Bangladesh is the fourth largest producer and consumer of bricks in Asia after China, India, Pakistan and Vietnam, according to various industry studies. There are more than 6000 traditional brick kilns which cater for 99 per cent of the 17 billion pieces of the country's annual brick requirement. In the process, the kilns emit large quantities of environmental pollutants into the atmosphere causing harmful impact on agricultural yields, climate and health.
Although the traditional brick sector contributes about 1 per cent of the country's $246 billion GDP, it is characterised by low energy efficiency due to outdated technology, prevalence of small-scale kilns with limited financial capacity, dominance/overuse/dependence on a single raw material (clay). Therefore, developmental transformation is urgently needed in the brick industry by gradually shifting it towards cleaner processes, efficient technology and better product portfolio.
Given this backdrop, non-fired bricks/blocks (often cited as alternative bricks or AB) have the required potential to become the next phenomenon in the brick field industry of Bangladesh.
CURRENT MARKET SCENARIO OF ALTERNATIVE BRICKS: For sometime now, the government's Housing and Building Research Institute (HBRI) has been actively involved in conducting experiments on a diverse range of alternatives to traditional kiln bricks. Moreover, a number of private sector entrepreneurs who are now commercially engaged in AB started experimenting on this sector in the late 90s. Almost 5-6 years later the next group of entrepreneurs emerged. Officially, there are around 15 organised alternative brick (AB) manufacturing companies in the country at present, of which top 5 companies are controlling most of the market share. Although there were only 3-4 commercialised AB manufacturing companies till 2008, within a span of last 5-6 years more than 10 entrepreneurs have launched their AB manufacturing plants to produce non-fired bricks for domestic market. Alternative brick market accounts for approximately BDT 900 million (USD 11 Million) which has been growing at a steady rate of 20 per cent per annum since FY 2014-15. The industry is yet to reach its optimum growth or maturity, as demonstrated by increasing investment in this sector by mid and large enterprises alike. Large conglomerates and real estate giants are planning to enter this space with nationwide expansion plan. Existing market actors are also planning to invest in procuring new machineries/equipment and setting up new manufacturing plants across different parts of the country from 2018.
Market players are currently offering 6 broad product categories having diversified features, usage and applications: Pavers and kerb stones, especially for footpath and divider, solid concrete block, 3-6-hole brick, hollow concrete block, saucer drain, embankment protection blocks and pavement tiles. Large-scale buyers such as government agencies and industrial establishments drive the sales growth contributing to more than 60 per cent of the total market demand whereas real estate companies contribute 25 per cent and individual building owners contribute around 10 per cent.
In case of alternative bricks, close to 55 per cent of the total cost of a standard alternative brick goes to raw material sourcing and transportation of raw material from the source to factory reflecting the crucial role that raw materials play in this industry. Sylhet Sand, pea gravel, stone dust, stone chips, cement and water are the required raw materials which are primarily collected from domestic sources. Some of the manufacturers purchase their raw materials from India (Tripura), Vietnam, Oman etc.
INCENTIVE FOR CUSTOMER TO SHIFT TO ALTERNATIVE BRICKS: At user level, alternative brick offers multi-faceted benefits. Besides reducing construction cost by around 20-25 per cent, it also provides positive environmental impact, structural integrity and high durability. The buildings constructed with alternative bricks are resistant to temperature which makes them less susceptible to temperature fluctuations. For this reason, users of the buildings can lower heating and cooling bills by up to 25 per cent. Cement is one of the most durable materials on earth which is the main component of the brick. Therefore, these bricks have high capacity to protect against high winds, fire and earthquakes. Besides, these bricks do not absorb moisture or water, making the buildings safe from rotting, wall warping, termites, molds and rusting.
POLICY RECOMMENDATIONS: Based on a series of discussion with the current market players, value chain stakeholders and probable customer segments, it has become evident that alternative brick making industry needs to be facilitated with a number of policies at this nascent stage of its growth. Stated below are some relevant recommendations to ensure wider use of Abs:
According to the national budget 2012-13 under non-VAT stipulation of VAT law, VAT is exempted on "Concrete hollow block and concrete ready mix" product. But currently hollow blocks generate only 5 per cent of the total revenue for an AB manufacturing company, and 95 per cent of revenue is generated from other types of AB products which are produced using the same machine and raw material; just the moulds are different. The government should announce all types and variants of AB products as VAT exempted including the following: solid concrete block, unipaver, kerb stone, rectangular paver, soccer drain etc. This will eventually lead to fewer burdens on end-customers, resulting in increased use of AB.
The government's procurement policy should include alternative bricks in the annual procurement schedule. RAJUK has taken several "ideal residential project" initiatives which include 20,000 apartments at Purbachal New Town, 22,000 apartments at Uttara Residential Area-3rd Phase, and 10,000 Apartments at Jhilmil Residential Area where approximately 315 million bricks can be replaced by AB. Our research indicates that such policy by RAJUK can double the existing annual demand.
Sustainable finance department of Bangladesh Bank published a Master Circular to all banks in March 2017 regarding a new re-financing scheme to promote eco-friendly products and initiatives. As per the circular, entrepreneurs will get bank loan at lower interest rate for some 51 environment-friendly products and initiatives in 8 sectors under the above-mentioned re-financing scheme. Alternative brick is categorised there as Non-Fire Block Brick or Green Brick and Block. As per the circular, banks will charge maximum 8-9 per cent interest on the loan to be provided to the entrepreneurs for the investment in an AB manufacturing plant. However, Bangladesh Bank has determined only 2 types of AB: foam-concrete block and compressed block brick. The term 'compressed block brick' needs to be defined in such a manner that encompasses all diverse non-fire brick types currently being produced in Bangladesh.
Strategies to achieve greener growth have become a necessity in today's economy and availing proper green construction materials are the first step towards achieving that vision. Donor communities including the UNDP and the European Union (SWITCH-Asia Programme) have come forward to patronise different initiatives to promote the concept of greener alternatives to traditional brick fields. Given this backdrop, non-fired bricks have the potential to become the ultimate solution to meet our needs to trigger the shift towards sustainable and greener structures.
Muntasir T. Chowdhury is Managing Director, Inspira Advisory and Consulting Ltd and Mr. Simon Rahman is Senior Programme Officer, SWITCH-Asia Project, Oxfam in Bangladesh.
© 2017 - All Rights with The Financial Express