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3.
The entire export earning from handicrafts and cottage industries will be exempted from income tax. For all other
industries, income tax rebate on export earning will be given at 50 percent
Tax holiday facilities will be available for 5 or 7 years depending on location of the industrial enterprise.
Dhaka and Chittagong Divisions (excluding 3 hill tract districts of Chittagong Division)
5 years
Khulna, Sylhet, Barisal and Rajshahi Divisions And 3 Chittagong hill tract districts
7 years
Tax holiday: Tax holiday facilities will be provided in accordance with the existing laws. The period of tax holiday
will be calculated from the month of commencement of commercial production. Tax holiday certificate will be
issued by NBR for the total period within 90 days of submission of application. This facility can be availed of by
industries set up within June 30, 2000 ADb.
4. Duty :
No import duty for export oriented industry. For other industry it is @ 5% ad valorem.
5. concessionary duty on import capital: import duty, at the rate of 5% ad valorem, is payable on capital
machinery and spares imported for initial installation . The value of spare parts should not, however, exceed 10% of
the total C & F value of the machinery. For 100% export oriented industries, no import duty is charged in case of
capital machinery and spares. However, import duty @ 5% is secured in the form of bank guarantee or an indemnity
bond will be returned after installation of the machinery. Value Added Tax (VAT) is not payable for imported capital
machinery and spares.
Weaknesses:
1.lack of infrastructure and communication facilities.
2.unawareness about international requirements and market
3.lack of co-ordination between government bodies and private players.
4.inadequate information of new technology.
5.inadequate information of current market trends.
6.less interest of young people in craft industry.
7.lack of skilled labour. Expensive and irregular supplies of many raw materials;
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1. Raw materials: the availability of raw materials
2. market for products: market exercises a strong influence on the establishment of industries.
When market is regional, the industry is located nearer to the market.
3. Energy availability: fuel and power energy sources must be available.
4. Transportation facility: transport is the life line of modern industry. Transport facilities are
needed for bringing raw materials and sending the finished products. An industry tends to be
localized at places, which have transport facilities such as railway, road and seaport.
5.labor supply: low wages and abundant labor help in localization of cottage industry.
6.Government concession: government has been providing sub-sidies and tax concessions for the
cottage industries located in certain notified areas. These areas have been declared as industrially
backward and the government offers incentives, namely cheap power, tax concession. Earlier.
backward areas were not economically feasible, but now due to government concessions these areas
are developing fast.
7.water supply: the processing industries use large quanties of water for cooling, washing, steam
generation .the industry must be located in a place where a dependable supply of water is available.
8.site characteristic: the topography of the land and soil structure should be considered, since either
or both may have a pro-nounced effect on construction costs.the cost of the land, local building
construction cost and living conditions are important. Future changes for expanding the plant
facilities may be desirable or necessary.
9.community factors: the character and facilities of a community can have quite an effect on the
location.cultural facilities of the community are important for sound growth of cottage industry.
To sustain in market with competitive industries:
1.more effective supervision must be ensured.
2.division of labor or specialized work can be provided.
3.disruption of production is less
4.scope of expansion is high.
5.processing of work is quick and smooth.
6.cost of material handling can be reduced using conveyors.
7. floor space can be properly utilized.
8.inventory of work-in-progress is redused.
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9.inventory of finished goods is less.
10.sequence of operations.
11.minimize the cost and maximize the profit.
12.ensuring superior quality with minimum cost.
13. ordering cost of raw materials must be low.
Jute
Seed preservation 20%
Jute cultivation10%
Weaving/Spinning/Dying 15%
Jute Processing/watering 10%
Jute Industry and SME 15-20%
Activities of JDPC 45
Handicraft 85%
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Textile
Handloom 20-25%
Primary Textile sector(PTS) 40%
Ready Made Garments(RMG) 85%
Silk sub sector 50%
Handicraft 90%
( source: usad : United States Agency for International Development) (july 2006):..
According to buyers, handicrafts are
products significant to the country where they are made,
due to skill, tradition, culture, and local materials used
Therefore, buyers argue that most of the
products made in China (and in countries seeking
to emulate Chinas production capabilities) are not
handicrafts, even though many are partially or fu
lly handmade. China will produce anything that you
will ask, better than anyone else, and at a better pr
ice, but these are not unique handicrafts like those
being produced in other countries.
.s
Swot analysis
2. Strengths of bangladeshi Handicrafts Industry Large, diversified and potential market.
There is large product variety and range is available because of diversified culture. It has
strong, diversified and supportive retail infrastructure. Diversified product range that service
different market. Cheap labor rates that result to competitive price. Need low capital
investment. There is flexible production flexibility. Low barriers of new entry.
Handicrafts:
Handicrafts are mostly defined as "items made by hand, often with the use of simple tools, and
are generally artistic and for traditional in nature. They are also object of utility and object of
decoration. Some common types of handicrafts are Textile based handicrafts, Clay, Metal,
Jewelers, Woodwork, Stone Craft, Glass and Ceramic.
