Bangladeshi furniture industry needs reforms to reach its full potential: HATIL Chairman Selim H. Rahman

The furniture industry in Bangladesh has seen remarkable growth in recent years with an annual growth rate of 19-20 percent. 

According to the Export Promotion Bureau, the current size of the furniture industry in Bangladesh is worth Tk 25,000 crore.

The success of Bangladeshi furniture extends beyond its borders, with thriving exports to foreign markets. Notably, there has been a remarkable 267 percent surge over the past decade, data from the Export Promotion Bureau showed.

In the fiscal year 2011-2012, the country's furniture exports totalled USD 27.14 million, which significantly surged to USD 76.41 million in the fiscal 2019-2020.

Leading the drive towards this growth is HATIL Complex Ltd, currently the country's leading furniture brand and also recognized to be a game-changer in the country's furniture industry.

HATIL traces its roots back to H.A. Timber Industries Ltd – a small timber shop on the bank of the Buriganga River – founded by the late Al-Hajj Habibur Rahman in 1963, at 2/1 Ultinganj Lane in Old Dhaka's Farashganj area.

Over the next 25 years, the only focus of this business was selling wood. 

"Customers would come to our shops with a list of required items they were suggested by carpenters for their homes. Based on their requirements, we would cut the wood and sell them which the carpenters then would use to manufacture doors and everything else," recalled Selim H. Rahman, the eldest son of Habibur Rahman.

For Selim H. Rahman, currently, the chairman and also the managing director at HATIL Complex Ltd, the whole business was "somewhat traditional" and "lacked innovation".

"It seemed to me that this whole business could actually be thought of and structured differently," he said.

His vision received a significant boost when, in 1988, his father made the decision to import a seasoning plant — a machine designed to extract excess moisture from freshly cut wood – from Italy.

This seasoning plant was the first in Bangladesh owned by a private entity.

"My father had two things in mind: first, if he could bring in this seasoning plant, it would greatly benefit the customers as it gives the opportunity to season wood in less time (maximum 30 days) because natural seasoning of wood takes one and half years and second, it would also help his business grow," said Selim Rahman.

His father's decision to bring in the machine at a time when there was only one small seasoning plant in the whole country under the Bangladesh Forest Industries Development Corporation (BFIDC) "I had an idea since my father brought the seasoning plant: Could we actually think about manufacturing?" he recalled.

By the 1980s, the country's furniture industry had already started flourishing.  Most of the household items were already available in the local market.

"But things like doors and window frames needed for building a house were not readily available at stores," Rahman said. "So, it occurred to me that we could think about this."

This visionary approach marks the inception of HATIL Complex Ltd, led by Selim H. Rahman, which initially focused on door manufacturing.

Subsequently, as the demand for household furniture items increased, HATIL's product range expanded as well.

After nearly 35 years since its inception, HATIL has indeed become a household name.

According to its company profile, HATIL now has 75 outlets all across the country and 18 outlets overseas.

In an exclusive interview with UNB, the furniture industry tycoon discussed various aspects of the thriving sector.

When compared to the past, what is the current scenario of the local furniture industry?

Selim H. Rahman: The furniture industry in Bangladesh has seen significant development over the years. By development, I mean there was a time when a substantial amount of imported foreign furniture was needed to meet customer demands. The quantity of these imports has now decreased as local manufacturers are able to fulfil those demands.

The government played a significant role in this context. The government has encouraged the growth of the local furniture industry. Some policy support and opportunities have been provided by the government as well.

What do you think are the major challenges this industry faces?

Selim H. Rahman: The culture in our country is such that when an individual initiates a business based on a particular product or demand, it often encourages other entrepreneurs to enter the same sector. This dynamic is a key driver behind the growth of industries here in Bangladesh. This growth encompasses various sectors within the industry. However, it's important to note that due to the lack of proper policy and regulations in place, some actors in the furniture market do not adhere to proper manufacturing methods and lack compliance with industry standards. On the other hand, compliant brands incur higher production costs due to adherence to regulations, including taxes and VAT imposed by the government, ultimately resulting in higher prices for consumers.

The need of the hour is to establish a structured system that benefits consumers and manufacturers. Developing guidelines for the industry is crucial. There is a lack of specific criteria or policies governing the furniture industry, leading to revenue loss for the government. Reforms could unlock the full potential of this industry.

Furthermore, there is substantial employment potential for youths if provided with adequate training. Every household needs some amount of furniture, even if it is small, for living. As such, furniture is an essential item for human civilization.

Bangladesh's LDC graduation is scheduled for 2026. Experts are now talking about export diversification. How is the furniture industry preparing in this context? And what is HATIL doing in this regard?

Selim H. Rahman: I'm not fully aware of all the opportunities, benefits and challenges we'll face once we graduate from the group of LDCs as we are yet to be communicated regarding these matters from the authorities. However, what I understand is that we will need to compete with other actors in the global market to stay competitive in the future because the trade benefits and advantages we are getting at this moment will not be given to us post-LDC graduation. To stay competitive in the future, we will have to attain the required capability. To acquire that capability, we will need to work on the prerequisites. We haven't seen that preparation yet.

One thing that plays a significant role behind the growth of industries is public-private partnerships. What kind of communication with the government is happening in the furniture industry regarding policy issues?

Selim H. Rahman: There is some sort of communication happening in this regard. In many cases, there is a lack of qualified human resources needed for the growth of this industry. It is essential to pay attention to this aspect of our education curriculum. Many polytechnic institutes in our country do not prioritise the wood industry in their curriculum.

Another challenge is the perception among young individuals when choosing careers. Carpentry is often considered more complex compared to working in the garment industry.

Due to these societal perspectives and various reasons, many institutes have stopped offering courses on these subjects. We have discussed these issues with the government. The academic curriculum related to the wood industry hasn't been upgraded compared to the past. We have worked together to upgrade these curricula. In conclusion, both the government and private initiatives are necessary in this context. Communication from both sides is crucial.

Furthermore, for any industry to thrive, the government must offer essential policy support. If we look at the massive growth of the Ready-made Garment industry (RMG) today, it became possible due to the government's policy support in the 1980s. A comparable growth can also be realized by the furniture industry if the industry stakeholders receive crucial policy support, such as duty-free import of raw materials, among other measures.

HATIL currently sources its raw materials from external suppliers. Given the ongoing global supply chain disruptions, initially triggered by the COVID-19 pandemic and further exacerbated by the Russia-Ukraine war, what strategies does HATIL have in place to navigate these challenges?

Selim H. Rahman: HATIL does not use local wood for its furniture. We source it sustainably from overseas. Now, if that source is disrupted, it poses a challenge for us. It may force us to either halt our business or use locally available wood which is in direct contradiction of our commitment towards the environment. Another issue is that we import certain raw materials that are not available in the country or not produced here. If a supply chain crisis occurs, and we cannot import these raw materials, our business may face significant threats.

Additionally, there are some materials that we used to source from outside but are now exploring local alternatives to reduce dependency on imports. While some things may not be feasible due to the lack of industry for all products here, we always strive to find local alternatives wherever possible. We are focusing on research and development to discover local alternatives for such materials. Additionally, we are also exploring alternative international sources to diversify our import options in case of major supply-chain disruptions.