The ceramic industry is eyeing a modest $100 million in exports by 2012.

The industry
people say this is possible provided the government supports them with due
diligence. Bangladesh is now witnessing ceramic industry as a highly prospective
sector for its rising export performances.

The Export Promotion Bureau (EPB) statistics put the total value of exported
ceramic products from the 21 Bangladeshi manufacturers at $38.33 million in the FY
2006-07, up by 28 per cent from the previous year. According to an official figure,
Bangladesh exported only $1.0 million worth of ceramic wares in 1991 before
recording a staggering 695 per cent growth in about a decade, investing nearly Tk 20
billion and employing some 0.1 million workers.

Of the products, ceramic table wares are being exported to about 50 countries
including, the US and Canada, tiles to India, Nepal and Bhutan, and sanitary wares to
the Middle East, specially the UAE. The industry sells ceramic products worth about
Tk 8.0 billion in the domestic market and pays taxes close to Tk 3.0 billion.

If the government ensures energy supply and expedites refund of the import duties
paid upon execution of exports, Bangladesh can become one of the three largest
global ceramic exporters by the next decade. Local industry is using the most
advanced 'bone China' technology and the labour costs here are relatively less
compared with the developed nations. Also, as a LDC (least developed country)
member, Bangladesh enjoys tax exemption facilities. Since value addition to the
ceramic sector happens to be the most, the government should promote it in its
efforts to assume another major export earner's magnitudes.

Experts suggested that the authorities should enhance the currently levied 20 per cent
complementary tax on imported ceramic to 65 per cent to protect the Bangladeshi
ceramic products, as the imported Chinese ceramic sell rather cheap here. The
government put an embargo on cutting hills in 2007 through a public notification,
which stopped the ceramic manufacturers from procuring raw materials from the
Mymensingh hills since. The Mymensingh clay could be used for producing tiles, but
for table wares Bangladesh needs to import superior quality clay from India and
China. The government may take steps to find deposits of superior quality clay for
ceramic in the coalmine region of north Bengal.

Although Bangladeshi ceramic industry has carved a niche in the world market, its
domestic market share is shrinking day by day, due to widespread import of low-
priced foreign goods. Hefty duty on imported raw materials, comparatively lower
duty on imported finished ceramic products and high price of gas are the main
obstacles to the growth of domestic ceramic industry.

The local tableware industry has the capacity to feed the Tk 3.0 billion domestic
market but local manufacturers now account for less than Tk 500 million market.
Monno, Shinepukur, Bengal Fine and Peoples Ceramic are the major players in local
ceramic tableware market. Bangladesh ceramic industry, which exports the products
mainly to the EU countries and the US, imports raw materials from China, Rumania,
Indonesia and Germany. Ceramic manufacturers also urged the government to reduce
tariff on gas, used in the ceramic factories. It will help them compete in the
international market. Presently, average gas tariff is Tk 2/cubic metre for fertiliser
factories, Tk 5.13/cubic metre for ceramics factories and Tk 3.5/cubic metre for gas-
based power plants. The industry urged the government to lower the import duty on
ceramic raw materials to 5.0 per cent from the existing 7.5-15 percent.

Ceramic manufacturers lamented that they had to lose a portion of the export market
as its output witnessed a sharp decline, which resulted from low voltage of electricity
and low gas pressure. In fact, the industry needs uninterrupted power and gas supply
round the clock to maintain the required 380-degree temperature in a ceramic
tableware factory. When power voltage or gas pressure is low, such temperature
reduces and when the temperature falls it takes at least 12 hours to bring it back to
previous level, causing a huge loss. A low heat in any plant causes fault to colour and
quality. Country's competitors like Sri Lanka, Malaysia and Thailand are capturing
its export markets as it is losing competitiveness.

According to the industry people, to harness power during the shortfall period they
used diesel-run generators, but due to high oil prices it was very expensive. For
running high cost generators, the prices of the products also rise and thus the industry
loses competitiveness in world market. Industry insiders said that the government
should patronise the potential ceramic industry, which witnessed a considerable rise
in export for the last few years.

The export of tableware products has been registering more than 6.0 per cent yearly
growth for the last ten years making a substantial dent in the US and European
markets. Bangladesh Ceramic-ware Manufacturers' Association (BCMA) sources say
the present investment in the country's ceramic industry is roughly about Tk 8.0
billion. The ceramic industry marked a 800 per cent export growth during the last
one decade. The quality of products, such as dinner sets, tea and coffee sets, is much
better than that of India and China.

To cope with the increased demand, all major exporters, such as Monno Ceramic,
Shinepukur, and Bengal Fine Ceramic, have been expanding their plants. More
plants are needed, but unfortunately the country has extreme dearth of skilled
manpower in this industry. The manufacturers claim they were not receiving due
government facilities, such as lower interest rate as other export sectors receive.

A medium scale ceramic plant needs around one billion taka in initial investment,
and Bangladesh has only four such tableware manufacturers. The products are
brighter and shine pretty nice. The manufacturers here are taking risk while
diversifying their designs. China and India are no better competitors here as they
produce only traditional items.

As overseas demand is going up, country's big players are now eyeing the export
market, pumping over 80 per cent production into international market. After
consistent growth in the last 15 years, the country is now in a good position to
achieve the target. Quality of products has earned Bangladesh a niche market in the
developed world and the recent trend shows that the market will grow and grow
further. But in spite of all export potentials, looming gas crisis seems to deprive the
sector of a smooth rise. Very often, shortage of gas hits the production of the ceramic
industry. No special measures have so far been taken.

There are over a dozen of ceramic factories in Bangladesh, which produce over
40,000 tonnes of ceramic products a year. Monno, Shinepukur, Bengal Fine,
Standard, Peoples and National Ceramic are engaged in tableware while RAK, Fu
Wang, China-Bangla and Mir are engaged in tiles and sanitary ware. The companies
have invested so far over Tk 6.0 billion and more investments are in the offing with
many such industries planning to produce all the three ceramic categories. Ceramic
products including stone tableware, porcelain tableware, bone China tableware, tiles
and sanitary ware have a $20 billion global market out of which Bangladesh's share
is only 0.17 percent. Two new plants are expected to be established very soon.

Among the famous ceramic industries, Shinepukur Ceramics is a leading ceramic

tableware exporter of the country having two state-of-the-art units for producing
porcelain and bone china tableware at Savar, some 35 km off Dhaka. The units are
equipped with modern quality control laboratory facilities, decal plant, carton-
packaging plant and modelling unit, and have their own gas-fired power supply.

The porcelain unit is capable of producing 60,000 pieces a day, while the capacity of
the bone china unit is 10,000 pieces a day. Since its

commercial production began in 1999, Shinepukur Ceramics, a 100 percent export-

oriented company, has so far exported its products to the UK, US, Spain, Italy,
Australia, New Zealand, Norway, Sweden, Russia, the UAE, Denmark, Germany,
Turkey and India.

Like Shinepukur Ceramics, country's all other leading ceramic units are having
robust growth performances belying all earlier speculations. Bengal Fine Ceramics is
also doing pretty well and its export performances hit an all-time record. Monno
Ceramics is also having robust business with overseas countries. Others have earned
equal fame.

The natural gas that is used in the kilns of the Bangladesh's ceramic

industry does not contain any sulphur and that is why the country's ceramic products
look brighter. Bangladesh has been manufacturing tableware for the last five
decades, but the country is also famous for its pottery, a heritage of more than two
millenniums.