Industry Update
ENERGY
Engine Oil Market Expanding Fast
The growth in engine oil market was tremendous for last three years because of the rise in the consumer base in the automobile market and also introduction of new power plant in Bangladesh. Which boosted the oil market with a growth of nearly 15% during that period. Which is a good sign for the economy which indicates the consumers purchasing power is increasing. The consumption of lubricant oil rose to 160 tons in 2018 because of the increase in registered vehicles number in the country. On the other hand, Bangladesh started to generate 2.5 times more power with a production of 11623 megawatts of power recently. This demand of lubricant is assumed to rise for 15 years more because of the growth in power development and automobile purchase.
AUTOMOBILE
Auto Parts Market Swells on Rising Demand
Bangladesh’s automotive parts market size was reported to be in between BDT 1,300 crore to BDT 1,400 crore last year with a annual growth rate of 10% to 12%. Automobile market was below BDT 500 crore 10 years ago in Bangladesh. The market of automobile market is mostly dominated by Toyota which makes the auto parts of Toyota car more of lucrative option for the importer. Common items which are imported are engine, alternator, radiator, air conditioner, suspension, brake pads, spoiler, rim, tyre, trim package, body components etc. Most of the parts are imported from Thailand, China, Indonesia, Taiwan, Dubai and India, with Thailand and Indonesia etc. As importers are mostly interested to bring Toyota’s parts, it is hard to find parts for other cars in our country. There are almost 200 auto parts traders in our country and beside that some manufactures parts in Bangladesh. Locally manufactured parts are known for low quality.
TEXTILE
Yarn Prices Slide on Supply Glut
The supply of finished apparel items is increasing because of the lower price of yarn which is known to be the main raw material for textile products. The decline is about 12% in last two years which is threatening the primary textile industries in Bangladesh because lower price is just piling the stocks of yarn. The price of 30 carded yarn was between USD 3.40 and USD 3.50 a kilogram which dropped to USD 3.05 per kg. There are at least 430 local mills and the total apparel industry which are in threat is almost of USD 8 billion. The price of raw cotton is lowered because of US- China tariff war and also for Bangladesh, availability of cheap yarn from India.
AGRICULTURE
Potato Price May Go Further Up
Because of last year’s loss in potato crops, many of the farmers switched to other products, declining total cultivation of potato. So, potato price will go higher this year according to industry experts. Price of new potatoes are now BDT 18-24 and BDT 28- 30 per kg at growers’ end. The biggest potato selling hub are Nilphamari, Rangpur, Dinajpur, Thakurgaon, Panchagarh and Gaibandha districts. The price was BDT 12-18 a kg in this season of last year according to the Department of Agricultural Marketing (DAM). Most of the farmers incurred loss of BDT 8000 to BDT 8500 per bigha last year. And even till now it is pointed out by many industry players that the farmers are not even interested to grow potato for the February-March period for hoarding.
Monthly Business Review- January 2019
Bangladesh is now a role model in economic development boosted by its population and growing industrial base led by RMG industry. Economy is growing at more than 7% and projected to grow even faster in the future to become the 26h largest economy in the world by 2030. However, behind this rise lies multiple challenges revolving around infrastructural development and inadequate funds. Bangladesh needs to receive enough funding to sustain this growth and one industry has potential to do just that – Private Equity and Venture Capital (PEVC). Globally, PEVC backed companies are proven to generate more revenue and employment growth than non-PEVC backed companies.
However, for Bangladesh it’s still a distant reality. While the large start-ups of Bangladesh such as bKash and Pathao are gaining FDI and global attention, small start-ups are also on the rise guided by incubators and accelators. Thus, Venture Capital’s popularity is amassing but Private Equity still begs attention. Private Equity is shunned due to prominent obstacle such as, no local institutional investors, an economy reliant on debt financing, an obstinate corporate culture and huge tax rates on fund manager fees. Therefore, regulations and policies require structure and changes to promote local fund manager participation and attract international firms. Thus, a thriving PEVC industry is the catalyst for economy’s development that will unfold Bangladesh’s success through its manufacturing and tech sectors.
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