BANGLADESH: State-owned firm sits idle on unsold rubber

Local consumers, who used to buy rubber from Bangladesh Forest Industries Development Corporation (BFIDC), said they have started to collect the raw material from private producers as the authorities do not want to sell rubber at auction prices.

However, BFIDC said the bid prices are often much lower than the international prices.

"We have not been buying rubber from BFIDC for the past two months as it doesn't accept the bid prices,” said N.C. Saha, general manger of Gazi Tyre, which is one of the largest consumers of rubber.

Saha said they cannot but buy rubber from the private producers or import it to meet the demand. Gazi Tyre consumes more than 2,000 tonnes of rubber a year.

Bidders offered Tk 251 for a kilogram of rubber on 13 January 2013, but the Corporation set the price at Tk 265 defying the bid price, according to BFIDC data.

Consumers said BFIDC has been setting prices in such a way for the past six months that forced them to go to private producers or importers.

In another instance, bidders quoted Tk 245 per kg on 12 May 2013, but the Corporation finally set the price at Tk 260.

"Import cost is lower now and the quality is also better than the locally produced rubber,” Saha said.

Rubber plantation is relatively new in Bangladesh compared to other countries, industry insiders said.

The government has been encouraging plantation in the hilly areas since 1980. Some 45,000 acres of land have so far been allotted to BFIDC and 32,500 acres to private producers.

The government plantation accounts for nearly 75 percent of the total domestic production at 10,000 tonnes a year. The rest is produced by the private players.

Companies, including Gazi Tyre, Hossain Tyre, Rupsha Sandal, Meghna Cycle and Apex Group, are the major consumers of the locally produced rubber.

Local consumption is likely to rise further as some of these companies have started to manufacture automobile tyre in recent months.

Meghna Cycle, which is one of the two largest consumers of locally produced rubber, has also started importing the raw material as BFIDC has been failing to go with the bid prices for the past half year.

"We pay around Tk 240 for each kg of imported rubber, but BFIDC is charging far more,” said a senior official of Meghna Group of Industries that exports bicycles.

Private producers are doing good business as the big consumers are not buying from the government enterprise.

"We have no stock; we are under a sales pressure,” said Motahar Billah Chowdhury, a private rubber producer.

S.M. Harun-ur-Rashid, a former general secretary of rubber garden owners' association, said they are getting good prices now.

"Now we are selling rubber at Tk 250-Tk 255 a kg depending on quality,” Rashid said.

Prashanto Bhushan Barua, chairman of BFIDC, said they have been demanding prices in line with the international market.

"A vested quarter is involved and they are saying that BFIDC is charging high,” Barua said.

He said buyers have to pay around 24 percent value added tax and other taxes for BFIDC rubber, but they can evade the tax while purchasing from the private producers due to a lack of monitoring.

Source: \"The Daily Star\", Dhaka; 2 June 2013

(Syed Rashid Ali, Karachi, Pakistan)