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Bangladesh strides in value addition
ECONOMY
Abbas Uddin Noyon & Mahfuz Ullah Babu
31 December, 2020, 10:10 pm
Last modified: 31 December, 2020, 10:51 pm
Policy support for localisation pays off
Seven-eight years ago, blood cancer patients in Bangladesh had to buy each dose of imported Rituxan injection at Tk1.2 lakh, which was beyond most people's reach.
The injection is now cheaper by about half as local companies have come into the production of lifesaving drugs. Foreign companies are also selling the product at around Tk50,000 here in the face of growing competition.
Local drug makers are selling insulin for diabetes at Tk345-Tk600, while the imported ones would cost patients double the amounts over the last decade.
Dozens of the once-expensive drugs are now affordable only because of local production, cutting the price tag by at least half.
Like the lifesaving products, consumer goods such as consumer electronics and home appliances, and automobiles are also gradually becoming affordable with increased local value addition, thanks to entrepreneurs' craving for localisation and supportive policies on the part of the government.
Bangladeshis can now also be proud of export-oriented apparel industry's strengthened backward linkages and increased self-dependency in a wide range of services.
Dr KAS Murshid, director general at Bangladesh Institute of Development Studies (BIDS), told The Business Standard,
"Making people's lives easier is what it is called development. And, our entrepreneurs have done the same by adding value locally in different products and services."
"Now, we need to focus on exports. We also have to be careful so that industrialisation does affect the environment," he added.
Electronics and appliances see massive growth
Refrigerators, televisions, mobile phones, and also laptops and computers nowadays -- everything is coming within reach of many more consumers as brands are trying to maximise their value addition in Bangladesh to get the best out of the tax and duty structures, aimed at boosting local manufacturing.
The market is not a sole playground of venerable companies like Phillips, Sony, or Panasonic anymore, thanks to China's rise which eased the way of technology distribution. Without the China story, the aspiring companies might have found it difficult to come up like this.
Twelve years ago, a then young school teacher, Sharmin Akter, had to save money for two years to buy a 10CFT imported refrigerator at Tk38,000. Now, the local wonder company, Walton is selling the same sized one at only Tk20,000 with a more extended warranty period.
Banker Masud Ahmed bought an imported washing machine at Tk70,000 in 2010, while his younger brother bought a better one at Tk30,000 last year.
"I love the way local manufacturing is easing the pressure on our purse," said Ahmed.
Walton's entry in 2010 was a game-changer.
The home-grown company gambled on local manufacturing counting on supportive policies and it captured three-fourths of the refrigerator market, and 40% of television and over 20% of the air conditioner market.
Other local groups like Butterfly, Pran-RFL, and Minister also built plants here.
Amid the changing situation, multinationals, including Singer, Samsung, and LG, invested here to manufacture locally.
Walton's increased efforts for achieving edge in technological, marketing and management allowed the company to become one of the top five global brands in its field.
SM Nurul Alam Rezvi, vice-chairman of Walton, said their venture has employed 25,000 people directly and another one lakh indirectly.
Minister's Chairman MA Razzak Khan said, "We are making TV, refrigerator, air conditioner, blender, rice cooker and many other home appliances. As a result, prices have gone down, and 5,000 people have also been employed in our venture."
Mobile phone industry booming
Imported smartphones are subject to 57% duties and taxes while a local assembler in Bangladesh pays 17%.
With this policy incentive since the fiscal 2017-18, at least 10 companies, including global players like Samsung and local giant Walton, are assembling smartphones in Bangladesh, while US brand Motorola is also planning to set up a plant here soon.
The around Tk2,500 crore of investment has made mobile phones affordable and created jobs at the same time.
The local plants are meeting around 60% of the annual market demand – nearly three crore handsets were sold in the last fiscal year.
Mobile handsets are a vital part of Digital Bangladesh where mobile financial services have already revolutionised everyday transactions. Rural and urban Bangladesh is converging faster, and Bangladeshi youths got the opportunity to prove their talents in the global stage.
Rezwanul Haque, former secretary general of the Bangladesh Mobile Phone Manufacturing Association, told TBS that almost all the governments provide policy support to help local industries flourish and Bangladesh is doing the right thing.
