Home ›› 17 Jan 2023 ›› Front
Fourteen textile mills across Bangladesh invested Tk 4,148 crore in the industry last year, stepping up their game to tackle the elevated demand of locally produced fabric and yarn as a global supply chain disruption made imports unfeasible.
Though this sector posted a robust investment in 2022, it is in fact 31.55 per cent lower when compared year-on-year. In 2021, 26 factories invested nearly Tk 6,060 crore in this industry.
Man-made fibre (MMF) currently dominates nearly 72 per cent of the global market share, and has huge possibilities in Bangladesh. But only one factory invested in the sector in 2022, show data from the Bangladesh Textile Mills Association (BTMA).
Among the 14 factories that invested Tk 4,148.14 crore, 12 factories invested for yarn manufacturing, one for fabrics and one for yarn and fabrics. These factories will manufacture 153,575 tonnes of yarn and 7,800 tonnes of fabrics annually, show the BTMA data.
The apex body is optimistic that the new investments will help generate 1.5 lakh new employment opportunities when the above mentioned factories go into full phase operations. Currently the sector has nearly 1.1 million workers.
Bangladesh has 510 yarn and 901 fabric manufacturing mills, and most of the factories are manufacturing cotton yarn and fabrics.
Industry insiders say they expected more investments in 2022 than what actually came in. But due to the many hurdles, such as the global financial crisis, Bangladesh’s energy shortage and lack of adequate policy support, many investments are yet to come.
BTMA President Mohammad Ali Khokon told The Business Post, “Investments are not static. Those depend on factors such as supply and demand. As the demand for fabrics and yarn is rising, more investment will come in this year and the next.
“However, the ongoing gas and electricity supply shortage is severely impacting our performance, and that is why many investors are hesitating. The government should solve the crisis as soon as possible to attract more investments.” This year, most of the investment will go into factories manufacturing manmade fibre, Khokon added.
The BTMA claimed that the sector has nearly $15 billion in investments, and meets around 85 per cent to 90 per cent yarn demand for knit-based readymade garment (RMG) products, and 35 per cent to 40 per cent yarn demand for woven RMG goods.
Excellent export performance boost investments
According to the Export Promotion Bureau (EPB), Bangladesh recorded $45.71 billion in 2022 through apparel exports, compared to $35.81 billion in the previous year. This sector earned $24.71 billion through knitwear exports.
Besides, the apparel sector earned nearly $23 billion in the last six months, and posted 15.56 per cent year-on-year growth, while the knitwear sector contributed $12.66 billion to the figure.
Industry insiders point out that most of the readymade garment factories are manufacturing cotton-based clothes, and they fulfill most of their primary textile demand from domestic sources.
The government is also providing a 4 per cent cash incentive to any apparel exporter who utilises local yarn. Considering such factors, both new and existing investors are keen on investing into the country’s cotton-based textile sector.
On the issue, BTMA Additional Director and Chief Executive Officer (CEO) Monsoor Ahmed said, “Business friendly policies are very important for attracting investors.
“When we began our journey, many international experts and organisations said Bangladesh is impractical for a primary textile industry. But thanks to the incentive and other policy support, we are capable of meeting nearly 90 per cent cotton yarn demand. New investors are also coming day by day.”
Investments in MMF sector yet to rise
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) claimed that around 26 per cent of their total exports consist of MMF-based clothes. This means the country exported manmade fibre-based clothes worth nearly $11 billion in 2022.
But due to a shortage of local textile mills, exporters meet almost 100 per cent of their MMF demand through imports.
Though many factories are manufacturing cotton-polyester-based fabrics, it is not enough to meet apparel exporters’ demand. That is why RMG makers are importing yarn and fabrics worth billions of USD every year. This issue is also a barrier to boosting value addition.
BTMA data shows that among the 14 textile mills that invested last year, only one factory, HS Composite Textile, invested in the manmade fibre sector. Besides, only three companies had set up MMF factories in 2021, investing nearly Tk 1,000 crore.
Envoy Group Managing Director Kutubuddin Ahmed, who is also investing in the MMF sector, told The Business Post, “MMF is a highly tech-based sector, and needs a big investment to set up a factory.
“We just entered the industry, and are optimistic that many others will follow us after seeing our success.”
Abdullahil Rakib, managing director of TEAM Group, said, “There are hundreds of MMF fabric types in the world, and it is quite difficult for a factory to manufacture different kinds of items.
“I think we have to identify which of the MMF types are mostly utilised, and then invest in those. I will set up a MMF factory very soon.”
Industry leaders point out that government policy support is most important for setting up MMF factories. Besides, bureaucratic red tape and harassment are key barriers against this sector’s expansion.
BTMA’s Monsoor Ahmed said, “If the government provides us with cash incentives for using locally produced MMF, it will draw more investors to this sector. Besides, uninterrupted supply of gas and electricity are important factors, and the government should work to ensure it.”
