Competitive prices propelling plastic exports

Plastic product exports from Bangladesh grew 17 percent year-on-year to $162 million in the first eight months of the current fiscal year as the country ensured supply at competitive prices and even discovered new markets despite the global economic downturn.

Besides, this was the highest volume of plastic product exports ever recorded during the July-February period of any fiscal year, according to data from the Export Promotion Bureau (EPB).

Bangladesh mainly exports plastic products to the US, Canada, EU, China, India, and Nepal.

According to a study conducted by the Bangladesh Investment Development Authority (Bida), Bangladesh exports a variety of plastic products but packaging items make up the bulk, followed by tableware and kitchenware.

Shamim Ahmed, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), said the competitive price of locally-made plastic products is the main driver behind export growth in the sector.

As such, the sector managed to continue exports even amid challenges resulting from the global economic downturn, including the ongoing US dollar crisis and subsequent difficulties in opening letters of credit for importing raw materials.

Ahmed also said local companies now manufacture world-class plastics, which is encouraging foreign buyers to source products from Bangladesh.

"Exports would grow further if the government helps local companies explore new markets through its missions abroad," he added.

Kamruzzaman Kamal, director of marketing at Pran-RFL Group, said plastic product exports were growing as disruptions to the global supply chain were being removed. Increased availability of mother vessels is further helping deliver more shipments.

Also, the freight cost has reduced by almost 50 percent and it may decline further in the future, he added.

"Overall exports from the sector were not impressive last fiscal year but we are assuming that there will be an improvement this year as western economies have started to rebound," Kamal said.

On the other hand, he informed that their profit margins have shrunk in the face of a roughly 30 percent hike in production costs due to the higher price of US dollars.

"While exporters could not raise their product prices, we are trying to increase efficiency in production to ensure a better profit margin," Kamal said.

According to industry people, plastic product manufacturers currently make more than 142 items although there is no polyolefin production facility in the country, leaving them to rely on imports.

Bangladesh mainly exports intermediate products like film plastic, household items and garment accessories, they said.

The increased exports were not enjoyed by all though as Akij Biax Films Ltd, a concern of AkijBashir Group, did not register increased shipments of plastic products.

However, Akij Biax manufactures biaxially oriented polypropylene, biaxially oriented polyethylene terephthalate, cast polypropylene, film and stretch film.

Hossain Iraz, director of operations at AkijBashir Group, alleged many in the industry are facing difficulties in terms of export due to a lack of support in their competition against foreign brands.

For example, the government could provide incentives such as a tax holiday to facilitate exports from the sector, he said.

Iraz also said the strength of the domestic market can be leveraged to help the sector become more competitive in the international market.

"Local companies should be given better protection so they become more cost efficient and can offer a better value proposition to export markets," he said.

"Stern actions in enforcing fair play by taking evaders of government dues to task should be given priority and protection of law abiders can boost exports of plastic products," Iraz added.

However, he said there is no fair play in the market as materials imported under bonded warehouse licences are locally available, which is harmful for partially export-oriented factories like Akij Biax.

He also emphasised on fair competition among manufacturers in the domestic market as it would automatically boost exports.

Iraz said the government now provides an 8 percent cash incentive for exports of plastic goods while it was 10 percent last fiscal year.

As per an estimate of the BPGMEA, sales in the domestic market hit Tk 35,000 crore in FY2022-23, up from Tk 25,000 crore in FY2017-18.