Textiles

1. Sector Highlights
• The Ready Made Garments industry experienced an export boom in the 1990s because of the excellent negotiation with the U.S in 1984-85.
• The most beneficial public policy of introducing back to back LC and bonded ware house facility gave a tremendous impetus to the export scenario in Bangladesh.
• Bangladesh is best placed in the region for textiles and garments because of low-cost labor, preferential trade status and advantageous global market access.
• Government incentives for the spinning and weaving industries include a 15% cash subsidy of the fabric cost to exporters sourcing fabrics locally.
• There is a huge fabric demand supply gap in the RMG industry which is being met by imports. Thus, the potential for backward linkage industry is enormous.
2. Industry Background and Status

The phenomenal growth in RMG was experienced in the last decade.  In 1984-85, no of Garment factories was 800 RMG jointly with knitwear accounted for more than 70% of total investments in the manufacturing sector during the first half of the 1990’s. At present with about 4,000 factories and a workforce of two million, 80% of which are women, employing over 50% of the industrial workforce and having 75% of the total exports earning of the country. Exhibit 6.1 shows the growth of RMG exports from Bangladesh since 1981-82.

3. Industry Outlook

Multi-Fibre Agreement (MFA) and Generalised System of Preferences (GSP) of the EU are the main actors behind acquainting Bangladesh RMG products to global market ensuring assured market access. Bangladesh is now a significant RMG supplier to North America and Europe. Due to phasing out of MFA, many are doubtful about Bangladesh’s ability to maintain the fast growth of the recent years in this sector but Bangladesh has taken a better position in the U.S.A market through competition. However, on a more positive note, Bangladesh is expected to maintain its tariff-free access to EU under the European GSP, since the GSP is not covered by the Uruguay Round Agreement. Recently, Canada has also provided tariff-free access of all the items from Bangladesh.

Meantime, Bangladesh RMG industry has earned strong competitiveness as a global standard RMG source. Marketing network has been spread over the economies of the continents. End users could well recognize and differentiate the products confidently.Till today, Bangladesh RMG industry largely depends on the imported yarns and fabrics. Bangladesh produces only 10% of export-quality cloth used by the garments industry. The need for establishment of backward-linkage industry has become an immediate concern to the government and the exporters. There are enormous opportunities in setting up composite textiles industry combining textile, yarn and garments.

4. Investment Opportunities

RMG and textile sectors have enormous investment opportunities. Government provides highly favorable policy framework for investment in these sectors. Investors have the following choices:

• Establishment of new textile / RMG mill in the private sector.
• Joint ventures with the existing textile / RMG mill.
• Acquisition of public sector textile mills that are being privatized.
• Indirect investment through financial services and / or leasing.

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Spinning

1. Value Addition to the Fibrous Substances

Spinning is the first step in textile value chain that adds value to the fibrous substances by converting them into yarn or thread through the processes of drawing, twisting and winding (Exhibit 1). Characteristics of the yarn vary based on the materials used, fiber length and alignment, quantity of fiber used and degree of twist. The earliest spinning probably involved simply twisting the fibers in the hand. Later, the use of a stick to help twist the fiber was introduced.

Drop spinning involves the use of a stick with a whorl or weight to stabilize the spinning of the stick (called a spindle). The spindle is spun, and hangs supported by the yarn as more fiber is introduced. This introduced fiber picks up the twist and becomes yarn. However, the development of spinning wheel allowed a continuous and faster yarn production. Spinning wheels are either foot or hand powered. Modern powered spinning, originally done by water or steam power but now done by electricity, is vastly faster than hand spinning. Materials that can be used to create yarn fall into three broad classes: plant, animal, and synthetic.

• Plant materials: cotton, flax (to produce linen), hemp, raffia, yucca, coconut husk, ...;
• Animal materials: wool, goat (angora or cashmere goat), rabbit (angora), llama, alpaca, dog, camel, silk, ...;
• Synthetic materials: polyester, nylon, rayon, acetate, mylar...;
• Apart from the above, mineral materials like asbestos are also used, but not very often.
2. Spinning Industry in Bangladesh

