Ceramic exporters are set to go through a rough time after Bangladesh graduates from the least developed country (LDC) status in 2026 as such products will face 12.7% tariff on average when entering international markets.
The projection was made by experts during a seminar on the "Ceramic industry in view of Bangladesh's LDC graduation: prospects and challenges", organized by the Bangladesh Ceramic Manufacturers and Exporters Association (BCMEA) in the capital on Saturday.
The average incentive for ceramic exporters is currently 10%.
But such subsidies must be paid after graduation and so, local ceramic products will face pressure in terms of export competition, said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD).
Moazzem said Bangladesh would face competition from countries like India and Vietnam, which have already signed free trade agreements (FTA) with the EU and UK.
After graduation, Bangladesh will face a situation where its ceramic products will have to be exported with duty while Indian and Vietnamese goods will be exported without duty due to their FTAs.
Bangladesh is currently enjoying the benefits of the employer investment fund (EIF) for the development of its technical capacity for export.
However, Moazzem said this benefit will no longer be available after graduation, and Bangladesh will have to find alternative sources to develop its export capacity.
For this reason, Bangladesh will have to address nine issues -- reducing the cost of production, adjusting with imported low-duty products, adjusting between high tariff of export and incentives of the products, increasing productivity, diversifying products, introducing variations to the export market, improving the labour market, and protecting the environment, the paper said.
Commerce Minister Tipu Munshi said ceramic products could play a role in diversifying Bangladesh's export basket.
And although the local ceramic market is large, exports from the sector will also increase, Munshi said while suggesting exploring new markets and capacity building for the industry.
Md Sirajul Islam Mollah, president of the BCMEA, said the local ceramics sector has replaced imports and there are now 70 industries (tableware, tiles, and sanitary) set up in Bangladesh.
According to him, a total of Tk13,500 crore has been invested in this sector, which brings in export receipts of around Tk400 crore every year.
Investors are facing problems due to the continuous increase of gas prices.
"There is no scope to use alternative energy for this sector as it is quite gas dependent. The price of gas increased 100% in the last decade," Mollah said.
He urged the energy regulatory commission to not increase the price of gas for industrial connections.
