Prospects and Opportunities for the Dutch Fire Safety Sector in Bangladesh

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1 Prospects and Opportunities for the Dutch Fire Safety Sector in Bangladesh Report written by Mott MacDonald on behalf of The Netherlands Embassy in Dhaka, Bangladesh and Netherlands Enterprise Agency (RVO.nl).

2 Prospects and Opportunities for the Dutch Fire Safety Sector Bangladesh

3 Table of Content Introduction... 3 Size of the market... 3 Broad overview of opportunities in the Bangladesh market... 4 Setting up local manufacturing... 4 Dutch exports... 4 Opportunity s for Knowledge Institutes... 4 Events... 5 International Building and Fire Safety Expo 6-8 December 2015, Dhaka Bangladesh... 5 Trade Mission... 5 Full Market Report

4 Introduction The incidents of fires, particularly in the Ready Made Garment industry in Bangladesh (Rana Plaza), have brought global attention to fire safety in Bangladesh which has resulted in a gradual change in the fire safety market. Global pressure to reinforce building and fire safety measures within the Ready-Made-Garment (RMG) and textile sector in Bangladesh has provided a boost to the practice of fire safety as well as a boost to the fire safety equipment market. A growing number of inspectors and fire safety equipment suppliers are currently providing inspection services and supplies to the sector. These events have increased the overall awareness in regards to health and safety; this awareness is gradually spilling over into other sectors in Bangladesh. Although, the market remains weak due to several challenges, however mitigating such challenges can unlock a huge potential market. Size of the market The recent spurt of growth in the market is due to the enforced compliances of the textile and apparel sector. Growth of other industries such as pharmaceuticals, hotels, hospitals, power and large infrastructure is also contributing to a gradual development of the market. The future potential of growth in the market is high and prospective market value is to the tune of 550 to 600 million. The realization of this market value and future sustained growth of the market will depend on creating an enabling environment for fire safety through increasing awareness and social responsibility as well as increased enforcement and oversight. All fire safety products are imported except for small accessories such as fire buckets, which are locally sourced. The top selling products are fire pump systems, fire detection systems, fire extinguishers, fire alarm systems, and fire doors. Although imports are mainly sourced from China, UAE and Malaysia, many products originate from USA, UK, EU, Ireland, Japan, Korea, Taiwan, Singapore, Australia and New Zealand. Local production is limited to a few low value accessories. Evidence from the market suggests an increasing trend of growth of fire safety equipment market, but the action steps that are in place for the textile and apparel industry drive the growth. 20 top suppliers total sales increased by 66% in one year Considering that the number of fire safety equipment suppliers in the market drastically increased from 2013 to 2014 as a result of many new entrants, a direct result of incidents in the RMG sector, there still was substantial revenue growth per supplier. Currently, there is quite a large number of supplier companies in Bangladesh actively engaged in the market. Most of these companies specialize in a wide spectrum of supplies and services for industrial, commercial, and residential consumers. These business organizations specialize in access control, video surveillance, fire safety and security, EAS (electronic article surveillance), BMS (buildings management system), PA (Public Address System), burglar alarm systems. The current market value of fire safety equipment is estimated to be in the range of 50 to 100 million. 3

5 Broad overview of opportunities in the Bangladesh market Setting up local manufacturing Dutch manufacturing companies could set up a joint venture with a local company with manufacturing experience and expertise for the purpose of setting up a local manufacturing plant that could provide fire safety equipment to local companies. Such a joint venture initiative could focus on manufacturing less technical equipment, such as fire doors, fire extinguishers, and fire safety accessories, to provide to the local market. If such a company were located in Bangladesh, a more affordable option could be provided to buyers with an international company tied to it. This could encourage companies that do not otherwise purchase fire safety equipment due to its high cost. It should be noted that such a company would most likely also have to set up a testing facility in order to assure that their products receive relevant certifications. There have been instances in which buyers purchase fire extinguishers at low cost from the open market and come to find that their fire extinguishers are filled with flour instead fire extinguishing chemicals. If such a company existed that produced products locally and provided certifications, warranties, and maintenance services to its clients, fear of low-quality or fake equipment would decrease while the simultaneous penetration of fire safety equipment would increase substantially. According to sources at Accord and Bureau Veritas, feasibility studies on the production of fire doors in Bangladesh have been previously done and have shown positive results. Dutch exports Another option is the traditional concept of trade, which would include finding a local distributor or setting up a local office in Bangladesh. It is recommended that this company focus on the export of equipment that the Netherlands is well-known for manufacturing well, generally more highlytechnical equipment, such as water pumps. There is a demand for more technical equipment of highquality nature, as can be understood by the purchase of such technical equipment from American, British, and German manufacturers. There are a growing number of companies that require strict compliance or have an inherent interest in using high-quality equipment in order to decrease chances of impending tragedies and disasters, and the introduction of certain types of Dutch equipment in the local market may be welcomed. Opportunity s for Knowledge Institutes Setting up an internationally accredited testing and certification facility to certify locally manufactured and or imported building and fire safety products, for instance, fire doors. This testing facility could provide certifications for locally manufactured equipment for both the export and local market. Currently, there is no recognized testing facility in Bangladesh, and many manufacturers require their products to meet international standards, especially if products are exported. One of the key restraints for setting up local plants for the manufacturing of fire safety equipment is the absence of an internationally recognized testing facility that could provide required certifications. If such a testing facility were available, this could potentially encourage the manufacturing of a wide variety of products. In addition, many RMG factories have reported that they have imported fire equipment that have claimed to be tested to meet standards, but upon inspection by Accord or Alliance have 4