Development of spinning industry in Bangladesh is closely associated with the development of Textile and Clothing (T&C) sector as a whole. Power-driven modern textiles in Bengal were traced back to early twentieth century. Before 1947, modern textiles were only the composite textile mills having spinning and weaving facilities.Later, activities like specialized textile weaving, knitting and hosiery and dyeing-printing-finishing were added. During 1947, there were about 11 composite textile mills in Bangladesh (then East Pakistan) with 1.1 millions spindles and 2.7 thousand looms. Spindles grew to 3.2 millions in 1956 but declined to 0.8 million in 1972 as worn-out obsolete spindles went out of operation. In 1972, large-scale manufacturing units including textile mills were nationalized. After 1982, state-owned spinning mills were gradually denationalized. By 1999, spindles installed were 2.8 million (2.4 million in the private sector and 0.4 million in the public sector) with an annual production capacity of 200 million kg. BOI sectoral Survey found that in 2004, about 3.44 millions spindles are producing 382 million kg of yarn for the textile industry (Exhibit 2).

3. BOI Spinning Sector Study 2004

The spinning sector census was conducted during March–June 2004. Initially, a spinning population frame was prepared combining the lists of BOI registered mills and BTMA members. Total 198 spinning mills were listed and all of them were surveyed. In practice, 10 units could not be traced, while 17 mills were found closed and 13 mills undertook no action to implement their projects. In terms of spindle capacity, only 10.7% spindles were found inactive while 81.2% spindles are in production (Table 1).

Mainly Dhaka-based Production: A geographical analysis of the active spinning mills demonstrates that about 81.6% of millsare located in Dhaka Division and 11.4% in Chittagong Division. On the other hand, Khulna, Rajshahi, Sylhet and Barisal Division have only 2.5%, 1.3%, 1.3% and 1.9% mills respectively.

Dominated by the Local Entrepreneurs and Human Resources: It is observed that among all 158 active mills, almost all the mills (96%) were set up by the local entrepreneurs. Only 4% mills have been established jointly with the foreign investors. Total investment in the active spinning mills is amounted to Taka 8,554 crores. The survey found that about 92,172 people are working in the spinning sub-sector including only 85 foreign experts / technicians.

4. Yarn Types and Market Scenario

The products of the spinning sub-sector are yarns of different categories like cotton, polyester, synthetic, acrylic, filament, woolen, blended, etc. Production data shows that 138 ‘in production spinning mills’ produced 382.11 thousand MT of yarn in 2003 of which 81% are cotton yarn. Some secondary sources indicate that in 1999, yarn production of 112 million kg satisfied only 22% of total yarn requirement of the Value country. The total demand-supply gap of yarn for 1996-97 was 429 million kg, which increased to 639 million kg in 2002.

Import pattern of yarn into Bangladesh also illustrates the intensity of demand. Exhibit 3 presents data on import of yarn to Bangladesh since FY 1990-91. Major sources of yarns are Taiwan, China, Hong Kong, Korea, Indonesia, India and Thailand. It shows the potential of spinning for further investment.

5. Challenges of and Supports to the Spinners

The success of a robust textile sector largely depends upon an improved and reliable spinning sub-sector. If spinning sub-sector produces substandard / inferior yarn, its adverse effect persists right across the entire value chain. Availability of raw materials, transportation, port facilities and tariff rationalization are the key challenges to the spinners.

The Government has been supporting the spinners providing lower tariff for machinery spares and raw materials, cash incentives, reduced tax rate, and low-cost funding etc.

6. Investment Outlook

Textile & Clothing is the largest manufacturing sector of Bangladesh providing over 4 million jobs, accounting for 5% of GDP, 40% of manufacturing value addition and 75% of total foreign exchange earnings.

The growing demand for yarn in the local market, comparatively low cost of doing business, lucrative incentive package, favorable investment policy regime etc are the main reasons for investment in this sustainable sector. Spinning could be chosen.

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Frozen Foods

1. Sector Highlights
• Government is promoting semi-intensive shrimp farming.
• Fish and prawn exports registered a modest growth in the past decade.
• Shrimp processing and export industry is largely dominated by the smaller unorganized sector.
• Government has taken different initiatives of quality assurance of frozen foods in co-operation with exporters.
• 15% cash incentive is given to shrimp export amount.
2. Industry Situation

The frozen foods export is the second largest export sector of the country. After some initial difficulties in terms of quality achievement, exporters have earned credibility and trustworthiness in the global market. Assurance of reliable and continued product quality is a major challenge in this sector. Technology orientation, marketing perceptions, and quality improvement aspects invite foreign investment in this sector. The current challenges of international trading are largely dictated by price, quality, time and service.

