Can Bangladesh be the next Vietnam in furniture exports?

The furniture industry in Bangladesh needs robust government policy support, particularly the provision of bonded warehouse facilities, to enable the duty-free import of raw materials. This would help the sector compete more effectively on a global scale, according to experts and manufacturers.

They also emphasised the need for stronger international branding to elevate the sector's status, akin to the success of the Ready-Made Garment (RMG) industry. Government support could play a key role here by assisting manufacturers in participating in international trade fairs and fostering connections with global stakeholders, thereby enhancing the industry's global presence.

Speaking to The Business Standard, Dr Mohammad Abdur Razzak, chairman of the Research and Policy Integration for Development (RAPID), stated that Bangladeshi furniture exporters need to integrate into the global value chain to unlock their export potential.

Manufacturers must also understand consumer preferences and market demands to remain price-competitive, he added. Highlighting the challenges, he explained that opening outlets abroad for furniture exports involves significant costs, making it a less viable option. 

These costs include hiring staff, marketing, and providing after-sales services, as many furniture companies offer a 21-day return policy.

Razzak suggested that the best strategy for Bangladeshi furniture manufacturers is to connect with the global supply chain, similar to the apparel industry. For example, partnering with a global brand like IKEA, which designs and sells ready-to-assemble furniture, could boost consumer confidence and establish a foothold in the international market.

He further noted that aside from the garment industry, no other export sector in Bangladesh has successfully integrated into the global supply chain. To address this, he proposed that attracting Foreign Direct Investment (FDI) in the furniture sector could be an effective way to achieve such integration.

Regarding bonded warehouse facilities, Razzak explained that under the current tariff policy, any industry can utilise bonded facilities for up to 70% of its export value. This provision could provide a significant boost to furniture exporters aiming to expand their global reach.

Speaking to TBS, Kawser Chowdhury, director of the Bangladesh Furniture Exporters Association (BFEA), highlighted the challenges faced by entrepreneurs in the sector. He noted that they currently pay up to 70% duty on raw materials, which significantly hampers their competitiveness. 

Allowing the import of raw materials under a bonded warehouse facility would provide much-needed relief and help the industry thrive internationally.

To build brand awareness in the global market, Chowdhury suggested that the government support exporters by facilitating their participation in international trade fairs. Citing Vietnam as an example, he explained that after the US imposed tariffs on Chinese-made furniture in 2018, Vietnam seized the opportunity to become the top exporter of furniture to the US, with exports reaching $7.4 billion annually.

Bangladesh, he believes, has a similar opportunity to capture a share of this market. However, this requires strategic branding to position the country as a furniture-exporting nation and greater engagement with stakeholders and related associations.

Salim H Rahman, chairman of the Bangladesh Furniture Industries Owners Association, echoed these sentiments. He stated, "We are now looking to secure a larger share of the global market, but our products are priced out of competition." 

He stressed that providing bonded warehouse facilities would enable the sector to increase export earnings manifold within the next five years, driven by strong international demand.

Data from the Export Promotion Bureau (EPB) paints a mixed picture of the industry's performance. In FY24, Bangladesh exported $45.7 million worth of furniture, a significant drop from over $110 million in FY22. However, with the right policies and support, the sector has the potential to regain and even surpass its previous achievements.

The global furniture export market is estimated to be $770.4 billion by 2024.