Overview of the Sector

Over the past decade, the plastics industry in Bangladesh has experienced remarkable growth. Currently, the Bangladeshi plastics market is valued at approximately $2.99 billion.  Of the entire sum, 83.4% corresponds to usage within the country, with the remaining 16.6% oriented towards global markets. The annual growth rate for plastic production averages over 20%.

Bangladesh primarily manufactures plastic products for household use, kitchenware, sanitaryware, toys, construction materials, and packaging for processed foods, pharmaceuticals, and fast-moving consumer goods (FMCG). Additionally, plastic is used in garment production, textiles, pharmaceuticals, medical equipment, electronics, electrical equipment, and transportation devices. On average, each person in Bangladesh consumed 9 kilograms of plastic products in 2020. Currently, 142 different types of plastics are employed in production, and this variety is expected to expand in the future. The sector manufactures a wide array of 2,500 different plastic items. The value added during the production of plastic goods ranges impressively from 51% to 70%. A significant portion of household plastics and packaging materials utilized in Bangladesh are produced domestically.

For high-quality plastic products, molds for plastic injection are typically imported, primarily from China and India. Conversely, for lower-quality products, molds are sourced locally from light-engineering vendors. Injection and blow molding are the predominant methods employed by local plastics industries, and as a result, many factories are equipped with injection and blow molding machinery. Bangladesh boasts approximately 5,030 manufacturing units within the plastics sector, with nearly 98% of them classified as small and medium-sized enterprises (SMEs). Approximately 60% of these units are concentrated around Dhaka, employing approximately 1.2 million individuals and manufacturing a diverse range of products for both domestic consumption and export markets.

During the year 2022, Bangladesh engaged in the recycling of 362,332 metric tons of plastic, with the country’s thriving informal sector being responsible for 90% of this recycling activity. Bangladesh has the potential to become a plastic recycling hub. Furthermore, Bangladesh achieved a more favorable outcome in terms of plastic decoupling, registering a decoupling factor of 21, which surpasses the average of 13 seen among its developed counterparts. Currently, around 30% of the plastics are being recycled in the country and the National Action Plan for Sustainable Plastic Management aims to achieve a goal of recycling 50% of plastic materials by the year 2025. This makes the plastic recycling industry a potential area for investments as it has huge growth prospects. 

Key Factors Driving the Plastics Industry

1. Rising domestic demand: Plastic demand has risen at a 20% yearly growth since 2007, according to government statistics. Locally the high requirement for plastic is due to the ever-growing demand for plastic furniture, household plastic equipment, plastic hardware, toys, and so on. Besides, industrial packaging requires a large bulk of plastic production. 
2. Government incentives: The government has halved the import levy on raw materials from 25% to 5% in fiscal year 2015 to 2016. Full Import duties on machinery are exempt for export-oriented industries, but the other industries must incur 2.5% to 6% tariff on machinery imports. Since 2016, the government has been providing a 10% financial incentive to the plastic industry for exporting.
3. Pandemic led growth: During this pandemic, the use of single-use plastic products like masks, medical equipment, and personal protection equipment (MPPE) has expanded significantly, resulting in rapid plastic growth.
4. Increased urbanization: Yearly per capita plastic consumption in Dhaka stands at 22.5 kg which is significantly higher than the national average and this goes to show that as more urbanization occurs usage of plastics will only increase. 
5. Increasing per capita income:  As income per capita increases in the country, the plastic waste per capita also increases¹.

 ¹Plastic pollution and economic growth.

Export Potential

Bangladesh currently holds a mere 0.6% share in the global plastic market. However, plastic exports from Bangladesh have demonstrated a consistent growth rate of 4.5% per year since 2014. The country exports a diverse range of plastic products, with packaging items comprising the largest portion, followed by consumer goods like tableware and kitchenware. Particularly noteworthy is the impressive 25% annual growth rate in the export of household items since 2014. Additionally, Bangladesh exports significant quantities of PVC pipes, polythene sheets, plastic waste, and various garment accessories such as bags, plastic hangers, and PET/PE bottles.

Approximately 250 plastic manufacturing units in Bangladesh are engaged in export activities, reaching over 68 countries worldwide. Primary export destinations include the USA, Canada, the EU, China, India, and Nepal. In the fiscal year 2023, plastic product exports increased by 26.23% to $20.98 crore compared to the previous year’s $16.62 crore. The plastic sector contributes 1.5% of the country’s total export earnings. Typically, plastic exports consist of two main categories: finished plastic goods and business-to-business plastic raw materials. 90% of earnings come from supplies to other businesses, and a significant 80% of that goes to the garment sector. However, the Bangladesh Plastic Goods Manufacturers and Export Association (BPGMEA) has set an ambitious target, aiming for a 3% share in the global plastic market by 2030.

