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Overview

Furniture Industry in Bangladesh has great potential. The industry is growing every year by creating great value by providing customers with products of quality and convenience. The industry has flourished from its cottage industry days and has transformed into a major economic contributor.

The industry is catering to growing consumer demand by manufacturing domestically or by importing. Previously, the industry used to heavily rely on imported furniture from Malaysia, India, and Thailand. However, these days the domestic manufacturers have been able to take the major share of the market by providing quality end products. Around 70% production of furniture sector of Bangladesh is home furniture and 30% is office furniture. Scarcity of skilled manpower in handling modern equipment and machinery is limiting the prospect of growth of this industry, which can be addressed through setting up more technical schools with a curriculum of short-term trade courses.

Market Projection

Size & Growth

Furniture industry has shown commendable performance over the last decade, registering an average of 25% export growth. Moreover, the industry is the 2nd largest source of employment (after RMG) that currently employs 2.5 million workers. The domestic market is also exhibiting an upward trend and is currently worth BDT 67 Billion (Source: EU Technical Report). This market is dominated by numerous micro and small scale organizations (~80,000 units associated with furniture manufacturing as well as backward and forward linkages) while there are medium and large scale organizations (~80) that are dominating the urban areas, especially in Dhaka and Chittagong.

Trends & Industry Drivers

Currently this market is going through a transitioning period – thanks to the changes in the customer composition. As the purchasing power increases, shift in tastes and preferences are becoming more prominent. This shift can be found mostly in two ways: the material and design used in a particular furniture. Also, there are noticeable new trends including flourishing of f-commerce based furniture sales activity and market expansion opportunity with cross-connection to ship building industry.

Trends in Bangladesh Furniture market

FIGURE: Trends in Bangladesh Furniture market / SOURCE: LCP Primary Research on Furniture Industry in Bangladesh, 2017

Material wise, previously, the only thing that was preferred by the customers was wood, especially shegun wood due to its perceived value as the most expensive material in the country. And design was, it had to look royal – use of handcrafted designs on the furniture would give it a sophisticated touch. There were also a few niche markets that used to cater to customers who look for furniture made of rattan or bamboo.

Local furniture manufacturers are also expanding their reach in countries like Canada, Nepal, and Bhutan. This indicates that Bangladesh is making international-standard furniture, which cater to the taste and affordability of MAC (Middle and Affluent Class) population. Albeit around 90% of furniture demand in Bangladesh met locally, the industry has managed to export USD63.18 million worth of products in FY 2017 -18.

Currently, GDP per capita of Bangladesh stands at USD 1,516 and along with that a promising segment of population has high disposable income. Thus, these factors are elevating consumer’s capacity of spending.

Bangladesh Timber Value Chain

FIGURE: Timber Value Chain / SOURCE: Bangladesh Forestry Master Plan 2017-2036

Demand Forecast

Demand for wood products is likely to grow due to increasing population and their affordability. According to BBS (2014) the demand for industrial roundwood (timber) may continue to rise in tandem with the growth in population. Accordingly, the demand for timber is likely to rise to 9.77 million cubic meter – by 2030 and 10.62 million cubic meter – by 2050, from current consumption of approximately 8.57 million cubic meter.

Competitive Landscape

Major Brands in the Market

Furniture industry is far behind its saturation point in terms of number of players. Based on the brand value, majority of the brands can be divided typically into three tiers. These players are just the cream of the crop where there are thousands of small to medium wood products/ furniture manufacturers spread around the country. They mostly cater to local demands with customized requirements.

High-end Brands Hatil, Otobi, Navana Furniture, Akhtar
Mid-Tier Brands Partex Furniture, Brothers
Low-end Brands Legacy, Singer Homes

Raw-material Supply

On average 60% of raw materials of furniture sector are imported from different countries (source: Bangladesh Furniture Association). Of those, timber, wood coating materials, hardware & accessories, world class fabrics etc. are major importable items. Besides, most of the roundwood produced in the country is used as fuelwood. The rest goes into construction and industrial consumption. Sawmill, furniture, paper and pulp industry are the major industries connected with the forestry sector. Only the Government owned Karnafuli Paper Mill gets any significant supply of raw materials from government forests; all other paper and pulp mills are dependent on recycled or imported fiber as raw material, apart from sourcing unspecified quantities from private producers.

Foreign Export

There is a huge market in USA & Japan for office furniture. Besides, home furniture has a significant contribution in overall export figure. Lately, Middle East, gulf countries, Vietnam and Taiwan market have shown potential for manufacturers to explore.

Policy Reforms

During 80’s there was no such restriction on collecting logs/ timber from natural reserves. However, as the government realized the deteriorating effect of sourcing timber for forest reserves, it made changes in an 80 years old forest act (Forest Act 1927). Over the years, there have been multiple amendments in that act and it was made more restricted to sourcing from government declared natural reserves. Thus the industry shaped into an import oriented sector for raw material sourcing. Now, it is illegal to source timber from Sundarban or Chittagong or Cox’s Bazar (hill forests) where forest reserves are located.

Way Forward

There is no doubt on the potential of furniture industry. However, the over dependency on imported raw materials is a major pain point for this industry. Not so long ago, one of the major import sources, Myanmar imposed a ban on timber export, which had a significant impact on the industry. Instantaneously, there was a crisis of raw materials and export earnings dropped right away by 8.5% (Source: EPB) in that fiscal year. Hence, to eliminate such sourcing risk, government needs to facilitate by solidifying the backward linkage. Public private partnership can play a major bridging role here from within the country. Alongside, Government must facilitate long-term import agreements with different countries at cost competitive rates.

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