Interviewed by Syed Md. Rakeen, Team MBR

Having joined Berger Paints Bangladesh Limited right after completing his Masters in Business Administration from IBA in 1995, Md Mohsin Habib Chowdhury has become a name synonymous with Berger Paints Bangladesh Limited. He has grown with the company over the years and became one of its core members in the process. His exceptional performances as a senior general manager of sales and marketing have recently earned him the designation of Chief Operating Officer at Berger Paints Bangladesh Limited. Team MBR was in a conversation with Mr. Md Mohsin Habib Chowdhury and was fortunate enough to receive his take on the paints and coatings industry in Bangladesh.

Syed Md. Rakeen: The market size of the paints and coatings industry in Bangladesh is around BDT 45 billion, as reported by The Financial Express, and has registered an annual growth rate of 6% in recent years. In your opinion, which key factors are driving this consistent growth in this sector?

Md Mohsin Habib Chowdhury: The paint industry in Bangladesh is a self-sufficient industry that fulfils the necessities of paint products and offers technology-driven and diversified import substitute products. The paint industry has maintained steady cumulative growth over the last two decades despite being affected by many national and international challenges, such as economic downturns, socio-political turmoil, natural calamities, the COVID-19 pandemic, etc. The size of the industry has reached around BDT 60 billion now. The stable growth of the paint industry can be attributed to several key factors:

• Bangladesh has experienced impressive economic growth over the past decade, leading to an increase in disposable income and a rise in construction and infrastructure development projects. The growth of remittances, exports, the manufacturing sector, the service sector, microfinance, SME businesses, etc. has increased employment and consumer purchasing power in both urban and rural areas. The government of Bangladesh has been investing in large-scale infrastructure projects, such as highways, bridges, ports, and power plants. Rapid urbanisation, real estate growth, the construction of new buildings, and the renovation of existing structures all contribute to the growing market size of the industry.
  
  
• Consumer awareness is increasing about the importance of quality paints and coatings for durability, protection, aesthetic appeal, and safety for health and the environment. There is a shift towards higher-quality paints with augmented features.
  
  
• Paint manufacturers in Bangladesh have introduced manifold technological advancements to cater to various emerging industrial sectors. These include protective coatings for ocean-going marine vessels, vehicle refinish, wood coatings, powder coatings, floor coatings, fire-intumescent paints, fluorescent paints, and special primers and coatings to prevent corrosion in hazardous industrial settings. Such innovations open new avenues for portfolio expansion through import substitution.

All factors collectively contribute to the consistent growth of the paints and coatings industry in Bangladesh, fostering opportunities for local manufacturers, suppliers, and distributors within the market.

Syed Md. Rakeen: The paint industry has witnessed a gradual shift in customer preferences in terms of aesthetics over the years. Would you kindly share how the industry participants are incorporating the changing preferences in the paints and coatings industry?

Md Mohsin Habib Chowdhury: The paint industry has indeed experienced a shift in customer preferences in terms of aesthetics over the years. To meet these changing preferences, industry participants have been incorporating various strategies and offerings:

• Paint manufacturers have expanded colour ranges through tinting systems that offer thousands of shades in five minutes. The tinting systems are extensively distributed at dealer points across the country.
  
  
• Paint companies have introduced a range of speciality finishes and effects to cater to diverse customer preferences. These include metallic finishes, textured coatings, silk finishes, matte finishes, pearl finishes, and more. By offering a variety of finishes, customers can achieve unique and eye-catching effects on their walls, furniture, or other surfaces. Some companies are offering designer paints featuring unique patterns and textures that reflect a wide variety of ambiences and personalities.
  
  
• Paints with augmented features like superior washing and cleaning properties, sustainable and eco-friendly paint options like low VOC paint, waterproofing paints, and exterior paints with longer durability and protection against the weather.
  
  
• Consumers are now more interested in one-stop services for total painting solutions. Therefore, painting services are being extended across the country by top paint companies.
  
