Dedicated economic zones needed to boost furniture exports

The journey of branded furniture in Bangladesh began in 1975. Today, over 100 small and large branded furniture manufacturers operate nationwide. The domestic furniture market is valued at approximately Tk35,000 crore, with branded companies holding 35% of the market share, while the remaining 65% belongs to non-branded manufacturers.

Speaking with The Business Standard (TBS), Rahman H Rahman, president of the Bangladesh Furniture Industry Owners Association and chairman of HATIL, shared insights about the sector's challenges and growth potential. He urged the government to allocate dedicated zones for furniture in economic regions and suggested introducing bonded warehouse facilities, similar to those in the textile sector, to boost furniture exports. 

Current state of the furniture industry 

Asked about the current market situation, Rahman pointed to multiple challenges, including reduced sales. "Various movements, like the garment workers' protests, disrupt operations. For instance, our factory in Savar was shut down last week due to unrest. 

Such disturbances lower consumer interest, with only those in dire need buying furniture," he said.

In the past three months, sales have fluctuated dramatically, with some companies experiencing a 30-50% drop. Traditionally, the industry has witnessed 10% annual growth, but this year, businesses fear they won't even match last year's sales figures.

Market size and export challenges

According to the Bangladesh Investment Development Authority (BIDA), the domestic furniture market is worth BDT 35,000 crore, employing around 25 lakh workers across 40,000 organisations. While the industry has seen consistent 10% annual growth, exports have faced hurdles. 

Export earnings rose from $52.53 million in FY 2016-17 to $110.36 million in FY 2021-22 but have since declined due to rising raw material costs and currency fluctuations.

Rahman highlighted a critical export challenge: the high import duties on raw materials. "Unlike the zero-duty benefit offered to the textile sector, we pay full import duties for raw materials, even when exporting. Though there's an 8% export incentive, it's insufficient compared to the advantages other sectors receive."

Growing demand for branded furniture

Branded furniture is gaining traction among consumers, who now prefer reliable after-sales service and assurance of quality. "Consumers are willing to pay VAT, understanding it contributes to national development. Moreover, branded companies provide services that non-branded ones cannot, such as addressing post-sale issues or enabling complaints through regulatory bodies," Rahman noted. 

"A brand is a name built on trust, and that's why demand is growing."

Export potential and future goals

The furniture industry, being labor-intensive, holds vast export potential. Rahman observed, "China is shifting towards high-end products, and Vietnam is operating at full capacity. This creates an opportunity for Bangladesh to capture the market." 

The sector aims to achieve $1 billion in exports within the next decade. To facilitate this, Rahman proposed that the government allocate land in economic zones, fostering new ventures and backward linkage industries.

HATIL's sustainable vision

HATIL, one of Bangladesh's leading furniture brands, focuses on minimalism, durability, and sustainability. "We use recycled wood particles for board production and prioritize eco-friendly processes, such as renewable energy. The goal is to create sustainable products that minimize environmental harm," Rahman said.

Changing consumer preferences

As urban spaces shrink, demand for compact, durable furniture has risen. "Today's homes are smaller, especially with the rise of nuclear families. Unlike the heavy, bulky furniture of the past, consumers now prefer space-saving designs that are both practical and stylish," Rahman concluded.