3. Industry Outlook

Frozen food sub-sector has credible opportunities in Middle East, EU and North American countries and Far Eastern countries. In 2004-05, total fish production was 22.16 lack metric tons of which 8.82 metric .tons were shrimp. At present , there are 868 fish hatcheries and farm of which 2.18 lack hectors of shrimp farm. This export-oriented industry includes the following sub-sectors, which need proper attention for augmentation of production, attain international standard quality and export earnings.

• Hatcheries
• Sustainable aqua-culture technology
• Feed meals plants
• Processing unit for value-added products.

Investment in frozen food sector with new technology and equipment has a vast potential for growth.

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Leather

1. Sector Highlights
• The labor-intensive leather industry is well suited to Bangladesh having low-cost and abundant labor.
• Bangladesh has a domestic supply of good quality raw material, as hides and skins are a by-product of large livestock industry.
• Adequate government support in the form of tax holidays, duty free imports of raw materials and machinery for export-oriented leather market
• The industry lacks domestic technology and expertise and local support industries such as chemicals are still under-developed.
2. Investment Incentive
• Present government is in the process of setting up of separate Leather Park relocating the existing industry sites to a well-organized place.
• Leather exporters have been given 15% Duty drawback of cash incentive.
3. Industry Situation

Bangladesh leather industry is dominated substantially by the domestic investment which are mostly export-oriented. The leather includes some ready-made garments, although that aspect is continued mainly to a small export-trade in "Italian-make" garments for the US market. Footwear is more important in terms of value addition. This is the fast growing sector for leather products.

Presently Bangladesh produces between 2 and 3 percent of the world’s leather market. Most of the livestock base for this production is domestic which is estimated as comprising 1.8 percent of the world’s cattle stock and 3.7 percent of the goat stock. The hides and skins (average annual output is 150 million sq.ft.) have a good international reputation. Foreign direct investment in this sector along with the production of tanning chemicals appears to be highly rewarding.

Having the basic raw materials for leather goods as well as for the production of leather shoe, a large pool of low cost but trainable labor force together with tariff concession facility to major importing countries under GSP coverage, Bangladesh can be a potential off shore location for leather and leather products manufacturing with low cost but high quality. In 2004-05 total export of leather goods was 220.93 million US$ on the other hand it is 257.27 million US$ during 2005-06 FY.

4. Industry Outlook

Provision of newly announced infrastructural facilities through establishment of an integrated Leather Park and simultaneously, growth in the global demand, opportunities for investing in and setting up export-oriented leather industry in Bangladesh is definitely attractive. Foreign investors are welcome to capitalize on this opportunity.

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Electronics

1. Sector Highlights
• Rapid urbanization, migrations to urban centers and emergence of a consuming middle class have resulted in a modest growth in home appliance usage in Bangladesh.
• Global market of semi-conductor amounting about US$ 200 billion is clearly dominated by the Asian NIEs.
• Manufacturing of semi-conductors could be established as a potential cottage industry.
• Since 1996, phenomenal growth in cellular phone usage in Bangladesh has been registered and today, the number of customers reached at nearly two million.
• The labor-intensiveness nature of electronic industry highly matches with the Bangladesh’s competitiveness and invites foreign investment in this sector.
2. Industry Background

The electronics industry in Bangladesh mostly produces consumer items. Home appliances like television, radio, VCD and CD players, refrigerator, air conditioners, oven, electronic fan, blenders etc. are being assembled to a large extent. To ensure the performance reliability, the key challenges in this sector are technical assistance and proper technology orientation of the industry. Developing the significant capacity and skill in assembly and manufacture of a wide range of electronic components and parts is crucial.

As yet, Bangladesh does not have any telecommunication equipment industry in the private sector. However, an urgent need for diversification and modernization is felt among the existing entrepreneurs, government and professionals. Government is keen to provide and ensure enabling assistance to the development of this sector.

3. Industry Outlook and Opportunities

Skilled, easily trainable and low-cost human resources are the main cost advantage of setting up electronic industry in Bangladesh. Growing domestic demand and international market access are some key attractive issues to the investors. In the economies like Malaysia, Singapore, Korea and Thailand, electronics contribute a major portion in the GDP. They are encouraging electronic industry to shift from low-end assembly operations with high import content of inputs to upstream higher- value-added activities. In this context, relocation, outward investment and joint venture with Bangladeshi companies could be gainful strategies. To capitalize on the comparative advantages, substantial foreign investment from those countries is highly encouraged.

