Shahiduzzaman Khan

THE ceramic industry is eyeing a modest $100 million in exports by 2012. The
industry people say this is possible provided the government supports them with
due diligence. Bangladesh is now witnessing ceramic industry as a highly
prospective sector for its rising export performances.

The Export Promotion Bureau (EPB) statistics put the total value of exported
ceramic products from the 21 Bangladeshi manufacturers at $38.33 million in
the FY 2006-07, up by 28 per cent from the previous year. According to an
official figure, Bangladesh exported only $1.0 million worth of ceramic wares in
1991 before recording a staggering 695 per cent growth in about a decade,
investing nearly Tk 20 billion and employing some 0.1 million workers.

Of the products, ceramic table wares are being exported to about 50 countries
including, the US and Canada, tiles to India, Nepal and Bhutan, and sanitary
wares to the Middle East, specially the UAE. The industry sells ceramic
products worth about Tk 8.0 billion in the domestic market and pays taxes close
to Tk 3.0 billion.

If the government ensures energy supply and expedites refund of the import
duties paid upon execution of exports, Bangladesh can become one of the three
largest global ceramic exporters by the next decade. Local industry is using the
most advanced 'bone China' technology and the labour costs here are relatively
less compared with the developed nations. Also, as a LDC (least developed
country) member, Bangladesh enjoys tax exemption facilities. Since value
addition to the ceramic sector happens to be the most, the government should
promote it in its efforts to assume another major export earner's magnitudes.

Experts suggested that the authorities should enhance the currently levied 20
per cent complementary tax on imported ceramic to 65 per cent to protect the
Bangladeshi ceramic products, as the imported Chinese ceramic sell rather
cheap here. The government put an embargo on cutting hills in 2007 through a
public notification, which stopped the ceramic manufacturers from procuring
raw materials from the Mymensingh hills since. The Mymensingh clay could be
used for producing tiles, but for table wares Bangladesh needs to import
superior quality clay from India and China. The government may take steps to
find deposits of superior quality clay for ceramic in the coalmine region of north
Bengal.

Although Bangladeshi ceramic industry has carved a niche in the world market,
its domestic market share is shrinking day by day, due to widespread import of
low- priced foreign goods. Hefty duty on imported raw materials, comparatively
lower duty on imported finished ceramic products and high price of gas are the
main obstacles to the growth of domestic ceramic industry.
The local tableware industry has the capacity to feed the Tk 3.0 billion domestic
market but local manufacturers now account for less than Tk 500 million
market. Monno, Shinepukur, Bengal Fine and Peoples Ceramic are the major
players in local ceramic tableware market. Bangladesh ceramic industry, which
exports the products mainly to the EU countries and the US, imports raw
materials from China, Rumania, Indonesia and Germany. Ceramic
manufacturers also urged the government to reduce tariff on gas, used in the
ceramic factories. It will help them compete in the international market.
Presently, average gas tariff is Tk 2/cubic metre for fertiliser factories, Tk
5.13/cubic metre for ceramics factories and Tk 3.5/cubic metre for gas-based
power plants. The industry urged the government to lower the import duty on
ceramic raw materials to 5.0 per cent from the existing 7.5-15 percent.

Ceramic manufacturers lamented that they had to lose a portion of the export
market as its output witnessed a sharp decline, which resulted from low voltage
of electricity and low gas pressure. In fact, the industry needs uninterrupted
power and gas supply round the clock to maintain the required 380-degree
temperature in a ceramic tableware factory. When power voltage or gas
pressure is low, such temperature reduces and when the temperature falls it
takes at least 12 hours to bring it back to previous level, causing a huge loss. A
low heat in any plant causes fault to colour and quality. Country's competitors
like Sri Lanka, Malaysia and Thailand are capturing its export markets as it is
losing competitiveness.

According to the industry people, to harness power during the shortfall period
they used diesel-run generators, but due to high oil prices it was very expensive.
For running high cost generators, the prices of the products also rise and thus
the industry loses competitiveness in world market. Industry insiders said that
the government should patronise the potential ceramic industry, which
witnessed a considerable rise in export for the last few years.

The export of tableware products has been registering more than 6.0 per cent
yearly growth for the last ten years making a substantial dent in the US and
European markets. Bangladesh Ceramic-ware Manufacturers' Association
(BCMA) sources say the present investment in the country's ceramic industry is
roughly about Tk 8.0 billion. The ceramic industry marked a 800 per cent
export growth during the last one decade. The quality of products, such as
dinner sets, tea and coffee sets, is much better than that of India and China.

To cope with the increased demand, all major exporters, such as Monno
Ceramic, Shinepukur, and Bengal Fine Ceramic, have been expanding their
plants. More plants are needed, but unfortunately the country has extreme
dearth of skilled manpower in this industry. The manufacturers claim they were
not receiving due government facilities, such as lower interest rate as other
export sectors receive.
A medium scale ceramic plant needs around one billion taka in initial
investment, and Bangladesh has only four such tableware manufacturers. The
products are brighter and shine pretty nice. The manufacturers here are taking
risk while diversifying their designs. China and India are no better competitors
here as they produce only traditional items.

As overseas demand is going up, country's big players are now eyeing the
export market, pumping over 80 per cent production into international market.
After consistent growth in the last 15 years, the country is now in a good
position to achieve the target. Quality of products has earned Bangladesh a
niche market in the developed world and the recent trend shows that the
market will grow and grow further. But in spite of all export potentials, looming
gas crisis seems to deprive the sector of a smooth rise. Very often, shortage of
gas hits the production of the ceramic industry. No special measures have so far
been taken.

There are over a dozen of ceramic factories in Bangladesh, which produce over
40,000 tonnes of ceramic products a year. Monno, Shinepukur, Bengal Fine,
Standard, Peoples and National Ceramic are engaged in tableware while RAK,
Fu Wang, China-Bangla and Mir are engaged in tiles and sanitary ware. The
companies have invested so far over Tk 6.0 billion and more investments are in
the offing with many such industries planning to produce all the three ceramic
categories. Ceramic products including stone tableware, porcelain tableware,
bone China tableware, tiles and sanitary ware have a $20 billion global market
out of which Bangladesh's share is only 0.17 percent. Two new plants are
expected to be established very soon.

Among the famous ceramic industries, Shinepukur Ceramics is a leading

ceramic tableware exporter of the country having two state-of-the-art units for
producing porcelain and bone china tableware at Savar, some 35 km off Dhaka.
The units are equipped with modern quality control laboratory facilities, decal
plant, carton-packaging plant and modelling unit, and have their own gas-fired
power supply.

The porcelain unit is capable of producing 60,000 pieces a day, while the
capacity of the bone china unit is 10,000 pieces a day. Since its

commercial production began in 1999, Shinepukur Ceramics, a 100 percent

export-oriented company, has so far exported its products to the UK, US, Spain,
Italy, Australia, New Zealand, Norway, Sweden, Russia, the UAE, Denmark,
Germany, Turkey and India.

Like Shinepukur Ceramics, country's all other leading ceramic units are having
robust growth performances belying all earlier speculations. Bengal Fine
Ceramics is also doing pretty well and its export performances hit an all-time
record. Monno Ceramics is also having robust business with overseas countries.
Others have earned equal fame.

The natural gas that is used in the kilns of the Bangladesh's ceramic

industry does not contain any sulphur and that is why the country's ceramic
products look brighter. Bangladesh has been manufacturing tableware for the
last five decades, but the country is also famous for its pottery, a heritage of
more than two millenniums.