BANGLADESH: Bangladesh misses boat as Chinese plastic manufacturers move to cheaper bases

Md Jashim Uddin, Vice Chairman of Bengal Group of Industries, said scores of mid-sized Chinese companies are moving to countries like Vietnam, Indonesia, Bangladesh, and the Philippines, as they face higher workers' wages home.

"We can easily take the advantage of (relocation). Only a dedicated industrial park will attract more and more Chinese investors into the sector," he told Bangladeshi newsmen.

While Vietnam is aggressively taking the advantage, industry leaders say Bangladesh fails to harness the full potential of Chinese companies' relocation due to the lack of better roads and port facilities and power and gas shortage.

No data were available on how many Chinese plastic manufacturers already moved production bases to Bangladesh or how many are in the queue.

Bangladeshi manufacturers are also making footprints in the foreign markets after meeting the domestic demand, they said.

According to a recent study by a project funded by the European Union, exports of plastic goods from Bangladesh can reach up to US $4 billion by 2020 as the global market of the plastic items has been expanding rapidly.

But infrastructural facility is the main hindrance to attract the foreign direct investment, the Bengal Group top official said.

He also underlined the need for compliance issue to meet the buyers' demands.

Foreign buyers prefer the destinations which offer various ranges of products with a number of companies offering choices, Jashim Uddin said, adding the industrial zone will help the local entrepreneurs to increase export volume.

"Demand for plastic products is increasing in foreign markets in terms of quality and cost of production," Md Arif Rahman, brand manager of RFL Plastic Ltd, said.

RFL is now exporting plastic products to Saudi Arabia, Dubai, Qatar, Spain, France and some African countries, he added.

Many plastic companies now go for expansion considering the demand for both local and international markets, Mr Jashim, who is also the president of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), said.

The exporters said the plastic factories are mainly located in old town areas that need to be maintained properly for attracting buyers.

They emphasised on industrial zone for the plastic sector to boost the sector's growth. If the government gives land, exporters themselves are ready to develop the industrial zone, they added.

Environmental issue is another main threat to the development of plastic industry in the country, exporters said.

The Ministry of Commerce (MoC) has formed a new council for the development of the plastic sector, a MoC official said.

Currently, Bangladesh exports plastic goods to more than 20 destinations in the world including Europe, America, Canada, Middle East, and Africa.

Domestic demand for plastic products was 540,000 tonnes in 2005. Since then the demand has been growing at the rate of 30 per cent annually, industry people said.

Export of plastic products is rising every year. The country exported plastic products worth $ 88.69 million during the last fiscal year (2011-12) surpassing the target by 5.25 per cent.

The sector earned $68.76 million in 2010-11 fiscal, $50.63 million in 2009-10 fiscal and $37.37 million in 2008-09 fiscal year while the earning was only $22 million in 2003-04 fiscal.

Source: Daily "The Financial Express", Dhaka; 30 Aug 2012

(Syed Rashid Ali, Karachi, Pakistan)