• Sunday, Oct 17, 2021
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OP-ED: Can MPPE be a potential sector for export diversification?

  • Published at 09:35 pm July 25th, 2021
PPE-2020-06-27-at-22.06
Mahmud Hossain Opu/Dhaka Tribune

Bangladesh has just started to roll out in these areas and some courageous exporters have started production, which is a good sign

The export of medical personal protective equipment (MPPE) and personal protective equipment (PPE) have opened a new path for apparel and pharmaceutical product manufacturers of Bangladesh while the apparel sector has been facing a deep slump since last year. 

From the statistics, it is observed that import of some specific MPPE and PPE products have declined (26%) during Jan-December 2020 in comparison with the earlier year, while export of these similar kinds of products have increased about 19% in 2020-21 in comparison with 2019-20. 

These products are: Isopropyl Alcohol, Covid-19 test kits, protective garments, plastic face shields and Covid-19 diagnostic instruments and apparatus, 3-layer surgical mask. 

It means that Bangladesh has got some footholds in these areas.

During the Covid-19 pandemic, entrepreneurs may have found the sector as an area for export diversification.

Nevertheless, amount of the export from Bangladesh is not very high in comparison with global export, from UN Comtrade global data, 11 products such as disinfectants, diagnostic test kits, medical consumables, masks, medical devices and equipment-hospital medical devices and equipment, coveralls, gloves, respirators/ventilators, hair protection, eye protections, and aprons have total global export about $738.15 billion in 2020, while Bangladesh’s export of these products is only $0.74 billion. 

It is, of course, encouraging that exporters have started penetrating in these sectors, with some policy support and proper marketing effort Bangladesh can capture a good pie of this huge market. 

Actually, it is very difficult to identify specific products as under a single head there are a number of sub- products with specific HS codes. 

Bangladesh needs to prioritize products based on its capacities where HS code specification will be required.

It is very difficult to identify the exact products clearly, such as masks, there may be different types of masks, made of fabrics, plastic and many others; there could be medical/surgical mask, high fluid resistance, good breathability, for masks  internal and external faces; should be clearly identified. 

Structured design that does not collapse against the mouth (e.g. duckbill, cup shaped) which has got several standards also, required deeper analysis. 

From UN Comtrade global data it is seen that in 2020, $67.12 billion worth of masks will be exported, of which Bangladesh will secure only $0.09 billion or about a million. 

Similarly is the case for gloves, global export is about $16.13 billion; Bangladesh’s share is about $0.03 billion. 

In case of disinfectants global export is about $311.48 billion while Bangladesh captured $0.11 billion.

Among disinfectants, hand sanitizer is a widely-used item. Global export is about $6.25 billion, Bangladesh’s export is nil, and this could be an area Bangladesh can explore.

On the other hand, it might become apparent among the concerned players that the demand of the Covid-19 related products may decline while a number of countries have been able to control the infection and gradually open up. 

Wide efforts of vaccination are another issue of declined demand for medical products. 

Not only that, the market is being controlled by mostly developed countries, such as the UK and USA, Japan, Canada, Germany, Italy, France, Belgium etc.  

China and some other Asian countries also have capacities and at the an internal market for these products. 

South Asian perspective

In South Asia,  Sri Lanka has some foothold in this sector, so it has become apparent that in order to sustain, Bangladesh will have to compete with these big players in case of attaining adequate standard, quality, compliance and directives of WHO and similar other international organizations.

Currently a number of RMG factories and pharmaceutical companies are involved in  producing MPPE and PPE, using raw materials imported from China.

It is expected that pharmaceutical producers will concentrate on medical products while the RMG sector will pursue personal protective gowns, aprons and similar other products.

With Covid-19, we are now highly accustomed to knowing about the Medical and Personal Protective Equipment (MPPE) and also Personal Protective Equipment (PPE). 

PPE is defined by EU Regulation 425/2016, implemented in Italy by Legislative Decree no. 17/2019. Its function is to protect the wearer from health or safety risks. 

The CE marking ensures compliance with specific technical standards, in order to protect the operator.

PPE acts as protection between infectious materials and the skin, mouth, nose or eyes (mucous membranes.) 

The barrier has the potential to block the transmission of contaminants from blood, body fluids or respiratory secretions.