Walton has recently announced the export of mobile phones to the United States market.
Motorcycle inspires dream for local carindustry
Motorcycles are another story that is encouraging Bangladeshis to dream of their own cars shortly in the future.
Five years ago, a 100cc commuter motorcycle used to cost nearly Tk1.3-Tk1.4 lakh in the 2000s, a price tag 2.5 times higher than in the peer economies.
Runner Automobiles, an importer that pioneered motorcycle manufacturing earlier in the last decade, showed the way to all the popular brands, including Hero, Bajaj, TVS, Honda, Suzuki, Yamaha, and Lifan, to build manufacturing plants here.
More than Tk8,000 crore has already been invested in Bangladesh to manufacture and assemble two wheelers.
All that was needed was the right policy which reduced total taxes and duties to 89% for locally assembled units, less than 50% for frame building out of raw materials.
Now, prices of motorcycles have already dropped by at least one-third in the last four years and the industry's efforts for developing local vendors are believed to have brought the unit prices further down.
In the last four years, annual sales of motorcycles jumped to over five lakh units from less than two lakh units.
Bangladesh market is set to cross the million-unit milestone in the next few years and that would offer investors a scale to increase viability of further localisation, according to the Bangladesh Motorcycle Assemblers and Manufacturers Association President Matiur Rahman.
Meanwhile, Runner, the home-grown company, is exporting motorcycles to Nepal and exploring some other markets as well.
97% drugs locally produced
All-out dependency on multinational giants like Pfizer, Glaxosmithkline, Sanofi, Novonordisk, Novertis are long gone.
In the 1980s, the pharmaceutical industry policy helped the local industry emerge, which is catering to 97% of the local market, spending Tk23,500 crore a year.
All the top 10 players in the local market are home-grown companies and foreign firms do not compete with them anymore.
Beximco, Square, Incepta, ACI are very reliable names to doctors in 160 countries.
SM Shafiuzzaman, secretary general of the Bangladesh Association of Pharmaceutical Industries, admires the 2018 policy incentives for backward linkages in his industry.
Currently, Bangladesh is producing 15% of the required pharmaceutical raw materials, which will grow remarkably after the Active Pharmaceutical Ingredients (API) Industrial Park comes into operation.
Many more drugs will become even more affordable. The local industry is also edging closer to making sophisticated high-value pharmaceutical products alongside receiving export approvals for more and more products for the most stringent drug markets in the west, said Md Muhsin, marketing director at ACI.
Apparel and textiles
The readymade garment export from Bangladesh began in the late 1970s with simple policy support - bond facilities.
Entrepreneurs built thousands of garment factories to contribute to over 80% of the country's export earnings, and employed around 40 lakh people, most of them are low skilled female workers.
The industry began as a mere cutting and sewing hub. But backward linkage ventures significantly grew to maximise local value addition.
In woven garment exports, over half of the value is added locally now, while the knitwear industry barely needs foreign fabrics until any stringent condition comes from buyers with orders.
Local manufacturers are catering to the demand for over 90% apparel accessories.
Services marching ahead
Entrepreneur Abul Kashem Khan, chairperson of the Business Initiative Leading Development, also former president of the Dhaka Chamber of Commerce and Industry, underlines the emergence of local firms and professionals in service sectors, including healthcare, tourism and hospitality, financial services, ICT, telecom, construction, and maintenance services.
"Now, we all can rely on local firms' acquired expertise while local professionals with leading foreign firms are also doing a great job to add more value locally," said Khan.
Home-grown construction giant, Max Group, worked as a subcontractor to build the Bangabandhu Multipurpose Bridge on the river Jamuna in the 1990s.
The company, which is keen on knowhow and team building, is now leading megaprojects like flyovers and railroads.
Kazi Yaminur Rahsid, executive director of Max Infrastructure Ltd, told TBS that their flyover project at Chattogram is now seeing at least 90% of local value addition, which was much lower in their first flyover at the same city earlier in the last decade.
Most of the EPC (engineering procurement and construction) contracts are currently awarded to local firms - be it for building power plants or a modern factory.