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Agro-based Industry

1. Sector Highlights
• Bangladesh has a tropical climate, a lot of fresh water, indeed a land interspersed with numerous rivers, fertile soil and possibility to cultivate crops round the year. So, it unique to supply raw materials for the agro-based industry.
• Fruits and vegetable production has increased significantly in recent years.
• Government and NGOs have been conducting regular training programs in developing skilled manpower for agro-based industry.
• Substantial demand supply gap in the agro-based industry both in the domestic and international market.
2. Industry Incentives
• Specially arranged Equity Entrepreneurship Fund for development of agro-based industry.
• Special loan facilities available to set up an agro-based industry.
• Agro-based industry enjoys tax holiday.
• Any investment in this sector will enjoy similar tax amnesty as available in other sectors.
• Imposition of supplementary duty on mango, orange, grape, apples, dates and others to utilize the high quality and cheaper local resources.
• Cash incentive to the exporters ranges from 15% to 20% in various sub-sectors.
3. Sector Background

Being an agrarian economy, agriculture has dominated in the economy for years. It has fulfilled the preconditions of access to input and raw materials in setting up successful agro-based industries. Alluvial soil, a year-round frost-free environment, adequate water supply and abundance of cheap labor are available in Bangladesh. Increased cultivation of vegetables, spices and tropical fruits now grown in Bangladesh could supply raw materials to local agro-processing industries for both domestic and export markets.

In 2005-06, Export of agricultural products accounted for about 1.00% of total export amounting US$ 76.24 million.

4. Industry Outlook

To avail the competitive and comparative advantages, Bangladesh invites progressive agricultural practices, improved marketing technique and modern processing facilities. The government emphasizes development of the agricultural sector through appropriate measures to increase crop sector productivity and production of non-crop agriculture by providing increased credit, and facilitating greater access to inputs and modern technology. Investment interests in setting up agro-based industries in Bangladesh are highly encouraged.

To promote agro-based industries and attract investment in this sector, Board of Investment organized ‘Agri-Invest 2003 Bangladesh’ in December 2003. This first ever exposition created huge interest among the foreign and local investors.

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Information Technology

1. Sector Highlights
• To investigate the IT industry robustly, deregulation of the telephone has been decided and executed by mid 2003.
• The extensive growth of mobile telephony resulted in significant opportunities.
• The industry is at its introductory stage and has opportunity of capitalizing the potential.
• Bangladesh has a well-educated, skilled, dedicated and growing IT workforce.
• There is a fast growing domestic market and export demand.
• Strong research assistance from the universities and research institutions are available.
• Government is keen in establishing IT related infrastructure for the development of the industry.
2. Industry Incentive
• IT is declared as one of the thrust sector for development. Soft loan facilities from the Equity and Entrepreneurship Fund is available.
• Tax holiday for Software and IT services companies.
• All other facilities and incentives applicable in general to a foreign investor.
3. Industry Background

Compared to the neighboring India, Pakistan and other South and South East Asian nations, Bangladesh is lagging behind in IT Sector. But it is true that the sector has vast potentiality to develop. Availability of substantial number of qualified and experienced young people in various branches of engineering, science and technologies have opened up the scope of profitable investment in these sectors. Existing investment in IT sector is mainly small-scale and domestic in nature. Collaboration in the IT sector is mainly based on licensing agreements and representation. A growing number of computer training schools and institutes are being opened. Management of most of the IT firms is professionally strengthened with the Bangladeshis who have studied and worked in both North America and Europe, and returned home.

The annual market size for IT including computer hardware, peripherals and software was estimated to be worth approximately US$ 20 million. The market is fast growing at an annual rate of about 25%. The country has over 400,000 PCs

Formalization of VOIP by the early 2003 and telecom deregulation in mid 2003 would boost the overall IT sector lucrative for investment. Foreign investors from Asian, European and North American countries could avail these opportunities. A number of Bangladeshi IT firms are interested in finding international investors or joint venture partners in various sub-sectors.