Hand printed textiles including hand knitted and crochet, block and screen printing, batik, hand
printing by pen and tie-dye are used in products ranging from bed-covers to sheets, dress
material to upholstery and tapestry. The famous embroidered articles of silk and cotton often
embellished with mirrors, shells, beads, and metallic pieces are also found. Embroidery is done
too on leather, felt and velvet etc. This segment of the industry accounts for almost half a million
strong employment in addition to a large number of designers, block makers, weavers and
packers involved in the trade.
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operated either by the owner themselves or with the assistance of a small work
force of 10-20 people. Most enterprises use traditional techniques with or without
the use of tools or simple instruments. Total number of workforce associated with
the industry stands approximately over 3 millions of which over three quarters are
employed in textile, jute goods, wood, lather, cane and bamboo. These are
followed by metal-works and pottery. A rough estimate shows that exports
occupy about 20% of the total production. Key players in the sector involved in
domestic supplies as well as exporters are:
Non Government Organization (NGO) exporters of Handicrafts. (Eg. Arong)
NGO supportive product house (Non exporters)
Private manufacturers /exporters. (Eg. Various jute good manufacturers)
Small private manufacturers (Non exporters, eg. Naksha, Rang, Nabarupa etc.)
After 1970, Bangladeshs handicraft product was introduced in the market. And in 80s the
product got market acceptance, and this became its growth period. In the 90s, the handicraft
products of Bangladesh experienced a slow growth, and it is the maturity period of the product.
After 2000, the sales of product decreased because of its old design and poor quality. Moreover,
new competitors came with newly-designed, innovative and quality product. As a result,
Bangladeshs handicraft product faced a period of decline. Figure-01: Shows Bangladeshs
handicraft
product
life
cycle.
1970-1976
1977-1985
1985-2000
After 2000
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OrganizationType
Start from
Manpower
Product House
Main product
Market
Turn Over
Hathay
Bunano p.s.
NGOs
2005
4000
38
Naksha
Prabartana
Arong
Prokritee
Private
1993
500
2
NGOs
1986
5000
-
NGOs
1976
65000
653
Kids items
(Toys,
dresses)
All types of
textile
Handicrafts
All types of
handicrafts
All types of
handicrafts
Export
-
Local
7-8Mn. Taka
99% Local
100Mn. Taka
96% Local
-
NGOS
2001
2000
20
All types of
Handicrafts
(Specially produce
Handmade paper)
99% Export
700Mn. Taka.
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1. SWOT analysis of Bangladeshs Handicraft1. Strength of our Handicrafts: The following issues giving Handicraft business the
stamina to compete with the artificial machine made products and effort to take
place in domestic and international market2. It provides large product variety and range as it is full of diversified culture.
3. Industry is facilitated by diversified and supportive retail infrastructure across the
country.
4. Industry provides services to different market (Handicrafts, Textiles, Jewelry) because of
diversified product range.
5. Naturally we are resourceful in craft raw materials.
6. Industry needs low capital investment.
7. Low barriers for new entry in market.
8. Products are high value added, and handicrafts have various applications.
9. It is the potential source of foreign revenue because of higher export.
10. Industry provides potential sources of employment.
1. Impediments for Growth: The following weakness are the main barriers for the
Handicraft business development and making business more and more competitive -
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Narrow product range and lack of new and innovative designs suitable for overseas markets;
have been identified as main constraints for growth of handicraft export from Bangladesh.
Industry is lacking with infrastructure and communication facilities.
Lack of capabilities in producing large volume.
Lack of updated information on changing tastes and preferences of overseas buyers often
restricts market access of potential products.
Lack of finance and non-introduction of effective technology are also recognized as major
inadequacy for healthy growth of the sector.
Absence of properly equipped design centre, a long cherished demand of the handicraft
exporting community, is also responsible for a great deal of the drawbacks in production, design,
innovation and adaptation and so on.
Lack of co-ordination between government bodies and private players.
Inadequate information of current market trends.
There is lack of skilled artesian.
Industry is still confined to rural areas and small cities which creates a great transport problem.
Low or no involvement of Technical person such as Textile Engineers, Fashion designers etc.
1. Opportunity: The Handicraft business can be developed by ensuring proper use of the
following opportunitiesGSP in EU markets
Emerging demand for handicrafts goods in developed countries such as USA, UK, Japan, India,
Canada, France, Germany, Italy etc.
Rising demand and usage of handicrafts products in fashion industry.
Development of sectors like Retail that offers great requirements of handicrafts products.
Developing of domestic and international tourism sector.
E-commerce and Internet are emerged as promissory distribution channels to market and sell the
craft products.
Our cultural and jute good has got values in overseas market.
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1. Threats for our Handicrafts sector: Our Handicraft business has the following threats
which reducing our business and causes of unemployment
Hand-crafted products have to compete on price, design and adaptability with modern
machine made products, which make difficulties for our traditional products to be
competitive in international market.
Artificial automated product produced by competing countries, as Chinese embroidery
machine products compete with our hand stitch.
