agar as a prospactive industry

8/13/2019 Agar as a Prospactive Industry.

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A G A R I N D U S T R Y I S A P R O S P E C T I V E

I N D U S T R Y F O R I N T E R N A T I O N A LB U S I N E S S

Introduction

Though the history of Agar industry in Bangladesh dates about 400 years back, Indian

literature denotes the existence of Agar wood 2,000 years ago. It is an integral art of

religious rituals of !indus, Buddhists, "usli#s, $hristians, Taos, %ufis etc. In

addition, it is widely used in Ayur&eda, 'nani, Arabic, Tibetan, %ufi and $hinese

#edicinal ractices. A (inancial )xress ublished on August *, 201* reorts that

%u+anagar union of Baralekha uaila under "oul&ibaar district is the birthlace of

Bangladeshi Agar-Agar wood and Agar oil. The Agar entrereneurs of %u+anagar

clai# to be the first roducers of the roduct in this subcontinent. Their relati&es

#igrated to Assa# eastern ro&ince of India/ and started Agar business there. The

"u#bai Agar is a roduct of the #igrant Bangladeshi eole. The Agar business in

Bangladesh started its +ourney fro# %u+anagar about 400 years ago. About 10

factories are roducing the fully exort-oriented Agar wood and Agar oil at

%u+anagar. They are roducing re#iu# high-riced/ roducts by using all local raw

#aterials and #achinery. It is now #entioned as an industry in any go&ern#ent

docu#ent.

Agar Producing Countries in te !or"d

Agar trees grow in Bangladesh, Bhutan, India, Indonesia, aos, ietna#, "alaysia,

"yan#ar, the 3hiliines, %ingaore, Brunei, $a#bodia and Thailand. The leading

Agar roducing and exorting countries are India, Indonesia, "alaysia, aos,

Thailand and $a#bodia.

Product E#$"anation

Agar is roduced in two ways -artificially and naturally. "ost eole adot the

artificial #ethods as it takes se&en to eight years to collect agar. n the other hand,


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natural #ethods #ay take u to *0 years%Agar is used to #ake different li5uid

roducts, including fragrances, gola+al scented water/, agar bati incense/ and

different tyes of crea#s. It is also widely used in Ayur&eda #edicinal ractices.

Agar Fir&s in Bang"ades

Agar fir#s are built u in Bangladesh on fa#ily basis. "ost of the agar fir#s are

situated in %ylhet and "oul&ibaar district. (ar#ers are now culti&ating agar on a

co##ercial basis in regions like (enchugan+, Beanibaar, 6olagan+ and %adar of

%ylhet and 7a+nagar, 8ulaura, 8o#olgan+, %ri#angal and Barlekha of "oul&ibaar

district, and so#e hilly areas in $hittagong.

The Barlekha uaila is one of the ioneers for growing agar, and the %u+anagar union

is well known at ho#e and abroad for it.About 1,000 fa#ilies in the &illages of

%u+anagar earn li&ing by working in the agar factories set u in their ho#es and

around. %o#e #ore &illages in&ol&ed in the sa#e work include %aldigha, Bartal, 'ttar

%u+anagar, 9akshin %u+anagar, Tangortoli and 7afinagar.

There are around 14 Agar rocessing factories in the country, including 100 inBarlekha uaila of "oul&ibaar alone.

(ollowing table is gi&en to show the nu#ber of Agar fir#s according to area.

Area Nu&'er o( Fir&s

)ntire Bangladesh 14

%ylhet 9i&ision 121

Barlekha 'aila of "oul&ibaar 9istrict 100

Abo&e is the official reort about Agar industry in Bangladesh. According to

unofficially collected data about ten thousand fa#ilies in Bangladesh are engaged in

Agar culti&ation, rocessing, selling and exorting. At least 1000 Agar fir#s

including s#all, #ediu# and large scale/ are situated in "oul&ibaar where about

10 large scale Agar fir#s are running.
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So&e "eading Agar $rocessing and e#$orter (ir&s in Bang"ades)

Fir&*s Na&e Location Business T+$e

Bay f Bengal 3erfu#ary %haldigha of Barlekha

uaila, "oul&ibaar

3roducer : )xorter

8a#runnahar Agar (actory 8hadi#nagar in %ylhet 3roducer : )xorter

3riyadarshi Agrabad in $hittagong )xorters

Trend o( Agar Business in Bang"ades

Agar lanters rocess their trees into Agar oil, Agar wood and raw of Agar owder

with chea and do#estic instru#ents. arge fir#s collect the lanters; rocessed Agar

then branding and


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countries. Bangladesh exorts agar roducts to %audi-Arabia, 9ubai, 8atter, 8uwait,

Iran, Afghanistan and other "iddle )ast countries, and %ingaore and Indonesia.