Market Dynamics

Among businesses engaged in manufacturing, an impressive 98% of these enterprises fall within the category of small and medium-sized entrepreneurs, as reported by the Bangladesh Investment Development Authority (BIDA). Furthermore, there are more than a hundred toy manufacturing companies, including prominent players such as Hakkani Hark Group, Kabir Garden Industries, Sabbir Plastic Industries, and Aman Plastic Industries, that operate within the plastic industry.In terms of revenue generation, polyethylene emerged as the dominant player, commanding a market share exceeding 25.28% in 2022. Among these, RFL Plastics Ltd. stands out as the largest manufacturer in the entire country. Other notable players in the industry include Partex Plastics, Gazi Plastics, Bengal Plastics, Navana Plastics, Aman Plastics, N. Mohammad Plastics Industry, and more.

Government Support & Policy Incentives

The Plastic Industry Development Policy of 2020 has the goal of establishing a competitive plastic and packaging hub in South Asia, along with internationally recognized brands. Plastics products were identified as a priority sector in the National Industry Policy of 2016 and as one of the highest-priority sectors in the Export Policy.

Now, the Plastic Industry Development Policy for 2023 has been finalized, incorporating a provision for a 10-year income tax holiday for entrepreneurs located in plastic parks and disadvantaged areas. This five-year policy, developed by the Ministry of Industries, is set to be implemented by 2028. It outlines nine key strategies aimed at boosting local industries, enhancing capacity, expanding access to global markets, and fostering skill development to ensure the sector’s sustainable growth. The policy also intends to provide substantial financial support to domestic industries, offering loans to small and medium enterprises in the plastic sector at an attractive 3% interest rate from a dedicated fund.

Furthermore, plastic products from Bangladesh enjoy duty-free exports to the European Union and quota-free, duty-free access to 8,256 products in China. Bangladesh benefits from trade preferences and concessions under various frameworks, including the Generalized System of Preferences (GSP), South Asian Free Trade Area (SAFTA), Asia-Pacific Trade Agreement (APTA), and Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

Investment Challenges and Mitigation Strategies

1. Absence of Testing Facilities: Due to the absence of testing laboratories for plastic quality assessment in Bangladesh, we must rely on Singapore, Germany, and Hong Kong for quality certification.
2. Additional Costs Incurred: Given the insufficient availability of warehouses within the country, importing raw materials for plastic production in bulk from the global market becomes impractical.
3. Knowledge Gap: There is a significant deficiency in knowledge related to polymer science in our nation, and the plastics sector suffers from a scarcity of skilled labor.
4. Transition from GSP Program: While the GSP scheme typically allows developing and least developed countries to import goods into developed countries with low or zero tariffs, Bangladesh lost its eligibility for the U.S. GSP program in 2013 due to labor rights and workplace protection concerns. 

The Plastics Development Policy for 2023 highlights that, despite the immense potential of the plastics industry, there is a lack of concrete actions and strategic direction to address existing challenges. These challenges encompass the absence of quality control testing facilities, limited access to innovative technologies, inadequate plastic waste management, and a need for more business-friendly tax and customs arrangements.

Future Trends and Opportunities

1. Consumer Goods and Toys: Bangladesh offers compelling reasons for investors to establish manufacturing facilities for plastic household items and toys.
2. Building Materials: Investors are encouraged to support the Bangladeshi construction sector by providing high-quality, durable, and safety-tested plastic materials, including pipes, sheets, pallets, and materials for walls, exteriors, openings, and insulation.
3. Packaging Materials: Anticipated growth in industries such as food processing, logistics, and delivery, in addition to current plastic packaging uses, is expected to drive increased demand for plastic packaging materials.
4. Motorcycle and Electronics Components: The motorcycle and electronics assembly sectors have seen substantial growth in recent years. To stay competitive and reduce production costs, these industries are looking to source local plastic parts. Foreign suppliers of plastic components are welcome to meet this untapped demand.
5. China’s Industrial Transition: As China gradually shifts from labor-intensive manufacturing to high-tech industries, its global plastic market share is expected to decline. This presents a significant opportunity for Bangladesh to capture market share previously held by Chinese manufacturers.

Plastic Recycling Facility: The Bangladeshi government intends to establish a plastic recycling center by offering reduced income tax incentives. Bangladesh currently generates approximately 380 tons of plastic waste daily, with only around 36% being recycled. At the same time, the country imports a significant volume of plastic and PET resin.