Use of polyester, nylon, acrylic and other manmade elements in competing artificial
products which reducing the product cost of artificial product.
Quality products produced by competing countries like India, Pakistan, China, South
Africa, etc.
Competing countries are enjoying better Trade Terms sometimes.
Competing countries are offering better technological support and R&D facility in their
countries.
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Generalized System of Preferences (GSP) in European and American markets for Bangladeshi
handicrafts is an impetus for our exporters and it is making their products competitive. Although
implementation of the World Trade Organization (WTO) agreements will gradually phase out
such preferential treatment, Bangladesh as a least developing country (LDC) will continue to
enjoy the benefits to tariff preference of sometime in future. Some products of handicrafts are
enjoying cash incentives on their export which is a great stimulus of encouraging handicrafts
export.
1. Overseas Market and its opportunities:
Organized effort in marketing Bangladeshi handicrafts overseas is, in fact, a matter of recent
past-although some of the products were able to find export destinations a little time back. As
mentioned earlier, not many products dominate in the export oriented handicraft sector. And all
though at present Bangladeshi handicrafts are being exported to well over 50 countries of
different continents, more than 70% of the total merchandise is lifted by the European,
American, Indian and Japanese market. Table 02: Showing export values of different fiscal years
excluding textile handicrafts.
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Studies suggested that handicraft export from Bangladesh can find bigger opening in a number of
product areas and at the same time consolidate existing export base in some of the traditional
product range. Traditional Bangladeshi products which have made some dent in the export
market have the potential for increasing their market share significantly. These are traditional
decorative textiles (muslin, nakshi kantha, jamdani), block printed, vegetable dyed textiles,
artificial flowers, woven jute products, cane basketry, pottery, small leather goods (wallets,
purse, belts), etc. Appropriate adaptation of some of the Bangladeshi handicrafts can also be
expected to command increased share in the target markets. Figure-04: Showing country based
export
of
three
different
FY.
The chart is created with the major exporting countries of Bangladesh, it showing a growing
market opportunity for handicraft goods in Japan, The Netherlands, Belgium, Canada, Italy,
France, UK, Germany, and in our Local market also. But at the same time we have to provide
effort to increase export in India and other decrementing large markets. If our government
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patronizes this marketing process by arranging some international trade fair on only Handicrafts
as like DITF then we should be able to capture a large market beside our large competitor India,
Pakistan
and
China.
Setting up of design development centre is urgently needed for producing new product
and product diversification. Crafts men to be trained for better performance, innovation
and technology to be provided for overall development of the sector in a design
development institute.
Set up handicraft industrial park/ handicraft village/clusters of producers linked with lead
exporters to ensure sustainability
Enhance capacity of the exporters for getting market information.
Develop fund for identifying new markets and new products.
Access to finance be made easy.
Facilitate exporter participation in trade fairs, designing catalogues and preparing for
exhibition.
Continued and focused attention has to be given to handicrafts for up-gradation of skill,
creation of better work environment and development of cluster for specific crafts with
common service and improvement of infrastructures and market development.
Quality raw materials to be ensured for product diversification.
Branding Bangladesh is very essential at this moment because some of the buyers sell our
quality products in their brand which is preventing our market growth.
Our Prime Minister Sheikh Hasina has told that, she will try to Make Every Home a
Industry. By considering handicraft she can really elaborate it like, Every home will be
a handicraft industry, because it is the only industry which can flourish at this tough
time of gas and energy crisis. PMs strong campaign for saving environment from climate
change may promote the hand made goods like handicrafts globally. An integrated
branding and promotion of Bangladeshi Handicrafts can be great tool of poverty
alleviation also.
Focus will be on capacity building of the SMEs to support all companies to comply with
the international product oriented code of conduct.
Integrating and redefining of handicraft industry is possible by separating Handicrafts
from the Textile Sector. It will help to create a new branch of national trade as a unique
business beside textile business, thats why at first EPB need to take steps by separating
the handicraft exports from textile exports.
Arrangement of International Handicraft Fair to attract more buyers and thus reducing
difficulties in entering to overseas market for our Traditional and Non-Traditional
Handmade goods.
Without a doubt, the global market for handicrafts and hand-made goods is expanding.
When customers are faced with two products of similar price, quality and design, they
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Conclusion:
In our country the handicrafts are mainly regulated by non-technical persons who possess very
little technical knowledge and there is no involvement of textile engineers (thus product
development and quality product is quite impossible). The workers are mainly un-skilled women
and children. We can develop this sector as a wide earning sector to contribute to our national
economy by involving Textile Experts in this sector and by developing manpower skill. Finally it
should be helpful to introduce our tradition or culture to the globe. Efforts are underway through
close collaboration of public and private sectors toward product promotion, diversification and
export marketing. However, there is still the need for intensification of efforts at the levels of
production and marketing as well as design innovation and adaptation. Our exporters of
handicrafts should bear in mind that while creation of export market is a challenging task,
maintenance of the market is a more challenging one dependent on regular supplies, quality
assurance, and last but not the least fulfillments of the consumer test and preferences.