Bangladesh’s textile chemical and dyestuff play a crucial role in the country’s readymade garment (RMG) export – continually aiding the garment sector in one of the most favorable sourcing destinations for the global fashion industry. Recently Bangladesh chemical and dyestuff manufacturers formed an association called ‘Bangladesh Chemical & Dyestuff Manufacturers & Exporters Association’ (BCDMEA).
On 24 October BCDMEA attained the license of a trade organization for chemical and dyestuff manufacturers from the Ministry of Commerce.
Md. Amanur Rahman, Convener, BCDMEA – also Managing Director of Dysin Group a leading textile dyestuff and chemical manufacturing and solution provider – expressed his opinion regarding the formation of the association, prospects of chemical sector in Bangladesh etc.
Textile Today: Kindly share with us the motive behind forming BCDMEA. Also, the prospect and reality of Bangladesh’s chemical and dyestuff sector.
Md. Amanur Rahman: In the last 40 years, Bangladesh’s textile and apparel industry has become an indispensable fashion-sourcing hub. The industry holds more than 80% of Bangladesh’s economy. The textile sector has been on a fast growth trend despite the pandemic and various economic depressions. Having said that, the Russia-Ukraine war, the energy crisis and the economic downturn has been hurting the global fashion industry and as consequence, hampering the growth of Bangladesh’s textile industry.
The harsh reality that even though the RMG work orders have dropped 30% to 40% – still we cannot complete the existing orders due to the recent electricity and gas crisis. Maximum factories are passing the most difficult time.
In light of this troublesome reality, the chemical and dyestuff backward linkage sector is feeling the heat as the sector is directly related to the textile industry.
Keep in mind that the local chemical and dyestuff suppliers and manufacturers are playing a pivotal role in the country’s textile industry. For instance, since the 1990s, Dysin Group has been manufacturing chemical and dyestuff with its 5 units, of them, one is a 100% export-oriented unit – where we import duty-free chemical raw materials under the bond facility and supply duty-free finished dyestuff and chemicals to the textile mills. Usually, textile mills import a huge amount of required chemicals and dyestuff from abroad and keep it as stock in warehouses.
Similarly, other local dyestuffs and chemical manufacturers are providing the same valuable support through which the textile factories can get the necessary duty-free dyestuff and chemicals without importing and keeping a large stockpile. Thus, the chemical and dyestuff manufacturers are contributing immensely by saving valuable foreign currency and reducing lead time.
Despite the above-mentioned troublesome global reality, Bangladesh’s chemical and dyestuff manufacturing sector has endless opportunities. Bangladesh’s GDP growth is one of the highest in the world. That means when a country experiences a high growth trend, it also gives rise to the demand for chemicals. In today’s world, chemical is everywhere and by 2027, the global textile chemicals market size will reach $31.4 billion (IMARC report). Meaning, the country has great prospects in the future.
As the country imports most of the necessary chemical and dyestuff worth $4 to $5 billion. Whereas the textile sector alone imports around $2 to $3 billion worth of chemicals, which poses an immense opportunity for the manufacturing of chemical and dyestuff for textile and other industries. This will also open the door for other sub-sectors to grow. In addition, Huntsman, CHT, Rudolf – these types of chemical giants will set up manufacturing plants in Bangladesh. Meaning, these global chemical giants see a huge prospect in Bangladesh’s chemical and dyestuff sector.
This will also give us the local value-addition, save foreign currency and cut imports and increase the capacity of local chemical exporters. This is why we have formed the ‘Bangladesh Chemical & Dyestuff Manufacturers & Exporters Association’ (BCDMEA).
This platform will formulate policies and closely work with the government to ease the path for chemical and dyestuff manufacturers.
BCDMEA will provide support to the local chemical and dyestuff manufacturers and exporters. Our top priority is to get policy support for the chemical sector. It is vital to identify a promising sector and nourish it. In return, it will provide the backward capability and growth advantage.
Another vital support the chemical and dyestuff manufacturers need is the bond facility. As the existing bonded factories face difficulties in bond license and process. The present bond facility is more suitable for the apparel sector rather chemical sector. Like we have to take UD and utilization permits (UP) from apparel manufacturers and then we can produce chemicals and supply them to the factories – this impractical process must change for the betterment of the chemical sector.
