, we urge the government to withdraw Supplementary Duty (SD) on the ceramic products and supply gas and electricity uninterruptedly to factories” he added.

Use of modern technology, policy support a must 

Talking to the Daily Sun, Research Fellow of Bangladesh Institute of Development Studies (BIDS) Dr Mohammad Harunur Rashid said Bangladesh will become a trillion-dollar economy from current $460 billion one by the next 18 years.

“So, there’s no alternative to export diversification to boost the country’s economy. The ceramic sector has potential in the global market. To increase the market share globally, the industrialists must improve their product quality to compete with the global competitors,” he said.

Dr Harunur Rashid said there is no mentionable market share of Bangladesh in the world. “However, the government should take effective strategy and give proper policy support to increase the market share in the global market which will help Bangladesh become a developed country by 2041.”