Home ›› 04 Sep 2022 ›› Front
The high potential, rapid expansion and tremendous export growth of clothes manufactured in Bangladesh from man-made fibre – also known as MMF or synthetic fibre – have attracted the interest of foreign investors.
Japan, China and Korea, who are the leading MMF producers globally, have already started studying the feasibility of establishing a synthetic fibre manufacturing industry in Bangladesh, and many others are eying for opportunities to enter this sector.
It should be noted that though the readymade garment products made with MMF are a very lucrative business in Bangladesh, the country imports nearly all of such fibres, rather than producing those domestically.
Interested foreign investors and their governments have already held a number of meetings with local stakeholders to jump-start the manufacturing of MMF at a large scale, insiders said, adding that they expect investment in this particular industry to be visible soon.
However, many obstacles, especially the barriers to ease of doing business in Bangladesh, are delaying the procedure, they added. Speaking to The Business Post, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “Due to the rapid growth in the country’s artificial fibre clothes industry, many giant MMF manufacturers are keen on investing in Bangladesh.
“It is difficult to predict how much investment will come, but likely billions of dollars are expected.”
According to the World Trade Organisation (WTO), Bangladesh is the second largest apparel exporter in the world after China. The Export Promotion Bureau (EPB) data shows that Bangladesh exported clothes worth $42.61 billion in the last FY.
Meanwhile, data from the International Textile Manufacturers Federation reveal that 78 per cent clothes in the world are made of man-made fibre, and 22 per cent are made of cotton.
BGMEA’s Faruque said, “In sharp contrast to the global trend, Bangladesh’s apparel manufacturers produce 74 per cent cotton-based clothes, while man-made fibre-based clothes occupy 26 per cent of the export basket.
“Local manufacturers have been expanding their MMF-based product line since the last few years, and many new entrepreneurs are investing into the sector.”
When will the investments come?
Industry insiders claim that the process of getting foreign investment for setting up MMF manufacturing plants locally is now at the primary level. Interested companies have already collected the necessary data and are currently studying the feasibility.
These foreign companies, their senior officials and respective governments are in talks with Bangladesh’s business apex bodies, government officials, and their response so far has been positive.
The interested investors also recommended further improving the business atmosphere of Bangladesh, sources say.
In this regard, Japan’s Ministry of Economy, Trade and Industry (METI) and the Japan External Trade Organization (JETRO) held several meetings with business leaders and Bangladesh government officials in August.
During this meeting, aside from expressing interest in manufacturing MMF in Bangladesh, they also sought to invest in other potential sectors such as textile, IT, heavy and light engineering, said an official who attended those meetings.
“This move is now at the primary stage and we have yet to reach any concrete decision. But it is true that MMF production, and the IT, heavy and light engineering sectors have a lot of potential in Bangladesh,” an official of JETRO told The Business Post requesting anonymity.
He continued, “Bangladesh is the second largest apparel manufacturer and Japan is also manufacturing world class MMF. The JETRO will complete a feasibility study, and then take further decisions in this regard.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem met with a Japanese delegation this August. “They will probably invest on a direct and joint venture basis. A team from Bangladesh will visit Japan soon,” Hatem said.
Team Group Managing Director and BGMEA Director Abdullah Hil Rakib said, “Korea and China are also studying the opportunity, and they have made an initial decision to invest. But it is not clear how many days they will take to invest.
“But due to our rapid growth in the man-made fibre RMG segment, global investors are eying Bangladesh for opportunities.”
Foreign investments to bring opportunities
BGMEA sources say the country exported around $8 billion worth of MMF-based clothes last year, and nearly 100 per cent of the demand for this type of yarn is met through imports.
Manufacturers said they import MMF from China, Vietnam, Indonesia, Korea, Japan, Turkey and many other countries, and the imports take around 25 days to arrive in Bangladesh.
Setting up a MMF factory is expensive, and this is why local investors have been shying away from investing in this sector.
Envoy Textile Chairman Kutubuddin Ahmed said, “It takes a minimum of Tk 600 crore to set up a small man-made fibre factory, and around Tk 1,000 crore to set up a standard factory. This is why Bangladesh did not see many of such initiatives.”
Value addition is most important for Bangladesh to get the GSP+ facility from the European Union after LDC graduation, and for this reason, there is little alternative to setting up MMF factories locally.
To get more orders for value added clothes, a shorter lead time is important, and Bangladesh is far behind their competitors in this matter.
“When a foreign company sets up a MMF factory, others will follow. We will learn from them to adopt the technology, which will help us invest in this sector,” said Team Group’s Rakib, adding, “We expect that within the next five years, many MMF factories will be set up in Bangladesh.”
However, raising concerns over the environmental impact of building MMF factories in the country, researcher Faiz Ahmad Taiyeb said, “The environment authority should ensure strong monitoring because the petro-chemical used for manufacturing man-made fibres are toxic.”
“Due to dyeing factories and tanneries, many rivers of the country are already polluted. We have to ensure that the environment is not damaged further in the name of industrialisation.”
