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Bangladeshi toys: Prospects in local and global markets

M S Siddiqui | February 20, 2019 00:00:00

The history of plastic is very recent. It gained momentum with the

development of polyethylene by a German chemist named Karl Ziegler in
1953, and polypropylene by the Italian chemist Giulio Natta in the following
year. They were awarded Nobel Prize jointly in 1963 for their researches.
Apart from engineering plastics such as polycarbonate, ABS, PMMA and SAN
etc., polyethylene and polypropylene are the most commonly used plastics
now-a-days.

The global market of engineering plastics is growing very fast as alternatives

of other materials like rubber, iron and wood. W ith time, it ha s become the
most preferred material. Plastic has been used as pipes, valves, decorative
elements, doors, windows and so on in the global real estate and
construction industries. It is commonly found in flooring, siding, gratings,
railings, glazing, plumbing fixtures, bathroom units, panels and insulations.
Plastic has been used as a substitute of iron and rubber materials in
aerospace technology. In this modern age, plastics are being used in rockets
as part of solid fuel boosters and also in space shuttle s. This is also one of
the materials used while manufacturing helicopters because of its rigidity,
flexibility and durability.

The most important fact about plastic is that it is very lightweight and strong
making it useable as raw material in the field of aerospace. Now-a-days the
weight of the aircraft is reduced by using plastic. It has been said that
reducing one pound of a jetliner's weight by using plastic can save fuel of
more than US $ 1,000 during its lifetime.

Prior to 1971, Bangladesh had a very small plastic market. At present, there
are 3,000 plastic manufacturing units, 98 per cent of which belongs to the
small and medium-sized enterprises (SMEs). The domestic market size is
Taka 70 billion. Per capita consumption of plastic in Bangladesh is fi ve
kilogrammes per year. The plastic sector constitutes 1.0 per cent of GDP
(gross domestic product) and provides employment to half a million people
directly.
A study by the United Nations Economic and Social Commission for Asia and
the Pacific (ESCAP) in 2012 estimated that the Bangladesh plastic industry
could raise its turnover to US$ 2.0 billion by 2015 and US$ 4.0 billion by
2020, if proper policies are implemented and followed. As of now, direct
export is not significant when compared with other Asia n countries. In 2016-
2017 fiscal year, China exported plastic items worth US$ 70 billion, Thailand
US$ 12.7 billion, Malaysia US$ 7.5 billion and Vietnam US$ 3.0 billion, while
Bangladesh exported only US$ 900 million.

Bangladesh's ranking in the list of g lobal plastic exporters is at 89.

Demand for Bangladeshi plastic products has been increasing as the

international buyers are now shifting more to Bangladesh from China and
India. Bangladesh has a huge range of diversified products in its export
basket like PVC pipes, polythene sheets, plastic wastes, shopping bags,
injection moulding products, garment bags, plastic hangers, PET/PE bottles,
laminated packs, cosmetics, medicine packs and household accessories.

According to Bangladesh Plastic Goods Manufactur ers and Exporters

Association (BPGMEA), nearly 250-300 units are currently involved in the
export market. The sector earned US$ 98.48 million in the FY 2017 -18 while
the figure was US$ 116.95 million in the FY 2016 -17, according to the Export
Promotion Bureau (EPB) data. Export earnings from plastic products dropped
by about 16 per cent in the last fiscal year mainly due to high price of raw
materials.

Bangladesh could emerge as a global player in the plastic industry by hiking

its annual turnover to Taka 322.36 billion (US$ 4 billion) by 2020, according
to a study conducted by the United Nations ESCAP. W ithdrawal of
Generalised System of Preferences (GSP) by USA partially decreased the
competitiveness of Bangladeshi products that face duty from three to 15 per
cent depending on the product.

In fiscal year 2017-18, the domestic market size of plastic products hit Taka
250 billion, according to BPGMEA. The sector is growing at about 20 per
cent a year on the back of spiralling demand from domestic and export
markets.