"any Bangladeshi business #en setu outlet in foreign countries to conduct their agar

business abroad. "ost of the# refer %audi-Arabia, 9ubai and other #iddle-east

countries. )&en business#en are setu the rocessing syste#s artially in foreign

countries.

In financial year 2012-201* Bangladesh earns about Tk. 00-=0 #illion a year by

exorting Agar roducts.The industry>s contribution to 693 is about Tk *0 crore in

yearly.

De&and o( Agar Products in te !or"d

The ?Agar @ood il is one of the #ost recious li5uid. It is &ery #uch i#ortant for

roducing high 5uality ?Attar. Agar is used in the cos#etic and har#aceuticals

sector. Thus its de#and is integrating around the world.

According to a study of the (orest 7esearch Institute "alaysia (7I"/, the world

needs 4. #illion kilogra#s of Agar-wood er year and that is only the official figure.

'nofficially, the world de#ands around six #illion kilogra#s er year. !owe&er, the

roducing countries could #eet only * er cent of the de#and led by India, the #ain

roducer, contributing only 12 ercent, Indonesia in the second lace with = ercent

and "alaysia third with only ercent. Thailand, aos and $a#bodia co#e after

"alaysia.

According to the study, C0 countries use Agar roducts with the "iddle )ast being

the biggest i#orter. nly * ercent of the world;s de#and is #et by all Agar

roduct roducing countries. %o there is a ga of ercent between the de#and and

the suly of Agar roducts. %o it is one of the o&erriced roducts in the world.

O$$ortunities (or Agar Business in Potentia" Countries

As our otential #arket we select the '%A and the '8 because there is a large #arket

for erfu#ery roducts. Dow, Bangladesh exorts agar roducts only into "iddle-


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agreat owerwith considerable econo#ic, cultural, #ilitary, scientific and olitical

influence internationally.

Ris. o( Agar Business in Targeted Countries

Po"itica" ris.)Both of the countries are olitically stable and the rate of

robable olitical unrest is co#arati&ely low. %o, we think that the rate of

olitical risk is low for our business.

Econo&ica" ris.) Both of the countries econo#ic osition is stable but the

i#act of recession in 200C is still re&ailing in the econo#y and it is

indicating threat for our business.

Co&$etiti/e ris.) Though India has large scale of erfu#ery roduction in

their country so they are easily exorting their roducts in '8 and '%A

#arket at low cost so they are #a+or co#etitor for us.

Trans$ortation ris.) Transortation risk is #a+or risk for this business.

Because we are doing business with those countries which are far away fro#our countries, so there are chances of high risk.

Ta# and Tari(()Agar is luxurious roduct and the i#ort duty of luxurious

roducts is high in those countries. Bangladesh ha&e two agree#ent with those

countries and this are TI$(A with '%A and 6%3 with '8. TI$(A and 6%3

will hel to reduce the tax rate to exort agar roducts in both countries.

Grid to Co&$are Countries (or 0ar.et Penetration

COUNTRY %

VARIABLE !EIG1T

USA U-

2% Acce$ta'"e 3A45 Unacce$ta'"e 3U4 (actors

a/ Allows licensing to #a+ority owned subsidiary_

A A
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6%Return 3iger nu&'er7 $re(erred rating4

a/ Tax rate 0-2 1 1

b/ "arket sie, resent 0-4 4 *

c/ "arket sie,*- years 0-* * 2

d/ "arket share 0-2 2 1

Tota" 28 9

:% Ris. 3"o;er nu&'er7$re(erred rating4

a/ )xchange roble# 0-* 0 0

b/ 3olitical unrest 0-* 2 1

c/ Business law, resent 0-4 1 1

d/ Business law, *-10 years 0-2 1 1Tota" < :

In both countries the risk is law and the return is high.

Conc"usion

Bangladesh has a fa&orable cli#ate for large-scale Agar lantation. @e ha&e skilled

#anower and indigenous technology to roduce the finest Agar wood and Agar oil.

A big otential #arket is there. %o the go&ern#ent should facilitate large-scale Agarroduction in Bangladesh. It can be the first Bangladeshi re#iu# roducts to earn

the highest a#ount of foreign currencies, if the necessary olicy suort is a&ailable

fro# the go&ern#ent. Any ublic-ri&ate +oint initiati&e hel ta the enor#ous exort

otential of it. If Bangladesh does not take any initiati&e right now, other countries

like Brunei, "alaysia etc #ay seie the oortunity to cature such a big #arket.


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Re(erence

9aniels. . 9., 7adebaugh. . !. and other 2004/ Internationa" Business. 10th

edition. 3earson. Dew delhi F age 4*1

Infodri&e India official webage. India )xort 9ata. Agar 3owder. Agar 3owder

)xort 9ata India. 7etrie&ed fro# - J httK


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"d. oynal Abdin, 201*/ Agar the first otential re#iu# roduct. !ord$ress :

August MInternet blogN. A&ailable fro#K

JhttK

agar as a prospactive industry

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