4. Submarine Cable

Bangladesh has joined the consortium of SEA-ME-WE-4 submarine cable, which starts its commercial activities from 21st may, 2006. This will especially help prosperous data entry and software sectors. The landing station of this cable is situated at Jhelong in Cox’s bazaar. There are 14 countries of this consortium, the countries are Singapore, Thailand, UAE, Bangladesh, India, Pakistan, Sri Lanka, KSA, Egypt, Tunisia, Italy, Algeria and France. It has connected 16 telecommunication organizations of 14 countries. With the direct help from submarine cable Bangladesh can earn more foreign currency by increasing international voice circuit (e.g. submarine cable will give support to establish 1 lac voice circuit. Voice and data communication will be faster. Consortium has created capacity pool, which we can sell also can manage IRV. Broad band service, data transmission, call centre, software export will be cheaper. Unemployed youths can easily engage themselves in those services by taking short term training. Bangladesh has right to land 15 landing station without charge. It will help smoother operation of E-commerce, E-governance, E-education, Telemedicine etc. So, there are huge chances of development of ICT sector and finally government will be financially benefited.

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Ceramics

1. Sector Highlights
• Global market of ceramic tableware is about US$ 10 billion.
• Bangladesh Ceramic tableware has a good reputation is the international market like North America and EU countries.
• Bangladesh has achieved technical expertise on ceramic tableware manufacturing.
• Historically, tableware industry is labor-intensive and Bangladesh has a skilled manpower in ceramic industry.
• Sanitary ware and insulator has also a domestic and international market demand.
• The clean gas reserve required for firing is a great competitive advantage for Bangladesh.
2. Industry Status

A few ceramic tableware manufacturers dominate the industry producing high quality products for the international brands. A pool of skilled manpower has been developed. The latest technological advancements in ceramic are also acquainted. Bangladesh produces high quality Bone China transferring the technology from Japan. The domestic market is also attractive. Some low-quality tableware are imported mainly from China to cater the demand of lower segment of the domestic market.

3. Industry Outlook

Global ceramic tableware industry is currently going through a phase of acquisition and consolidation as smaller industries in the developed countries are becoming uncompetitive and bankrupt. As a result, the big names like Noritake, Wedgewood, Lenox, Villeroy & Boch and Royal Doulton are all individually becoming billion-dollar operations.

Historically, tableware industry is labor-intensive and even after spending billions of dollars on automation, developed countries could not reduce the number of workforce according to their expectations. As a result, the cost of production will always remain extremely high in developed countries and the premium brands are only surviving because they are charging huge price to the consumers for their brand equity.

Bangladesh, being a gas-rich and low-labor-cost economy, offers to be strategic partners in production and supply of ceramic products. Investment interests in this sector are strongly encouraged. The growing sanitaryware and insulator items has a large domestic market. Besides, international market, both in terms of demand and access, is highly potential.

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Light Engineering

1. Sector Highlights
• Bangladesh has about 40,000 small-scale light engineering enterprises spread over the country.
• Current light engineering industry manufactures about 10,000 types of items for the local industry amounting an annual value of approximately US$ 120 million.
• As the demand and usage of engineering and electronic goods increase, demand for light engineering products are also increasing.
• Significant number of cottage industries engaged in production of simple
• electronic goods.
• Government provides cash incentive facilities to exporters of value-added light engineering products.
2. Industry Situation

Light engineering industry in Bangladesh has grown with informal cottage status over the years. This labor-intensive operation produces a diverse range of items having an annual valuation of about US$ 120 million. These items include import-substitute machinery spares, plant machineries, small tools, toys, consumer items and paper products for the domestic market. Most of these enterprises are located in and around Dhaka metropolis. The industry has been turning to more formal set up and expected to grow remarkably in the upcoming years.

Bicycle is one of most important item in light engineering industry. Its role in the world transport system is expanding. Not only does it provide low-cost mobility, but in cities it offers more mobility than the automobile. Because it provides mobility and exercise, does not pollute the air or disrupt the earth’s climate and is efficient in its use of land, the bicycle is emerging as the transport vehicle of the future.

3. Industry Outlook

Because of the shortage in labor and wage hike in the light engineering sector, and simultaneously, strategy shift of the NIEs to concentrate on upstream higher-value-added industries, establishment and development of light engineering industry in Bangladesh has a huge potential. Foreign investors could take advantage of Bangladesh’s low-cost and easily trainable labor and already established light engineering industry and its infrastructure facilities to manufacture quality products for the export market.

