Supply shortage and high demand heat the fire extinguishing market

The sales of fire extinguishing and detecting equipment and products increased after some major fire incidents in recent months

After witnessing the havoc wreaked by a massive fire at a residential building in Dhaka’s Gulshan on Feb 19, Wahidul Hasan decided to place one fire extinguisher on each floor of his four-storey building in Narinda,.

But after checking out the prices in the Nawabpur area, the home fire extinguishing and detecting equipment and products market, he decided to purchase three extinguishers instead of four.

“I was under the impression that each extinguisher would cost around Tk 1,200, but I couldn’t find any extinguisher close to that price range. I have a limited budget; hence I am buying three for now,” he said.

The sales of fire extinguishing and detecting products geared up as buyers from all sectors -- readymade garment factories, hospitals, educational institutions, government and non-governmental offices and owners of residential buildings – crowded the market after some major fire incidents in recent months.

However, marketers are saying they cannot meet the current demand due to commercial banks’ unwillingness to open letters of credit, or LCs, for importing products in Bangladesh, where the fire extinguishing market is 100 percent dependent on imports.

These products are not on the priority import list released by the Bangladesh Bank, which introduced the measure to rein in US dollar spending due to a shortage.

Meanwhile, data released by Bangladesh Fire Service and Civil Defence shows that the number of fire incidents and damage caused by these incidents are rising.

Marketers in Bangladesh sell at least 50 different kinds of fire extinguishing and detecting equipment and products, which includes carbon dioxide, fire extinguisher, foam extinguisher, fireball, nozzle, fire alarm, heat detector, and ballpoints.

FIRE-RELATED ACCIDENTS AND CASUALTIES IN NUMBERS 

• In 2022, at least 98 people were killed in 24,102 fire incidents nationwide. The fire service estimates the damage caused by these incidents was approximately worth Tk 3.42 billion.

• The year 2021 was one of the worst in terms of casualties, as 219 people were killed in 21,601 incidents. The monetary value of the damage was approximately Tk 3.30 billion. 

• In 2020, 154 people were killed in 21,073 incidents. The monetary value of the damage was approximately Tk 2 billion.

PRICES ON AN UPWARD TREND

Atiqul Islam Soumya, the proprietor of Faruk Mill Store in Nawabpur, said the prices of the products were already on an upward trend since the beginning of the pandemic, but they shot up significantly since the central bank introduced measures to discourage import due to the US dollar shortage last year.

“We can’t open LCs anymore, so we can’t import new products. Due to the supply shortage, the prices went up,” he said.

Md Niaz Ali Chisty, senior vice-president of the trade body Electronics Safety & Security Association of Bangladesh, or ESSAB, said the price increased by at least 30 percent last year.

“The products we sold last year at Tk 900 are now being sold at a minimum Tk 1,500,” he said. 

A quick visit to some shops in Nawabpur revealed that prices of a two-litre fire extinguisher rose by at least Tk 300 while prices of a five-litre fire extinguisher rose by at least Tk 500.

“A carbon dioxide extinguisher used to cost Tk 2,300 before. Now it costs approximately Tk 3,200," Soumya, proprietor of Faruk Mill Store, said.

According to him, the product that was mostly affected percentage-wise is the heat detector, which used to cost around Tk 350, and now it costs around Tk 700.

WHY PRICES WENT UP?

Stakeholders in the industry pointed out one single reason for the price to shoot up significantly – the unwillingness of banks to open LCs due to the US dollar crunch.

Abul Hasnat Laurel, president of the Fire Fighting Equipment Business Owners Association of Bangladesh, or FEBOAB, said they are in talks with the government to allow their products on the priority import list.

“Mid-sized businesses cannot meet the terms and conditions to open LCs these days; hence they have stopped importing. The market is suffering from a supply shortage, so the prices went up,” he said.

ESSAB’s Chisty noted that the time the banks take to do due diligence these days to open an LC is another reason the prices go up.

“Banks are taking at least three to four months to open and clear an LC, which also creates a supply shortage and causes prices to go up,” he said.

However, both business leaders could not produce any number about how many products, category-wise, importers bring in every year.

MARKETERS UNHAPPY ABOUT PRICE RISE

Faruk Mill Store’s Soumya feels that the fire extinguishing products' over-the-top prices have lowered his sales.

“My sale went down by at least 50 percent. I can’t import anymore, so I only sell the products I have in my stock. If someone asks for 20 products, I can sell only five. I can’t continue doing business like this,” he said.

Mizanur Rahman, proprietor of Hightech Corporation at Purbachal Machineries Market, said rising inflation, along with the high prices of products, hit sales.

“The dual impact of the prices of the products we sell going up and inflation, which curtailed people’s purchasing capacity, is why our sales volume went down.”

WHY ARE THESE PRODUCTS NOT ON THE PRIORITY IMPORT LIST?

Bangladesh Bank spokesperson, Executive Director Md Mezbaul Haque, dismissed any notion of a US dollar crisis in the market.

“No bank has alerted us about any shortage of US dollar crisis in the market,” he said.

He also confirmed that the central bank does not believe these products should be on the priority import list.

“The importers must meet the terms and conditions to bring in these products,” he said.

Lt Col Mohammad Tajul Islam Chowdhury, director (operations and maintenance) of the Fire Service and Civil Defence, apparently disagrees with the central bank’s position.

“For everyone’s safety and security, the authorities need to ensure imports of these products are not backlogged,” he said.

[Writing in English and infographic created by Adil Mahmood]