The packaging industry in Bangladesh faces a sluggish period as economic uncertainty and rising costs take a toll.
Factors such as the stronger US dollar and increased prices for gas and electricity have contributed to this downturn.
This industry relies on sectors like food processing and readymade garments, making it susceptible to the overall economic slowdown experienced over the past 18 months.
In the past, the packaging sector enjoyed steady growth, expanding at 10-12% annually from 2000 to 2010 and reaching 20% before the pandemic.
This growth was driven by increased local manufacturing of consumer products. However, global economic challenges and domestic inflation have stagnated demand.
Bangladesh’s packaging industry is worth Tk 6,000 crore, with an annual demand for packaging products at 2 lakh tonnes.
Despite over 100 packaging factories in the country, only a few major manufacturers dominate the market, including Arbab Poly Pack Ltd, AGI, and Famous Printing and Packaging.
Setting up a medium-sized packaging factory costs Tk 100 crore, and the industry has seen investments exceeding Tk 5,000 crore.
However, it struggles as the sectors it serves also grapple with economic difficulties.
Akij Biax Films Ltd (ABFL), which invested over Tk 1,000 crore in 2018, is one of the few manufacturers producing films for both single-layer unprinted flexible packaging and multilayer printed flexible packaging in Bangladesh.
However, even ABFL faces challenges in a lackluster market.
Concerns exist about importers diverting packaging raw materials meant for export use into the local market, impacting fair competition.
Higher inflation has eroded consumers’ purchasing power, further dampening demand. The Consumer Price Index reached a 12-year high at 9.02% in 2022-23.
Overcapacity is another issue plaguing the industry, with a manufacturing capacity of 4 lakh tonnes against a demand for 2 lakh tonnes of packaging materials.
Despite this, Bangladesh still relies on the external market to meet 20% of its packaging material demand.