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AGAR INDUSTRY IS A PROSPECTIVE INDUSTRY FOR INTERNATIONAL BUSINESS


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 )x ress ublished on August *, 201* re orts that %u+anagar union of Baralekha u a,ila under "oul&iba,ar district is the birth lace of Bangladeshi Agar-Agar wood and Agar oil. The Agar entre reneurs 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 eo le. The Agar business in Bangladesh started its +ourney fro# %u+anagar about 400 years ago. About 100 factories are roducing the fully ex ort-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 t e !or"d


Agar trees grow in Bangladesh, Bhutan, India, Indonesia, 1aos, 2ietna#, "alaysia, "yan#ar, the 3hili ines, %inga ore, Brunei, $a#bodia and Thailand. The leading Agar roducing and ex orting countries are India, Indonesia, "alaysia, 1aos, Thailand and $a#bodia.

Product E#$"anation
Agar is roduced in two ways - artificially and naturally. "ost eo le ado t the artificial #ethods as it takes se&en to eight years to collect agar. 4n the other hand,

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 ty es 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&iba,ar district. (ar#ers are now culti&ating agar on a co##ercial basis in regions like (enchugan+, Beaniba,ar, 6ola gan+ and %adar of %ylhet and 7a+nagar, 8ulaura, 8o#olgan+, %ri#angal and Barlekha of "oul&iba,ar district, and so#e hilly areas in $hittagong. The Barlekha u a,ila 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 140 Agar rocessing factories in the country, including 100 in Barlekha u a,ila of "oul&iba,ar alone. (ollowing table is gi&en to show the nu#ber of Agar fir#s according to area. Area )ntire Bangladesh %ylhet 9i&ision Barlekha ' a,ila of "oul&iba,ar 9istrict Nu&'er o( Fir&s 140 121 100

Abo&e is the official re ort 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 ex orting. At least 1000 Agar fir#s .including s#all, #ediu# and large scale/ are situated in "oul&iba,ar where about 100 large scale Agar fir#s are running.

So&e "eading Agar $rocessing and e#$orter (ir&s in Bang"ades ) Fir&*s Na&e Bay 4f Bengal 3erfu#ary Location %haldigha of Business T+$e Barlekha 3roducer : )x orter

u a,ila, "oul&iba,ar 8a#runnahar Agar (actory 3riyadarshi 8hadi#nagar in %ylhet Agrabad in $hittagong 3roducer : )x orter )x orters

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. 1arge fir#s collect the lanters; rocessed Agar then branding and<or ex ort the Agar roducts. 1arge fir#s are also roduce- Attar fro# agar oil, Agar bati, Agar owder fro# raw of Agar owder and chi s fro# agar wood for ex ort. Agar wood and oil are ex orted to 9ubai and other "iddle-)ast countries through hand luggage or &ia courier ser&ice. It is co# letely infor#al trade based on #utual trust of the su liers and buyers. The for#al channel for ex ort of agar wood and oil is still &ery co# licated. At the sa#e ti#e, the i# orting go&ern#ents charge higher duties on for#al ex orts of agar wood and agar oil. The go&ern#ent #ay negotiate on the issue to allow ex ort of Bangladeshi Agar wood and oil duty free to 9ubai and other "iddle-)ast #arkets. As Agar roducts are luxurious roduct, #ost of the agar roducts are ex orted to foreign countries.

E#$ort , I&$ort Condition o( Agar Industr+


Bangladeshi Agar fir#s are roducing re#iu# .high- riced/ roducts by using all local raw #aterials and #achinery. %o, Bangladeshi agar has high de#and in foreign

countries. Bangladesh ex orts agar roducts to %audi-Arabia, 9ubai, 8atter, 8uwait, Iran, Afghanistan and other "iddle )ast countries, and %inga ore 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. 000-=00 #illion a year by ex orting Agar roducts. The industry>s contribution to 693 is about Tk *0 crore in yearly.

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


The ?Agar @ood 4ilA is one of the #ost recious li5uid. It is &ery #uch i# ortant for roducing high 5uality ?AttarA. 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 4.0 #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 *0 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 B ercent. Thailand, 1aos 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. 4nly *0 ercent of the world;s de#and is #et by all Agar roduct roducing countries. %o there is a ga of B0 ercent between the de#and and the su ly of Agar roducts. %o it is one of the o&er riced 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 ex orts agar roducts only into "iddle-