  
• Paint companies are providing services for custom colour matching. This personalised approach allows customers to achieve the exact colour they desire, providing a high level of customization. Paint companies often collaborate with interior designers, architects, and influencers to create curated collections or recommend colour palettes.
  
  
• Many paint companies have developed digital visualisation tools or mobile apps that allow customers to virtually experiment with different paint colours in their spaces before making a purchase. These tools use augmented reality or virtual reality technologies to simulate how a particular colour will look on walls or other surfaces.

By incorporating these strategies and offerings, the paint industry has been able to adapt to changing customer preferences and provide a wide range of options to suit different aesthetics, design trends, and environmental considerations.

Syed Md. Rakeen: Locally manufactured paints by multinational and domestic companies can meet 90% of the demands in Bangladesh. From your perspective, what are the export prospects of paints and coatings products manufactured in Bangladesh?

Md Mohsin Habib Chowdhury: We have yet to explore the export prospects of our paint products. Most of the raw materials for paint are imported, and high prices of raw materials, shipment costs, taxes, and duties on paint products make it challenging for us to become price competitive in international markets. However, there may be scope for export if some competitive advantages are created.

• Cost-competitive manufacturing may be ensured through the adoption of advanced technology, the sourcing of lower-cost raw materials, and the utilisation of low-cost labour.
  
  
• There may be opportunities for paint export in remote areas of some of our neighbouring countries or other emerging economies where the domestic paint supply is not sufficient.
  
  
• The export of emulsions (intermediary materials for paint production) may have a greater scope of export as taxes and duties are usually not imposed on such inputs or raw materials. However, special containers or ISO tanks may be necessary to transport emulsions.
  
  
• Bangladesh benefits from several trade agreements, such as the Generalised System of Preferences (GSP), with various countries. We may explore the scope of paint exports using lower tariff benefits under such agreements.

The success of Bangladesh's paints and coatings exports will depend on various factors, including product quality, marketing strategies, distribution networks, and competition from other global manufacturers. Local companies should invest in research and development, ensure consistent quality to meet international standards and regulations, and build strong relationships with potential buyers to maximise their export prospects. Government support through waivers of taxes and duties and the creation of conducive environments and policies to facilitate exports will be vital for the paint industry.

Syed Md. Rakeen: Berger Paints introduced lead-free, odourless, and eco-friendly paints in 2020 to ensure a safer environment. Would you kindly share the perspective of customers regarding environmentally friendly paints and how demand is evolving in the local market?

Md Mohsin Habib Chowdhury: Berger has made all its products lead-free since 2012 and launched the Berger Breathe Easy Eco Series. The introduction of low VOC (Volatile Organic Compounds), lead-free, odourless, and eco-friendly paints by Berger Paints aligns with the growing demand for environmentally friendly products in the market. Customers are becoming more conscious of the potential health risks associated with traditional paints that contain high levels of volatile organic compounds and toxic substances like lead. They are now more interested in using paints that have a reduced carbon footprint, are derived from sustainable sources, and have a minimal environmental impact throughout their life cycle, from manufacturing to disposal. However, the usage of low-VOC paint is still relatively low due to its higher price. We are trying to build greater awareness among consumers regarding the benefits of low-VOC paints, highlighting that these paints contribute to better indoor air quality and reduce the risk of respiratory problems and allergies.

Syed Md. Rakeen: As reported by The Financial Express, per capita paint consumption in Bangladesh is only 1.1 kg, while India and China consume 4.2 kg and almost 9.0 kg, respectively. From your perspective, which challenges are holding back the paint industry from registering figures similar to those of other Asian countries?