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Natural Gas-based Industries

1. Sector Highlights
• • Bangladesh has a net recoverable gas reserve of approximately 28.4 TCF of which primary recoverable is 20.51 TCF.
• Amount of gas production till January, 05 was 6.033 TCF.
• Joint venture opportunities between BPDB and private sector are open.
• There is a huge demand for fertilizer in Bangladesh as the agriculture is the principal sector of the economy.
• Usage of indigenous resources and conservation of environment are important policy concerns of the Government.
• Introduction of CNG fuelling in the metropolises has geared the need for establishment of sufficient CNG Distribution Stations.
2. Industry Incentives

Energy and Power sector has significant investment incentives like:

• Tax holiday for 15 years.
• Tax exemption from interest payable on foreign loans.
• Tax exemption from royalties, technical know-how and technical assistance fees payable.
• Tax exemption from profit arising from transfer of shares.
3. Industry Situation

Among the three main operators in power sector, until recently, BPDB was the sole public sector power generator in Bangladesh. It is also responsible for transmission and distribution of electricity outside Dhaka and in some rural areas. DESA is responsible for transmission and distribution of electricity in and around Dhaka – the largest load center in Bangladesh. REB distributes electricity in rural areas through operating Palli Bidyut Samities (PBSs). All of them are controlled by the Ministry of Energy and Mineral Resources (MEMR). PDB at presents owns some 3,091 MW of generation capacity.

With the increasing growth in industry, commerce and household usage, the demand for electricity in Bangladesh is enormous. It is assumed that the power demand will increase at around 6% per annum in the upcoming years.

CNG is a highly efficient, eco-friendly and cost-effective fuelling option for motorized vehicles. It could also make significant cross-savings in the health sector and reduce public health hazard. The increasing demand for maintaining air quality in metropolises like Dhaka has become the nation’s top-most priority. As such, two-stroke petrol fuelled taxies are being replaced with CNG-fuelled taxies. Other vehicles are also being converted to CNG orientation. At present we have 117 CNG filling station and 72 conversion workshops. There are 46501 CNG driven cars in Bangladesh and no. is increasing. Also steps have taken to set up more CNG filling station with the financial assistance of World Bank.

In these circumstances, a huge opportunity for investment in CNG Distribution Network has become imminent.

4. Industry Outlook

Opportunities exist for foreign investors include:

• Developing new plants (barge-mounted and other, large, small and mini) in joint venture with BPDB.
• Maintaining and expanding existing power transmission and distribution system.
• Rehabilitating or upgrading existing plants and supplying a variety of support services.
• Privately owned Remote Area Power Supply System (RAPSS).
• Technology transfer through manufacturing / assembly of power equipment.
• Investing in CNG distribution network development.

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Steel

1. Sector Highlights
• Iron has been a vital material in technology for well over three thousand years.
• Usage of steel products in Bangladesh increased remarkably in 80s when this industry flourished due to relaxation/liberalization of country’s Industrial Policy.
• World crude steel production for the 63 countries reporting to the International Iron and Steel Institute stood at an estimated 81.7 million metric tons in October 2003.
• Steel industry in Bangladesh has huge potential of growth in the coming years.
2. Industry Background and Status

Steel Production in BangladeshUsage of steel products in Bangladesh increased remarkably in 80s when this industry flourished due to relaxation/liberalization of country’s Industrial Policy. Until 1987, people had to depend on imported CI sheet and on the only state-owned Chittagong Steel Mills Limited, which produced small quantity of CI sheet/GP sheet. Statistics showed the use of CI/GP sheet rose to 4.85 lakh metric tons in 1999 from 1.00 lakh metric tons of 1987. In this backdrop to meet up this huge demand, production of GP/CI sheets in private sector began in 1987. This industry expanded rapidly in recent times.

In Bangladesh, there are about 300 manufacturing units to produce steel and steel products. In terms of the products diversity, these manufacturing plants could be categorized into at least six broad categories like:

• Billets used as feedstock to merchant mills, section mills, wire rod and seamless tube mills etc ;
• Finished long products e.g. wire rods, rebars, plain rounds, squares, flats, angles, channels, beams, rails etc;
• Plates used in production of boilers, merchant ships, off-shore platforms, line pipes, railway coaches, wagons and locomotives, structures etc;
• HR Coils /sheets mainly used for manufacture of pipes and tubes and as feedstock to cold rolling units;
• CR Coils/sheets used for production of automobiles, consumer durables, galvanized sheets, metal products etc;
• Galvanized sheets used in consumer durable industries and domestic applications including GP / CI sheets.

