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Bangladesh Chemical Industries Corporation (BCIC):

In 1976 BCIC was established under a presidential order. It was tasked with the efficient operation of large and complex industrial units, especially within the chemical sector. Over the years, its financial and operational health had significantly deteriorated, leading to increased import dependency for chemical products, particularly fertilizers. The number of its operational enterprises has shrunk from 18 in 2000 to just 10 currently.

In the financial year 2019-20, BCIC recorded a substantial financial loss of over Tk 7.21 billion, making it the third-highest loss-making government corporation. Only one of its units, Triple Super Phosphate Complex Ltd (TSPCL), managed to turn a profit, amounting to Tk 349 million. Many of its fertilizer units, including Shahjalal Fertiliser Company Limited (SFCL), Urea Fertiliser Factory Limited (UFFL), Chittagong Urea Fertiliser Limited (CUFL), and Ashuganj Fertiliser & Chemical Company Ltd (AFCCL), incurred losses exceeding Tk 786 million, with SFCL alone losing over Tk 2.65 billion. Non-fertilizer units like Chhatak Cement Company Limited (CCCL) and Karnaphuli Paper Mills Limited (KPML) also experienced significant losses, Tk 496 million and Tk 214 million respectively. BCIC has been facing acute shortage of natural gas for fertilizer units as well as inefficient operations, a considerable mismatch between production costs (around Tk 24,000 per tonne of urea) and the government-fixed selling price (Tk 14,000 per tonne since February 2013), and a lack of reinvestment in outdated plants, coupled with poor management. The corporation has received Tk 28.52 billion in state subsidies and accumulated Tk 37.25 billion in bank loans. Fertilizer production capacity under BCIC has fallen dramatically from over 1.6 million tonnes a decade ago to less than 0.9 million tonnes, forcing Bangladesh to import to meet its 2.6 million-tonne requirement. In a move to reduce import dependency and save foreign currency, the government plans to build a pharmaceutical raw material manufacturing plant under BCIC's supervision in Khulna. This plant, estimated to cost Tk 33.82 billion and to be constructed on about 47 acres of land, is currently awaiting approval from the Ministry of Industry and ECNEC, with potential for Public Private Partnership (PPP) implementation.^[1]

Freedom Fighters Welfare Trust (FFWT) - Eastern Chemical Industries (ECI) Ltd

• ECI Ltd, a unit of the Freedom Fighters Welfare Trust, was closed on June 30, 2018, after suffering continuous losses for 10 years.

• Established in 1965 by Bawani Group of Industries, the mill was located on 10.1 acres of land in Rangunia, Chattogram, with an additional 15 acres of unused hilly land, and produced formalin.
• Some workers alleged the closure was a "conspiracy" by high officials to transfer its land and property to the private sector for a container depot. A parliamentary standing committee had previously recommended this, but the move was suspended after intervention by a ruling party lawmaker.
• Most permanent workers were transferred to other enterprises under the FFWT in the lead-up to the closure.

Chittagong Chemical Complex (CCC):

• Founded in 1965, CCC was the country's lone state-owned chemical factory.

• Despite modernization in 1997 at a cost of Taka 1.12 billion and posting a profit of Tk 16.775 million in FY 2001-2002, it was declared closed on December 15, 2002, due to a "whimsical decision", resulting in around 500 employees losing their jobs.
• CCC once produced and marketed essential basic chemicals such as caustic soda, chlorine, hydrochloric acid, bleaching powder, and calcium hypo.
• Efforts were underway in 2012 to re-operate the complex, with tenders floated to restart the industry.
• Re-opening CCC is anticipated to save a significant amount of foreign exchange annually by reducing BCIC's dependence on importing raw materials for its other plants.

Private Sector Companies and Investment

The private chemical sector in Bangladesh showcases a mix of performance, with some companies thriving while others face significant headwinds.