PPE can also protect patients at high risk of infection, but its main purpose is to protect the healthcare operators who wear it. 

It should be appropriate to the risk to be prevented; must not pose a greater risk; respect ergonomic and health requirements; be compatible with other PPE in the case of multiple risks.

What needs to be done

WHO has specific guidelines, Bangladesh Directorate General of Drug Administration (DGDA) suggests to follow the guidelines and they have by this time accredited 7 laboratories with ISO 17025 standards. 

NOC from DGDA is a must for establishing a new unit. 

Entrepreneurs have to establish a classified area, BEXIMCO has already established classified separate areas to produce MPPE and started exporting. 

They also established a lab in their premises following international standards.

Bangladesh has just started to roll out in these areas and some courageous exporters have started production which is a good sign, it is very important now to extend regulatory support.

Its government, in the meantime, has initiated a number of policies to encourage entrepreneurs to produce MPPEs and in case of import of its raw materials, production process, trading stage and for service producers a number of exemptions have been announced. 

The SRO no. 109/AIN/2021/122/ Customs on "Covid-19 related raw materials'' issued on May 19 this year has  exempted 50 items(8 digit level) under 19 broadheads (4 digit level) for encouraging production of PPE mainly and Covid-19 related products.

In the SRO no.142-AIN/2021/138/VAT published on 3rd June, 2021 announced the VAT exempted items where the items (HS code 30.04, 30.02, 38.22, 39.26, 62.10, 62.11, 90.18, 90.20) related to  Covid-19 also have been included in four stages(Import, Import & Production, Production and Trading).

Entrepreneurs with Industrial IRC holders and manufacturers in the field of pharmaceuticals and RMG will be allowed to use these benefits under maintaining some conditionalities as per the concerned SROs. 

The companies will have to take permission and approval from DGDA. 

The entrepreneurs will need certificates from BGMEA and BTMA in the concerned sectors. 

DGDA will monitor the quality of the products regularly and will submit reports to NBR.

In the SRO(142) for which VAT exemption has been announced for a number of products,  maintaining some respective clauses of VAT and SD Act 2021, they will get these exemption, these clause are; 51(Tax invoices), 54(integrated tax invoice and withholding certificate), 54 (NBR may frame rules in respect of tax documents and issuance of copies thereof); as per clause 64 they will have to file returns and as per clause 107 entrepreneurs will have to keep records of all documents up to five years.

A number of entrepreneurs are preparing for producing MPPE or PPEs and have taken FDA approval, but they could not reach to the right places where the actual demand for specific type of products is waiting, because of travel restriction they are unable to visit the concern places and thus marketing of specific products have been one of the major concerns. 

Some are thinking that it is rather helpful if the concerned embassies can be engaged and some G2G initiatives are taken.

Most of the MPPE/PPE producers are the developed countries; they have required infrastructure and backward and forward linkages, and a totally supportive investment ecosystem. 

Thus, the initial stage would be very competitive and uncertain for the country.

While contacting the entrepreneurs, a number of whom have already supplied for the local market and trying to enter into the international market, for them the markets are almost unknown, they claimed a good marketing policy of the government and support establishing a good contact with the buyers through concerned embassies/commercial sections. 

While they emphasized for high logistics cost, which overshadowed the duty and tariff exemption. 

Port corruption, marketing sources, travel restriction, import of specific types of chemicals, safety features of these medical products are some other identified constraints. 

They also informed that Bangladesh has captured a big market in the export of RMG but products are very limited, this has created a problem because these limited products markets are being controlled by the buyers, and thus entry with new products into new markets need similar confidence among buyers about Bangladeshi markets.

There is huge information gap, specification, types and other details of the sector, it is felt by some body that we are used to work with the generic group but we do not understand it when the in depth information about the product is needed, unless detail contact between buyers and sellers have been established and they know each other, it is difficult to catch up the market.

Some have feared that vaccination on a large scale in the developed and developing countries might cause a decline in the demand of the MPPEs.

A combined level of effort and skill in the field of marketing, regulatory areas, quality and human resources are key for having a strong intervention in these potential sectors. 

 

The author is the chief executive officer of Business Initiative Leading Development (BUILD), a national Public Private Dialogue (PPD) platform in the country

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