Recent implementation status Survey by BOI, revealed that annual installed capacity of 48 GP/CI sheet units registered with BOI are 6.74 lakhs MT and their average production was 4.70 lakh MT.

According to statistics, on an average, about 5.14 lakhs MT BP Sheet/CR Coil were imported annually from 1996 to 1999. In response to the huge demand for BP sheet/ CR coil, entrepreneurs became keen to set up CR coil industry to produce it locally. During 2001-02, three CR Coil manufacturing units were established in the country. The total annual production capacity of these three industries is 2.66 lakh MT. To date, nine CR coil/sheet manufacturing units have been established, seven are in operation and rest two will go to very soon. The total annual installed capacity of these nine industries is 9.51 lakhs MT and the estimated investment is Tk. 8.83 billion. Table 6.5 summarizes the steel plants registered with BOI during FY 2002-03.

Bangladesh has around 250 Steel Re-rolling Mills consisting of five large automatic units. The country’s only state-owned major steel producer Chittagong Steel Mills was closed permanently by the Government in July 1999. The open-hearth furnaces had crude steel making capacity of 150,000 metric tons per year. The mill produced angles, blooms, and plates and also operated three hot-dip galvanizing lines fed by imported coil. Bangladesh consumed 2 million metric tons per year of finished steel, and the deficiencies were met by imports (Metal Bulletin, 2002).

Demand and Supply Scenario

The demand for steel is highly correlated to the growth of investment in the industrial sector.

Above Table 6.6 presents the projected demand scenario of steel products at present and the FY 2007-08. There remains a substantial demand-supply gap in the steel products. With the increasing investment in infrastructure, construction, machinery, railway machinery like locomotives, wagons, coaches; refinery machinery, pipelines; household appliances like air conditioners, refrigerators, consumer durables; ship-breaking and other steel intensive segments, the demand for steel is growing.

Steel Imports

Given the local production constraint, Bangladesh imports substantial amount of steel and steel products from a number of countries. Table 6.4 presents last 5-year data on import of iron, steel and steel products. Major sources of steel products include Australia, Belgium, Canada, China, France, Germany, Greece, Hong Kong, India, Indonesia, Italy, Japan, Malaysia, Mexico, Netherlands, North Korea, Poland, Russia, Saudi Arabia, Singapore, South Korea, Turkey, UK and the USA.

Export Potential

There remains a substantial market for steel products in the neighboring South Asian countries like Myanmar, India, Sri Lanka, Nepal etc. Export of CI Sheets have already started to Middle East, Sri Lanka, Singapore, China, and some African countries like Sierra Leone, Senegal, Uganda, Angola, Mozambique, Ghana etc. There also remains export potentials for billets, slabs, reinforcement bars and plates. Table 6.6 presents the recent export data of steel and steel products.

3. Challenges in the Steel Industry

Availability of raw materials, transportation, port facilities and tariff rationalization are the key challenges for the development of steel industry. Bangladesh urgently requires a number of basic steel industries to help the rapid industrialization process. Consistent and sufficient supply of gas is a major issue in steel manufacturing.

4. Outlook

Considering the overall development and industrialization process, steel industry in Bangladesh has huge potential of growth in the coming years. Steel could be chosen as a prime sector for investment to earn a sustainable return.

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Pharmaceuticals

1. Sector Highlights
• Pharmaceutical products have huge demand both in local and overseas market.
• There are huge demand-supply gap in pharmaceutical products.
• Bangladesh offers a good number of qualified, skilled pharmacists, bio-chemists, micro-biologists, and chemists for pharmaceutical industries.
• Government offers support for importing raw materials for production.
• Present Government has taken initiatives to modernize, expand and attract foreign investment in pharmaceutical industries, and for this adopted national medicine policy (revised) 2005, which will help to adapt with the changing world under WTO/TRIPS
2. Outlook

Considering the overall demand, pharmaceuticals is one of the emerging sectors in Bangladesh. Government offers different incentives for importing raw materials pharmaceutical industries. This particular sector has huge potential of growth in the future. For sustainable return, pharmaceutical sector could be a rational choice.

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