POST TIME: 11 July, 2018 00:00 00 AM
Furniture exports spurt in FY18
15 per cent cash rebate primarily boosts growth

Furniture exports spurt in FY18

Exports of furniture products have risen significantly in the 2017–18 financial year (in the period from July to June) compared to the previous fiscal year (2016–17) on the back of a 15 per cent cash rebate, robust technical know-how and cheap labour.

In addition, global giant furniture makers have transformed themselves into high-tech industries, a phenomenon that has helped boost exports growth, said industry players.

The furniture sector fetched export earnings of USD 63.18 million in the current fiscal year (2017–18) (in the July–June period). This was up from the USD 52.53 million recorded for the same period in the previous financial year, thereby showing a steady growth of 20.27 per cent.

Selim H Rahman, the president of the Bangladesh Furniture Industries Owners’ Association (BFIOA), told The Independent that China has been the largest furniture sourcing country in the world for the past couple of decades but the country has started shifting its industries towards the high-tech segment. “Therefore, a huge opportunity to capture the international market awaits us,” he said.  

Moreover, year on year, the average export growth has increased to 10–15 per cent, he said.

Rahman, who is also the managing director of Hatil Furniture, said the government has decided to provide a cash incentive of 15 per cent on furniture exports, which has also boosted export growth.

He explained that if an exporter exports a product worth USD 100 or an equivalent product, then the exporter will get USD 15 cashback as a rebate.

Bangladesh exports furniture to more than 38 countries, such as the United Arab Emirates (UAE) and other countries in the Middle East, Canada, Nepal, Bhutan, India, Malaysia, China, Japan, Australia, the US and Belgium, Switzerland and other European countries.

Bangladesh’s products have become famous because they possess

the finest quality and have innovative designs, he added.

Describing some challenges, he explained that raw materials like wood, hardware, finishing materials and other stuffs are all imported from abroad. “On an average, we pay 55–60 per cent import duties on raw materials. These increase the production cost of the final product.”

Bangladeshi furniture makers import raw materials, then manufacture the furniture, and eventually export the finished goods. Hence, import duties affect exports as well, he pointed out.  

Citing an example, he said, “For instance, we import fabrics used in sofas from abroad because we cannot source sofa fabric locally. We have to pay 98 per cent import duty on sofa fabric. Eventually, the add-up cost becomes more than 100 per cent.”

“We want bond facility. This means the facility provided to export-oriented industries for importing raw materials without paying any duties or taxes. It is essential for the export-oriented industries to avail the bonded warehouse facility as it enhances their export and price competitiveness,” he added.

He also wanted the government to reform the import tariff policy so that the country’s industry is able to survive and compete with global competitors, such as Vietnam and Indonesia. Vietnam is doing well, he explained, thanks to its cheap labour and export-friendly policies.

He also said Hatil Furniture exports products worth around USD 100,000 to the Middle East, Canada, Nepal and Bhutan every month. The domestic furniture market has been growing at a rate of 15–20 per cent a year, he added.

Partex Furniture Industries Ltd, a concern of Partex Star Group, is one of the largest furniture manufacturers in the country. The general manager (marketing) of Partex Star Group, Tareq Aziz, said the 15 per cent incentive on exports, better quality with new design, strong technical know-how and low wages were the factors behind such constant growth.

Partex Furniture has generally manufactured three kinds of furniture—solid wooden furniture, board furniture and

steel furniture—since its inception, he said. At present, Partex exports furniture to India, Malaysia and the UAE, and the growth rate has increased to 10–15 per cent per year, he added.  

“Locally, furniture sales have increased 27 per cent compared to last year,” Aziz added.

Pointing out a hindrance, he said Bangladesh has not been able to develop a backward linkage industry for furniture yet. “We have to import timber as well,” he added.

According to information provided by the BFIOA, more than 3,000 manufacturers are associated with this sector and more than 20 lakh people are working in this sector at present.