Md Mohsin Habib Chowdhury: The industrialisation and economic growth of China and India started relatively earlier compared to that of Bangladesh. The magnitude of construction, infrastructural development, and industrialisation in China and India is far greater. Bangladesh is also experiencing significant economic growth and the development of infrastructure; however, we are yet to catch up with our foreign counterparts. This is reflected in the lower amount of per capita paint consumption in Bangladesh. Also, renovation and repainting take place at shorter intervals in more economically advanced countries, as they are more cautious about protecting their assets and are interested in spending more for variety and aesthetics. Awareness regarding the role of paint in the protection of assets and infrastructure against corrosion is not yet widespread in our country. To increase paint consumption, we must create greater awareness of the importance of paint and coatings in preserving our buildings, construction, machinery, furniture, equipment, and other assets. And we are willing to work with all stakeholders in this regard.

Syed Md. Rakeen: The paints and coatings industry has recently faced challenges due to higher duties, restrictions on L/C opening, and raw material imports. In your opinion, what are the necessary steps required to maintain the industry's growth amidst economic disturbances?

Md Mohsin Habib Chowdhury: In recent times, we have faced significant challenges due to regulatory restrictions and limitations on L/C. Maintaining growth in the paints and coatings industry amidst economic disturbances can be challenging, but some measures can help mitigate the impact and sustain the industry's growth.

The government has imposed 5% SD (Supplementary Duty) on paint products for the last few years. In this year’s budget proposal, SD has been extended to primers as well. Ideally, SD is imposed on luxury and non-essential goods or socially undesirable goods. However, paint is a non-luxury item, as its major role is to protect the infrastructure against corrosion and erosion, not merely add aesthetic value. As the main purpose of paints and primers is the protection of fixed assets, they should be considered essential items, and SD should be removed or applied at a minimal rate.

To ensure a smooth supply of raw materials, it is crucial for companies in the industry to diversify their supply chains by developing alternative sources of raw materials, both domestically and internationally. Efficient L/C management through smaller consignments at higher frequencies may be necessary.

Companies should prioritise cost optimisation measures through efficient working capital management, lean manufacturing practises, formulation reengineering to accommodate alternative local raw materials, and implementing energy-saving initiatives. These efforts can help maintain competitiveness by offsetting increased duties and raw material costs.

Companies should actively participate in discussions, advocacy efforts, and policy-making initiatives to ensure their concerns are heard. Collaborative efforts can lead to policy reforms, tariff reductions, or other measures that support the growth of the industry.

Syed Md. Rakeen: According to the Asia-Europe Foundation, Bangladesh is a rapidly urbanising country, with 56% of its population expected to reside in urban areas by 2050. How do you envision the future of Bangladesh's paints and coatings industry in light of this fact?

Md Mohsin Habib Chowdhury: Given Bangladesh's rapid urbanisation and the projected increase in its urban population, the paints and coatings industry in the country is likely to experience significant growth and transformation. Urbanisation will lead to an increased need for residential buildings, commercial spaces, and public infrastructure projects, which will drive the demand for paints and coatings.

Paint manufacturers in Bangladesh will further invest in research and development to develop high-performance coatings with improved durability, weather resistance, and enhanced functionality. Additionally, advancements in digitalization and automation are expected to streamline production processes, improve quality control, and enhance efficiency in the industry. Urbanisation also creates an increased focus on aesthetics and design. Architects, designers, and consumers would look for greater ranges of colours, finishes, and textures in paints.

With growing concerns about environmental sustainability, there is an increasing demand for eco-friendly paints and green initiatives. Overall value chain improvement is also expected as consumers shift from economy paints to higher-quality coatings. In the near future, organised paint application services will thrive, and one-stop painting solutions will be widely utilised. Younger consumers will also be more interested in do-it-yourself painting, as the cost of labour and painters is likely to rise.

Overall, the future of Bangladesh's paints and coatings industry looks very promising, driven by the country's rapid urbanisation. The industry is likely to witness growth in demand, increased focus on sustainability, innovations, and collaboration with international partners, including technology transfer, joint ventures, and investment. These developments will contribute to the overall economic growth of the country and create opportunities for both local and international players in the industry.