ECONOMY
Abbas Uddin Noyon & Mahfuz Ullah Babu
31 December, 2020, 10:10 pm
Last modified: 31 December, 2020, 10:51 pm
Policy support for localisation pays off
Seven-eight years ago, blood cancer patients in Bangladesh had to buy each dose of imported Rituxan injection at Tk1.2 lakh, which was beyond most people's reach.
The injection is now cheaper by about half as local companies have come into the production of lifesaving drugs. Foreign companies are also selling the product at around Tk50,000 here in the face of growing competition.
Local drug makers are selling insulin for diabetes at Tk345-Tk600, while the imported ones would cost patients double the amounts over the last decade.
Dozens of the once-expensive drugs are now affordable only because of local production, cutting the price tag by at least half.
Like the lifesaving products, consumer goods such as consumer electronics and home appliances, and automobiles are also gradually becoming affordable with increased local value addition, thanks to entrepreneurs' craving for localisation and supportive policies on the part of the government.
Bangladeshis can now also be proud of export-oriented apparel industry's strengthened backward linkages and increased self-dependency in a wide range of services.
Dr KAS Murshid, director general at Bangladesh Institute of Development Studies (BIDS), told The Business Standard,
"Making people's lives easier is what it is called development. And, our entrepreneurs have done the same by adding value locally in different products and services."
"Now, we need to focus on exports. We also have to be careful so that industrialisation does affect the environment," he added.
Electronics and appliances see massive growth
Refrigerators, televisions, mobile phones, and also laptops and computers nowadays -- everything is coming within reach of many more consumers as brands are trying to maximise their value addition in Bangladesh to get the best out of the tax and duty structures, aimed at boosting local manufacturing.
The market is not a sole playground of venerable companies like Phillips, Sony, or Panasonic anymore, thanks to China's rise which eased the way of technology distribution. Without the China story, the aspiring companies might have found it difficult to come up like this.
Twelve years ago, a then young school teacher, Sharmin Akter, had to save money for two years to buy a 10CFT imported refrigerator at Tk38,000. Now, the local wonder company, Walton is selling the same sized one at only Tk20,000 with a more extended warranty period.
Banker Masud Ahmed bought an imported washing machine at Tk70,000 in 2010, while his younger brother bought a better one at Tk30,000 last year.
"I love the way local manufacturing is easing the pressure on our purse," said Ahmed.
Walton's entry in 2010 was a game-changer.
The home-grown company gambled on local manufacturing counting on supportive policies and it captured three-fourths of the refrigerator market, and 40% of television and over 20% of the air conditioner market.
Other local groups like Butterfly, Pran-RFL, and Minister also built plants here.
Amid the changing situation, multinationals, including Singer, Samsung, and LG, invested here to manufacture locally.
Walton's increased efforts for achieving edge in technological, marketing and management allowed the company to become one of the top five global brands in its field.
SM Nurul Alam Rezvi, vice-chairman of Walton, said their venture has employed 25,000 people directly and another one lakh indirectly.
Minister's Chairman MA Razzak Khan said, "We are making TV, refrigerator, air conditioner, blender, rice cooker and many other home appliances. As a result, prices have gone down, and 5,000 people have also been employed in our venture."
Mobile phone industry booming
Imported smartphones are subject to 57% duties and taxes while a local assembler in Bangladesh pays 17%.
With this policy incentive since the fiscal 2017-18, at least 10 companies, including global players like Samsung and local giant Walton, are assembling smartphones in Bangladesh, while US brand Motorola is also planning to set up a plant here soon.
The around Tk2,500 crore of investment has made mobile phones affordable and created jobs at the same time.
The local plants are meeting around 60% of the annual market demand – nearly three crore handsets were sold in the last fiscal year.
Mobile handsets are a vital part of Digital Bangladesh where mobile financial services have already revolutionised everyday transactions. Rural and urban Bangladesh is converging faster, and Bangladeshi youths got the opportunity to prove their talents in the global stage.
Rezwanul Haque, former secretary general of the Bangladesh Mobile Phone Manufacturing Association, told TBS that almost all the governments provide policy support to help local industries flourish and Bangladesh is doing the right thing.
