Bangladesh Plastic industry
Plastic is one of the key industrial sectors in Bangladesh making significant contribution to the country’s economy. There are around 5,000 plastic enterprises in Bangladesh, employing about 1.2 million people and producing a variety of products for the domestic as well as the export market. Plastic is a key component of many products in other sectors of the economy like textile, healthcare, construction, electronics, energy generation, automotive etc. Bangladesh primarily produces household goods and packaging products for food processing, pharmaceutical & FMCG industry, garments bags & accessories, toys, sanitary items and construction products including PVC pipes. The domestic market size was over USD 2,500 million in 2017, while the direct export value of plastic goods was around USD 120 million in FY 2018-19. Besides, deemed export items comprising accessories and packaging materials for the ready-made garments sector contributed USD 900 million in 2018.
The Plastic industry shows promise with a huge growth potential in the domestic market and opportunity to grab a share in the global market.
The demand for plastic products is expected to grow as plastic consumption is growing rapidly in Bangladesh.
Large Domestic Market
Per Capita consumption of plastic grew from 5.56kg in 2005 to 17.24 kg in 2017 and is still below the global average of 80kg per person which is indicative of potential for further growth. In addition to increasing demand for consumer items such as plastic furniture and kitchenware, double digit growth among established industries such as RMG, pharmaceutical, healthcare, motorcycle assembly and electronics industry is expected to drive the demand for plastic products in the domestic market.
Growing Export Market
Plastic exports from Bangladesh have been growing at a rate of 4.5 % per annum since 2014. Bangladesh exports a variety of plastic products among which packaging items make up the largest share followed by consumer products such as tableware and kitchenware. Exports of household items have been particularly promising with a growth rate of 25% per year since 2014. PVC pipes, polythene sheets, plastic wastes, garment accessories items such as bags, plastic hangers, PET/PE bottles are also some of the other significant plastic products exported by Bangladesh. The primary export destination includes the USA, Canada, EU, China, India and Nepal. The global market for plastic products is expected to grow at an annual rate of 4% and reach USD 721.14 billion by 2025 driven by an increase in application of plastic in automotive, construction and packaging industries providing ample opportunity to raise exports from Bangladesh.
Household goods such as kitchenware, furniture and home decoration items made of plastic has gained popularity as a cheaper and durable alternative to other materials. The domestic plastic consumer market was valued at USD 238 million in 2015 and grew at a rate of 20% per annum. With the rapid growth in purchasing power combined with increasing urbanization, demand for convenient plastic furniture is expected to grow further. In addition, exports of tableware and kitchenware from Bangladesh have been growing at a rate of around 22% since 2014 albeit from a smaller base. With the global trade of consumer plastic items accounting for USD 76.38 billion in 2019, Bangladesh has plenty of opportunities to increase its exports of plastic household items further.
PThe plastic toy segment has recently made entry in the national export basket, demonstrating tremendous growth in export value. The domestic market as well has steadily grown to a USD 1 billion segment. The demand is being increasingly met by local industry owing to skills enhancement by local producers and reduced duty for imported materials. The key challenge for local industry is maintaining compliance with the safety standards upon exportation to the EU market.
Automotive and Electronic Parts
Demand for component parts for the assembly and manufacturing of automotive and electronic products has increased considerably as local and foreign companies in these sectors saw phenomenal growth. These assembly industries face increased competition and need to reduce production costs through local parts sourcing, plastic parts to begin with. Foreign suppliers of plastic parts are welcome to meet such untapped demands, preferably in partnership with local plastics industries.
Application of plastic products such as PVC pipes have been increasing in construction due to its light weight and corrosion resistance qualities. The demand for construction related plastic items is expected to increase further due to rising infrastructure projects in the country. Furthermore, Bangladesh has opportunities to increase its export of plastic based construction products to take advantage of the rise in infrastructure projects globally particularly in Asia Pacific.
The Plastics industry is serving as a backward linkage industry for many growing industries especially in the RMG, pharmaceuticals & FMCG which has created a lot of opportunities for value addition within the country. The plastic packaging industry is expected to experience robust growth due to emerging sectors such as food processing, agriculture and healthcare. Furthermore, driven by high demand from consumers in emerging economies, the packaging industry is estimated to be one of the most prominent application segments in the plastics market globally.
Plastic waste recycling
Bangladeshi government intends to develop a plastic recycle base through reduced income tax measures. Bangladesh generates around 380 tons of plastic waste every day, about 30% of which are said to be recycled currently. Bangladesh at the same time imports a large volume of plastic/PET resin. FDI is expected to help Bangladesh to augment plastic recycling plants with state-of-art and energy-efficient technologies.
Fiscal And Other Incentives
Supportive Trade Policy
Source: Bangladesh Investment Development Authority (BIDA)