Another important change bonded chemical factories need is the declaring coefficient. As chemical manufacturers produce diverse chemical products for versatile industries and every time declaring a separate coefficient for every product is absurd. This too should be changed.
So, we want to work on removing declaring coefficient, UD and UP systems from the chemical industry.
In addition, another big obstacle is the haphazard HS code system – which needs to be streamlined. Some raw materials’ duty is more than the finished products. Then it becomes unfeasible for us to produce here. Our customs declare such HS Code for some raw materials that exporting countries are not allowed to export the product in that particular HS Code. BCDMEA will work to remove hindrances like these.
The association is formed by 11chemical and dyestuff manufacturers. More companies like Archroma/Huntsman, CHT, and Rudolf with existing or upcoming manufacturing plants have expressed their keen interest to join BCDMEA, which shall facilitate soon.
We are inviting all the chemical manufacturers in the country to join BCDMEA. We will work and go to the govt. with our common issues and challenges.
We will also collaborate with industry and academia to bridge the gap to create more efficient future textile chemical leaders.
Most importantly, we will work to remove the fear among people regarding the safety of the chemical industry. BCDMEA will also work in ensuring safe inventory, use and transport of the chemical industry.
Textile Today: Since RMG makers work with big global fashion brands, where quality, compliance and sustainability in sourcing chemical is very important. RMG makers are concerned to know the quality and standard of locally made chemicals and dyestuff. What do you say regarding this?
Md. Amanur Rahman: First of all, compliance is an indispensable part of the chemical manufacturing industry – be it for textile, food, or pharmaceuticals. As Bangladesh’s apparel industry has established itself as one of the most sustainable apparel industries globally – the chemical and dyestuff importers bring in top-quality chemical and dyestuff products. Regarding the local manufacturers, we have to follow the same path and we have that capability. All the BCDMEA members maintain strict international guidelines. For instance, all the BCDMEA members have to have licensed effluent treatment plant (ETP), industrial permission, industrial safety, fire safety and all types of necessary permissions.
In parallel, BCDMEA members will need brands and buyers required certifications. For my company Dysin is ZDHC level 3 and Organic Textile certified – which is the highest level of certification in the textile industry at present.
So, Bangladeshi textile chemical and dyestuff manufacturers have compliance and safety capability.
Textile Today: Kindly state the amount of chemical subsidy the BCDMEA members are providing to the textile industry.
Md. Amanur Rahman: Among the BCDMEA members, we have both basic and auxiliary chemical manufacturers. Our majority of members are auxiliary chemical manufacturers and they are producing around $70 to $80 million in auxiliary chemicals for the textile industry. While more and more, basic chemical manufacturers are joining the BCDMEA.
In the next 3 to 4 years, BCDMEA members can supply around 70% to 80% of the auxiliary chemicals.
While textile dyes manufacturing will take a bit more time.
Textile Today: There is a constant factor of ever-increasing price of imported chemicals and dyestuff. We are ultimately catering the fashion brands and buyers – and our apparel industry is under the constant pressure of reducing the garment price. Do you think the locally made chemical and dyestuff will give a breather to the textile industry? And what will you say to assure the fashion brands and retailers?
Md. Amanur Rahman: For fashion brands and retailers, the first thing they need is compliance and quality. World’s best and top-rated LEED-certified textile and apparel factories are in Bangladesh. If we can make the best factories then why not chemical and dyestuff manufacturers on the same path? Yes, we have the capability to make a top-class industry. So, is never an issue for us.
Rather the issue is ensuring competitiveness. Which our textile and apparel makers are also facing. The actual objective of establishing a chemical industry is to save cost and lead time. It is pretty simple; the establishment aims to provide chemical and dyestuff at a less cost and time.
Locally made water-based auxiliary chemicals always give the industry an edge. What Bangladeshi chemical and dyestuff producers are focusing and seeing the trend is that the actual value-addition comes in chemical reactions. So, we are bringing in intermediates and adding reactions to produce finished auxiliary chemical products. We are also making polymer chemicals, fixing agents, etc. We have more plans to produce reaction products. Similarly, other BCDMEA members are also focusing on this trend.
This is ultimately giving extra mileage to our textile industry. As cost competitiveness will increase immensely and at the same time, textile factories will get an inventory and lead time advantage.