Construction materials industry thriving on mega projects

The construction materials industry of Bangladesh has registered massive growth over the past decade as some mega projects are providing ample opportunity for capacity building and ensuring world-class products, according to industry insiders.

Local companies need to ensure quality products as well as display sufficient production capacity and operational efficiency to participate with international firms in implementing mega projects, they said.

At present, the government is implementing around a dozen mega projects using locally made construction materials instead of imported alternatives.

For example, at least 10 local companies are contributing materials, such as cement, steel and paint, for constructing the country's first elevated expressway in Dhaka.

And if the products being provided by these local companies were substandard in any way, then the international firm implementing the project would opt for imports, they added.

As such, a major portion of the Tk 8,940 crore project is being constructed using local materials.

Of the 10 local contributors, six are cement companies while two are steel makers and the others make paint and PVC products.

Sources say the cement makers are: Shah Cement Ltd, Crown Cement PLC, Bashundhara Industrial Complex Ltd, Heidelberg Cement, Seven Circle (Bangladesh) Ltd and Premier Cement Ltd.

The BSRM and GPH Ispat are providing steel for the project while two concerns of RFL Group -- RFL Pipe and Fittings, and Rainbow Paints -- are supplying the necessary pipes and road marking materials.

"It is a matter of pride that we are participating in building the elevated expressway. We provided a significant amount of cement for the project," said Mohammed Amirul Haque, founder managing director and CEO of Premier Cement.

According to him, local firms have long been contributing to the economy by improving the efficiency and quality of their products for use in mega development projects.

For example, local cement manufacturers have increased their production capacity to 58 lakh tonnes per annum while it was 20 lakh tonnes at best just 10 years ago.

"The public sector accounts for about 45 percent of the total consumption," he said, adding that cooperation between local and international firms is needed to ensure better quality products and increase supply.

As such, government mega projects and other development initiatives directly contribute to the growth of local manufacturers while also improving the environmental compliance and efficiency of their units.

"Besides, this cooperation opens an avenue for exports [by facilitating a relationship between local suppliers and international construction companies]," Haque said.

RN Paul, managing director of RFL Group, said they are providing soil, waste and rainwater pipes and fittings for the drainage system of the elevated expressway as well as road marking materials.

"So, we are providing two products for the entire project. We are proud to be a partner of the project," he added.

Paul also said if international firms involve local companies in their projects, then the latter would gain experience and confidence as well as a sense of responsibility.

"Participation with this type of international firm and mega project is not a matter of making business, rather it is an achievement of quality products," he added.

Paul explained that if local companies do not provide the required construction materials, then they would have to be imported at the cost of huge sums of foreign currency.

"So, local companies benefit and also help save foreign currency through such cooperation," he said.

Till date, a total of 66,000 tonnes of steel has been used in the elevated expressway project, with BSRM contributing a majority 52,000 tonnes.

Tapan Sengupta, deputy managing director of BSRM, said foreign firms consider a supplier's product quality and production capacity before making them an official source.

"They first give product specifications and test the product quality randomly before selecting the supplier," he added.

Sengupta also said they have the capacity to supply the required quantity and quality of products.

"The implementing agency accepted our products and we contributed by providing around 80 percent of the steel requirement," he added.

Sengupta acknowledged that involvement in this type of large project helps local construction material companies grow their capacity and achieve global standards.

He also said timely delivery is another important factor for participation with international construction firms as delays in the supply of materials slows project implementation and increases costs.

Bangladesh's steel industry is getting stronger though thanks to a construction boom and implementation of mega infrastructure projects, industry people say.

Government projects account for 40 percent of the total steel consumed in Bangladesh, up from 15 percent 13 years. Total consumption stood at about 8 million tonnes in 2022.

Sheikh Masadul Alam Masud, founder chairman of the Bangladesh Steel Manufacturers Association, said the local steelmaking capacity has nearly doubled to about 90 lakh tonnes over the past decade.

He said development works, including large infrastructure projects taken by the government, encouraged millers to expand their production capacities.

"We started to increase the capacity after the government declared its Vision-2021," he said, adding that when the government constructs mega projects, the private sector shows interest to invest.

He also said the large infrastructure development projects are encouraging local steel mills to improve the quality of their products.

"This is because we have to compete with foreign firms to win international tenders," he added.

Masud said production capacity of steel mills would exceed 1 crore tonnes had the economy retained its buoyancy amid the recent economic turmoil brought on by Covid-19 and the Russia-Ukraine war.

"The problem of electricity, gas and US dollar shortages coupled with a slowdown in public construction works has affected the sector," he added.

Rupali Chowdhury, managing director of Berger Paints Bangladesh Limited, said local construction material companies are benefiting from government development projects as it propels their capacity building and efficiency.

She sees huge potential for the sector in Bangladesh as the country will continue to see infrastructure development in the days ahead.

However, local companies cannot contribute to projects being implemented under a government-to-government basis even if they provide international standard products.

With this backdrop, she demanded the government include a provision in contracts for mandatory use of local products even in government-to-government projects.