Bangladesh had a good export market of plastic waste till the Chinese
government announced a ban on imports of 24 categories of solid wastes,
including certain types of plastics, papers and textiles in July 2017 which
came into force from January 01, 2018. Following the ban, export of plastic
PET bottle waste declined sharply. Earnings from the plastic waste sector
were US$ 13.53 million in the FY 2017 -18 while they were US$ 30.65 million
in the FY 2016-17, EPB data showed. Bangladesh exported 99 pe r cent of its
PET waste flakes to China before the restrictions were imposed, according to
sector insiders.

Bangladesh needs some more time to enter the high -tech engineering
products market. The most promising plastic product sector is toys for home
and export markets. Before 2010, Bangladesh imported toys worth US$ 600
million annually, 95 per cent of which was from China. Now imports have
reduced to US$ 360 million a year, according to traders of Bangladesh.

Bangladesh is now manufacturing toys for local and export markets, which
are expanding gradually. Export of toys, games and sports requisites from
Bangladesh to Hong Kong was worth US$ 1.38 million during 2015,
according to the United Nations Comtrade database on international trade.

However, the challenge of exporting toys is safety, compliance and patent

etc. In Europe, toy safety is governed by the Toy Safety Directive (TSD). The
TSD obliges manufacturers, importers and suppliers to ensure that their
products meet the requirements in the field of to y safety, including
mechanical, physical and chemical safety. Prior to being placed in the
market, each toy is submitted so that it can undergo a conformity assessment
procedure. W hen a toy is placed on the market, the manufacturer must draw
up a European Community Declaration of Conformity (EC DoC). By doing so,
the manufacturer certifies and assumes responsibility for the compliance of
the toy with the essential requirements of the TSD.

The second-most important framework condition is the protection of

intellectual property right (IPR). Toy manufacturers face competition from
counterfeit toys. In 2010-2011, Directorate-General for Taxation and
Customs Union (DG TAXUD) registered 872 infringement cases for toys with
a retail value of €16 million and 2,585 i nfringement cases for games with a
retail value of €20 million. The two main countries of origin were China (88
per cent) and Hong Kong (10 per cent).

Bangladesh faces many other challenges as polymers are not produced in

the country. The plastic industry uses imported raw materials of polymer
granules. However, industry insiders believe that this not a disadvantage.
The availability of cheap labour and the fast developing recycling industry of
postconsumer plastic wastes in Bangladesh are potential advanta ges to
provide competitiveness in the global market (Katalyst -2005). Given the
scarcity of skilled workers and professionals, extended level of training for
workers is required. Different kinds of training particularly on use of
CAD/CAM (computer aided designing and computer aided manufacturing)
and design of software need to be arranged for improvement of product
design. Bangladesh Standard Testing Institute (BSTI) should be equipped
with modern amenities and trained professionals in order to facilitate in dustry
for standardisation and quality improvement issues.
Bangladesh is now making non-brand toys in small numbers. The most
common toys exported are tricycles, electric or battery -operated cars, dolls,
electric dolls, pedal cars and similar items. It mus t try to make toys for global
brands and also develop own brands in order to get higher price for products.
The design and development of toys also need huge investment in laboratory
and human resources.

Toy industry imports a few hundred components mostly from China and faces
problems of Harmonised (HS) Code and customs duty as these are imported
in mixed consignment. Customs office also has no experience of price and
determination of taxes for these components. National Board of Revenue
(NBR) can identify the components and determine single HS Code for such
components and spare parts to resolve the confusions.

The entrepreneurs in the plastic sector have developed the plastic industry
through their own initiatives and finances. Now, the government should c ome
forward to support the sector so that it can enter global market with high
value products like toys and also increase capacity to comply with IPR and
safety issues.

M S Siddiqui is a legal economist.

mssiddiqui2035@gmail.com