6 failed to meet testing requirements. This requires imported equipment to be sent back to the international supplier, a costly and time consuming result. If a local testing facility were available, this could help decrease instances of faulty equipment usage. Opening a local office in Bangladesh for the purpose to provide fire safety services; this includes providing the structural and fire safety design and supervision to new buildings or to existing buildings that are looking to update their facilities. This service provider could also provide grading reports for building safety as well as provide remediation plans, this market has thus far been dominated by a few international players, although many local companies have entered the market, there is still a substantial demand for companies of international reputation. In addition, this same service provider could provide inspection services to companies that require compliance and audit services, for instance pharmaceutical buyers or RMG buyers who import from Bangladesh. Eventually programs such as the Accord or the Alliance will end in Bangladesh, which will create more room and dependency on buyers to rely on other institutions for compliance related issues. As fire safety spills over to other sectors, these sectors will also start to demand inspection services. Another major service that has shown consistent demand is capacity building and training of staff, this demand is found both in the public sector as well as the private sector. For instance, the demand for capacity development of RAJUK, FSCD, and DIFE personnel as well as the training of building managers will only increase in the future. Events International Building and Fire Safety Expo 6-8 December 2015, Dhaka Bangladesh Improving working conditions and fire/building/electrical safety in factories are constant challenges to the retail garment industry in Bangladesh. Building and Fire Safety Expo 2015 promises three days of collaboration and solutions with numerous representatives from brands, factories, NGOs, governments, Foreign Ambassadors, suppliers, vendors, service organizations, and many other groups all focused on the same thing, improving safety for garment workers. Trade Mission A trade mission is an excellent way to get acquainted with doing business in Bangladesh. A trade mission offers you the possibility to enrich your knowledge about the country, learn from successful entrepreneurs and consider the opportunities for your company to expand business to Bangladesh. An important element of every trade mission is matchmaking with companies who are especially selected to match with your business. Contact the Netherlands Enterprise Agency if you are interested to participate in a trade mission Building and Fire Safety sector to Bangladesh or if you want to visit the. International Building and Fire Safety Expo 6-8 December Full Market Report The Bangladesh s Fire Safety Landscape Unlocking Growth Report reviews the current status of the market, what activities are in place for the RMG and other industries, commercial buildings, hospitals and hotels, the size of the fire safety market, and opportunities present for businesses to operate in the market. The review also assesses the institutions and stakeholders implementing work place 5

7 health and safety measures, and recommends what investor s, specifically from the Netherlands can expect in this growing market. To receive a copy of the full market report or if you are looking for more information on this subject please contact: Netherlands Enterprise Agency Contact person: Annette Weijman Annette.weijman@rvo.nl or Embassy of the Kingdom of the Netherlands in Dhaka Address: Road 90, House 49 Gulshan II Dhaka Bangladesh dha-ea@minbuza.nl 6

8 Netherlands Enterprise Agency Prinses Beatrixlaan 2 PO Box AC The Hague T +31 (0) E klantcontact@rvo.nl This publication was commissioned by the ministry of Foreign Affairs Netherlands Enterprise Agency September 2015 Publication number: RVO /RP-INT NL Enterprise Agency is a department of the Dutch ministry of Economic Affairs that implements government policy for agricultural, sustainability, innovation, and international business and cooperation. NL Enterprise Agency is the contact point for businesses, educational institutions and government bodies for information and advice, financing, networking and regulatory matters. Netherlands Enterprise Agency is part of the ministry of Economic Affairs.