Walton has recently announced the export of mobile phones to the United States market.
Motorcycle inspires dream for local carindustry
Motorcycles are another story that is encouraging Bangladeshis to dream of their own cars shortly in the future.
Five years ago, a 100cc commuter motorcycle used to cost nearly Tk1.3-Tk1.4 lakh in the 2000s, a price tag 2.5 times higher than in the peer economies.
Runner Automobiles, an importer that pioneered motorcycle manufacturing earlier in the last decade, showed the way to all the popular brands, including Hero, Bajaj, TVS, Honda, Suzuki, Yamaha, and Lifan, to build manufacturing plants here.
More than Tk8,000 crore has already been invested in Bangladesh to manufacture and assemble two wheelers.
All that was needed was the right policy which reduced total taxes and duties to 89% for locally assembled units, less than 50% for frame building out of raw materials.
Now, prices of motorcycles have already dropped by at least one-third in the last four years and the industry's efforts for developing local vendors are believed to have brought the unit prices further down.
In the last four years, annual sales of motorcycles jumped to over five lakh units from less than two lakh units.
Bangladesh market is set to cross the million-unit milestone in the next few years and that would offer investors a scale to increase viability of further localisation, according to the Bangladesh Motorcycle Assemblers and Manufacturers Association President Matiur Rahman.
Meanwhile, Runner, the home-grown company, is exporting motorcycles to Nepal and exploring some other markets as well.
97% drugs locally produced
All-out dependency on multinational giants like Pfizer, Glaxosmithkline, Sanofi, Novonordisk, Novertis are long gone.
In the 1980s, the pharmaceutical industry policy helped the local industry emerge, which is catering to 97% of the local market, spending Tk23,500 crore a year.
All the top 10 players in the local market are home-grown companies and foreign firms do not compete with them anymore.
Beximco, Square, Incepta, ACI are very reliable names to doctors in 160 countries.
SM Shafiuzzaman, secretary general of the Bangladesh Association of Pharmaceutical Industries, admires the 2018 policy incentives for backward linkages in his industry.
Currently, Bangladesh is producing 15% of the required pharmaceutical raw materials, which will grow remarkably after the Active Pharmaceutical Ingredients (API) Industrial Park comes into operation.
Many more drugs will become even more affordable. The local industry is also edging closer to making sophisticated high-value pharmaceutical products alongside receiving export approvals for more and more products for the most stringent drug markets in the west, said Md Muhsin, marketing director at ACI.
Apparel and textiles
The readymade garment export from Bangladesh began in the late 1970s with simple policy support - bond facilities.
Entrepreneurs built thousands of garment factories to contribute to over 80% of the country's export earnings, and employed around 40 lakh people, most of them are low skilled female workers.
The industry began as a mere cutting and sewing hub. But backward linkage ventures significantly grew to maximise local value addition.
In woven garment exports, over half of the value is added locally now, while the knitwear industry barely needs foreign fabrics until any stringent condition comes from buyers with orders.
Local manufacturers are catering to the demand for over 90% apparel accessories.
Services marching ahead
Entrepreneur Abul Kashem Khan, chairperson of the Business Initiative Leading Development, also former president of the Dhaka Chamber of Commerce and Industry, underlines the emergence of local firms and professionals in service sectors, including healthcare, tourism and hospitality, financial services, ICT, telecom, construction, and maintenance services.
"Now, we all can rely on local firms' acquired expertise while local professionals with leading foreign firms are also doing a great job to add more value locally," said Khan.
Home-grown construction giant, Max Group, worked as a subcontractor to build the Bangabandhu Multipurpose Bridge on the river Jamuna in the 1990s.
The company, which is keen on knowhow and team building, is now leading megaprojects like flyovers and railroads.
Kazi Yaminur Rahsid, executive director of Max Infrastructure Ltd, told TBS that their flyover project at Chattogram is now seeing at least 90% of local value addition, which was much lower in their first flyover at the same city earlier in the last decade.
Most of the EPC (engineering procurement and construction) contracts are currently awarded to local firms - be it for building power plants or a modern factory.
