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Presentation on Growth of Textile and Clothing Industry in Bangladesh

Bangladesh Cotton & Textile Convention 2006. Opportunities for Increased Trade In Cotton Textiles. Presentation on Growth of Textile and Clothing Industry in Bangladesh. A. Matin Chowdhury Managing Director Malek Spinning Mills Ltd. Hotel Dhaka Sheraton 23 rd April, 2007. Background.

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Presentation on Growth of Textile and Clothing Industry in Bangladesh

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  1. Bangladesh Cotton & Textile Convention 2006 Opportunities for Increased Trade In Cotton Textiles Presentation on Growth of Textile and Clothing Industry in Bangladesh A. Matin Chowdhury Managing Director Malek Spinning Mills Ltd. Hotel Dhaka Sheraton 23rd April, 2007

  2. Background • Traditionally a textile country. • Jute exports supported economy. Declined in 80’s due to technology and nationalization; had to look for alternative. • Textile & Clothing (T & C) replaced jute as the major export : (a) East Asian wages were going up (b) Problems in Sri Lanka (c) Labour intensive industry (d) Favorable quotas and GSP Policy from EU and USA

  3. T & C Export Journey • Initially garments produced with imported yarn & fabric. • Growth could net be sustained with imported inputs : • Cost too high Smaller margins. • Inconsistent quality leading to claims / rejections. • Undependable deliveries Extended lead times. • Unable to respond to fashion changes.

  4. Post MFA Policy Statement • In a quota free world, all textile manufacturers will have free access and • hence will be competing against Bangladesh for garment export. • Competing countries are trying to reduce export of basic and intermediary raw materials / products and pushing for finished goods. • As these countries opt for value added products, supply of yarn and fabric will be reduced. Bangladesh, relying on these countries for raw material, will be at a disadvantage. • All buyers give preference to countries / companies with vertical operation • to meet lead time and fashion changes, local fabric availability is • necessary. • Therefore, in order to maintain its competitive advantage in garment • exports, Bangladesh supported local textile industry.

  5. Policy Result :Domestic Market • Growth in population & per capita consumption, multifold increase in demand • BTMA members & handloomweaversmet market needs & kept foreign competition out. In spite of lowering import duties and lifting all import bans/restrictions.

  6. T & C Growth

  7. Positive Impact of Using Local Inputs Knit garment export fueled by the supply of indigenous yarn has overtaken woven garment export

  8. Challenges • World T&C market growing at 5% annually. • Buyers moving to targeted countries. Large volumes and economies of scale needed. Bangladesh is strong in sweater, knit, denim and home textiles. • Bangladesh only nation excelling in dual supply chain management for export using • Local Inputs • Imported inputs • Growth potential very large. Can aim at $20 billion export by 2011 with 65% local inputs.

  9. EU Growth • Results: • Export under GSP to the EU increased eleven fold. • 1998 - Euro 329 mil • 2005 - Euro 3.625 mil • Huge local inputs & foreign exchange retention. • Massive domestic investment in T & C. • USA Market • Total T & C import

  10. Top Ten Gainers in USA Market 2004 - 2006 Source : OTEXA. USA

  11. Top Ten Losers in USA Market 2004 - 2006 Source : OTEXA. USA

  12. Opportunities • USA Market • Gainer • * China * Indonesia * Vietnam * India * Bangladesh • Looser • * Mexico * Canada * Central America * Korea • * Taiwan *Hong Kong • Bangladesh has taken steps to fill the space created by the above countries. Post-MFA US Market Growth In Million $

  13. Value Retention Using Local Fabric 2006 Bangladesh T & C business & FE retention: (all figures in mil US $)

  14. Home Textile – Bangladesh in the EU market • Bangladesh fastest growing exporter. • Grew from €49 mil 2004 to €98 mil in 2005. Source : EUROSTAT

  15. DENIM Local availability of yarn stimulated growth in Denim fabric manufacturing : This results in : Bangladesh top denim supplier to EU 2006 – 26.76% market share - Growth - 26.15% for Man denim - 91.00% for Woman & Girl’s denim Export to USA 2005 - 850,000 doz. Growth - 160.00%

  16. Yarn Requirement • Ring spinning meeting demands for knit. • Open End yarn required for woven especially denim. • Yarn for sweater. FUTURE • Raw cotton requirement will continue to grow • Bangladesh domestic & export market based on cotton products. • All types of cotton demand is developing.

  17. Bangladesh Textile & Clothing Export in Post MFA – Era • Strengths • Aggressive investors • Efficient and trainable labour force • Duel Supply Chain Management : Export with local inputs Export with imported inputs • Backward linkage • Market access Areas for Growth • Knitting • Sweater • Denim • Bed sheet • Woven Garments

  18. THANK YOU FOR YOUR KIND ATTENTION

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