• Kohinoor Chemicals: This company stands out for its consistent profitability, reporting a 19% year-on-year profit growth in FY23 and 22% in the first quarter of FY24 (July-September). Its success is largely attributed to its popular household brands like Sandalina, Ice Cool, Fast Wash, Bactrol, and Tibet, which encompass soaps, cosmetics, and toiletries. Unlike many peers, Kohinoor focuses on producing and selling finished goods, allowing it to navigate economic turbulences more effectively. In FY23, it earned a profit of Tk 377 million, with sales growing 15% year-on-year to Tk 4.02 billion by March of that fiscal year.
• Salvo Chemical Industry: Specializing in sulphuric acid, sulphate, battery-grade water, and glucose, Salvo Chemical's profit initially declined by 64% to Tk 27 million in January-March 2023 due to high production costs, rising raw material prices, currency devaluation, and increased energy costs. However, it later reported a 12% year-on-year higher profit, reaching Tk 108 million in FY24, driven by increased sales. The company is also in the process of issuing shares at Tk 16 each to its sponsor-directors to meet a regulatory requirement for a minimum 30% stake, following an earlier rejection by the Bangladesh Securities and Exchange Commission (BSEC) to protect general investors.
• Global Heavy Chemicals: As a manufacturer and distributor of sodium hydroxide (caustic soda) and chlorine, the company has faced severe challenges. Its loss doubled year-on-year to Tk 38 million in Q1 2023 (January-March) and to Tk 415 million in FY23. Production has been significantly hampered by persistent gas crises, leading to decreased sales and a mounting debt burden.
• Far Chemical Industries: This company, which produces textile dyeing chemical products, saw its losses more than double in January-March 2023 compared to the previous year, and to Tk 171 million in FY23. Its operations were disrupted by a factory relocation and difficulty in opening Letters of Credit (LCs) for machinery imports due to the dollar crunch.
• Wata Chemicals: A producer and seller of various acids, Wata Chemicals experienced a 3% profit fall in Q1 2023 (January-March) and a 25% year-on-year plunge in profit in FY23. Higher sales in FY23 could not offset increased production costs.
• Active Fine Chemicals: Reported a 50% year-on-year drop in earnings in Q1 2023 (January-March) and for the nine months through March FY23.
• Lynpers Chemical Industries Ltd: A Bangladeshi company that plans to invest $5.7 million to establish a Textile Chemical industry in the Ishwardi Export Processing Zone (IEPZ). This initiative is expected to produce 9.0 million kg of textile auxiliary chemicals annually and create 121 jobs.
• Hydrogen Peroxide Exporters: Leading exporters include Samuda Chemical Complex Ltd, Tasnim Chemical Complex, SM Chemical Industries, HP Chemicals Limited, and Infinia Chemical Ltd. Bangladesh exports hydrogen peroxide to 14 countries, primarily Asian economies such as Vietnam, China, Korea, Pakistan, India, Indonesia, Sri Lanka, Myanmar, Malaysia, UAE, and South Africa, with annual exports around $24 million.^[2] In August 2022, the Port of Singapore lifted shipment restrictions on hydrogen peroxide, which had been imposed following the BM Container Depot fire in Chattogram, providing a potential boost for exports.

Investment Trends

The chemical industry has emerged as a significant magnet for investment. In the last quarter of FY 2023-24 (April-June), the sector attracted Tk 66.29 billion in local investment proposals and Tk 14.48 billion in foreign investment proposals, making it the highest recipient of foreign investment among industrial sectors registered with the Bangladesh Investment Development Authority (BIDA).^[3] Across all sectors, 254 industrial establishments registered with BIDA in that quarter, proposing a combined Tk 773.64 billion in investments and expecting to create around 47,105 jobs. Malaysia had also expressed interest in exploring trade and investment opportunities in Bangladesh's chemical segment, driven by the growth of chemical-consuming industries like textile, garment, and pharmaceuticals. Trade between Malaysia and Bangladesh grew significantly to $2.50 billion in 2018.

Flammable Chemicals in Old Dhaka

Despite tragic fires, hazardous chemical warehouses and factories continue to operate within Old Dhaka's congested residential areas, posing a significant risk.^[4] A 2019 survey by DSCC identified 1,924 chemical warehouses in Old Dhaka, with 98% categorized as "moderately risky". Locals believe the actual number is higher due to lax monitoring. Bangladesh Environment Conservation Rules-1997 explicitly prohibit industrial units handling hazardous chemicals in residential zones. Following the devastating Nimtoli fire in 2010 and the Churihatta fire in 2019, the DSCC ceased issuing new licenses or renewing existing ones for chemical businesses in Old Dhaka. However, these measures have had limited impact on the ground. Chemical traders maintain that they cannot relocate without government assurances for resettlement and rational pricing for plots. The Bangladesh Chemical and Perfumery Merchant Association had stated that 25 marked hazardous chemical substances are no longer stored in Old Dhaka and have been moved to Keraniganj warehouses, asserting they will not take responsibility for any unlawful storage of flammable materials.

Relocation Projects

The government initiated four projects to relocate chemical, plastic, printing, and electronics industries from Old Dhaka after the 2010 Nimtoli fire.

As of 2024, most of these projects remain incomplete, primarily due to bureaucratic red tape and complications in land acquisition.^[5]