)ast countries. Bangladeshi agar business#en can transfer their roduction rocess artially to those #iddle-east countries like 9ubai. Dow we will ex ort our agar roduct to '8 and '%A #arket and further we will ex and our business to the entire )' countries. As '8 and '%A both of the countries are econo#ically and olitically stable so their #arket fluctuation rate is low .Thus there is certainty to earn rofit through this ex orting agar. The erfu#ery roduct is daily life using necessary roduct to the eo le of these countries whose core ele#ent deri&ed fro# agar oil. %o the de#and of agar roduct is high in these countries and the su by ex orting agar roducts to '8 and '%A. ly of the agar #ade roduct is not #uch as de#and. Bangladesh will earn big a#ount of foreign currency

Brie( Descri$tion o( Our Targeted Countries USA The 'nited %tates is a de&elo ed country and has the world>s largest national econo#y, with an esti#ated 693 in 201* of E1B.= trillion F 2*G of global no#inal 693 and 1HG at urchasing- ower arity. The econo#y is fueled by an abundance of natural resources and the world>s highest worker roducti&ity, with er ca ita 693 being the world>s sixth-highest in 2010. The '.%. has the highest #ean and secondhighest #edian household inco#e in the 4)$9 .4rganisation for )cono#ic $oo eration and 9e&elo #ent/ as well as the highest a&erage wage, though it has the fourth #ost une5ual inco#e distribution a#ong 4)$9 nations with roughly 1BG of the o ulation li&ing in o&erty. The country accounts for *HG of global #ilitary s ending, being the world>s fore#ost econo#ic and #ilitary inno&ation. ower, a ro#inent olitical and cultural force, and a leader in scientific research and technological

UThe 'nited 8ingdo# is a de&elo ed country and has the world>s sixth-largest econo#y by no#inal 693 and eighth-largest by urchasing ower arity. It was the world>s first industriali,ed country and the world>s fore#ost ower . The '8 re#ains

a great ower with 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 indicating threat for our business. Co&$etiti/e ris.) Though India has large scale of erfu#ery roduction in their country so they are easily ex orting their roducts in '8 and '%A #arket at low cost so they are #a+or co# etitor for us. Trans$ortation ris.) Trans ortation 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 ex ort agar roducts in both countries. re&ailing in the econo#y and it is

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


COUNTRY % USA U-

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


.a/ Allows licensing to #a+ority owned subsidiary

!EIG1 T

6% Return 3 ig er nu&'er7 $re(erred rating4


.a/ Tax rate .b/ "arket si,e, resent .c/ "arket si,e, *-0 years .d/ "arket share 0-2 0-4 0-* 0-2 1 4 * 2 1 * 2 1

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


.a/ )xchange roble# .b/ 3olitical unrest .c/ Business law, resent .d/ Business law, *-10 years

28

0-* 0-* 0-4 0-2

0 2 1 1 <

0 1 1 1 :

Tota"

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 #an ower 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 Agar roduction in Bangladesh. It can be the first Bangladeshi re#iu# roducts to earn the highest a#ount of foreign currencies, if the necessary olicy su ort is a&ailable fro# the go&ern#ent. Any ublic- ri&ate +oint initiati&e hel ta the enor#ous ex ort otential of it. If Bangladesh does not take any initiati&e right now, other countries like Brunei, "alaysia etc #ay sei,e the o ortunity to ca ture such a big #arket.

Re(erence
9aniels. I. 9., 7adebaugh. 1. !. and other .2004/ Internationa" Business. 10th edition. 3earson. Dew delhi F age 4*1

Infodri&e India official web age. India )x ort 9ata. Agar 3owder. Agar 3owder )x ort 9ata India. 7etrie&ed fro# - J htt K<<www.infodri&eindia.co#<india-ex ortdata<agar- owder-ex ort-data.as x L 7etrie&ed on 20 Ianuary 2*, 2014

I5bal %iddi5uee, .2011/ Agar far#ing sees ex ort #arkets. Bang"ades 6da+ MInternetN, 1H 4ctober. A&ailable fro#K Jhtt K<<www.bangladesh2day.co#<newsfinance<2011<4ctober<1H<Agar-far#ing-seesex ort-#arkets. h OtitlesL MAccessed C Ianuary 2014N.

"d. Ioynal Abdin, .201*/ Agar the first otential re#iu# roduct. !ord$ress : August MInternet blogN. A&ailable fro#K Jhtt K<<+oynal.word ress.co#<201*<0C<0*<agar-the-first- otential- re#iu#- roduct< L MAccessed 12 Ianuary 2014N

T7A9)8AP official web age. !o#e. 7etrie&ed fro# Jhtt K<<bangladesh.tradekey.co#<su Ianuary 2*, 2014 liers<agar-wood-oil.ht#L . 7etrie&ed on 12

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