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Bangladesh TEXTILE SECTOR

Bangladesh TEXTILE SECTOR

sheshir
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Bangladesh TEXTILE SECTOR

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  1. PRESENTATION ON PRESENTATION ON THE IMPORTANCE OF THE THE IMPORTANCE OF THE BANGLADESH PRIMARY BANGLADESH PRIMARY TEXTILE SECTOR TEXTILE SECTOR To To Fresher’s Reception Program Fresher’s Reception Program School of Science & Engineering School of Science & Engineering Southeast University Southeast University Southeast University Seminar Hall, Dhaka 7th September , 2009 A. Matin Chowdhury Managing Director, Malek Spinning Mills Ltd.

  2. Thank you for inviting me to make a Presentation on the Textile & Clothing (T&C) Sector of Bangladesh. T&C has grown and we appreciate the interest of the University in this Sector. T&C is the largest employer in the country and is currently up-scaling its requirement. Therefore, it is important that the University and the students consider this, in their H.R. development and career planning.

  3. GROW TH AND CONTRIBUTION OF THE T&C IN BANGLADESH

  4. Growth and contribution of the T&C in Bangladesh After liberation of Bangladesh in 1971:  Jute was the only exportable item.  Most products including yarn and fabric were imported.  Huge shortage of foreign currency. Present Day (2009) Jute export unfortunatelydiminished to 2.68% of national export. T&C has rescued the country by: - Meeting the total domestic needs. - Exporting US$ 12.87 billion – 82.68% of national export. - Currently running good foreign exchange reserve. - Huge employment with downstream and supporting industries.

  5. Bangladesh Export Position 2007 – 2008 and 2008 - 2009 Sl No. 01 02 03 Item July 07 - June 08 % July 08 - June 09 % Total Export 14,110.80 100.00 15565.19 100.00 Textile & Clothing Others No. 01 Knit Garments 02 Woven Garments 03 Home textile 04 Terry towel Total T & C 05 Footwear & Leather 06 Frozen Food 07 Raw Jute & Jute Goods 08 Bicycle 09 Processed Food 10 Ceramic 11,170.76 29,404.04 July 07 -June 08 5,532.52 5,167.28 357.96 112.88 79.16 20.84 12,870.17 2,695.02 82.68 17.32 Sl Item July 08 - June 09 Growth% 6,429.26 5,918.51 389.83 132.57 16.21 14.54 8.00 17.44 11,170.76 346.92 534.07 483.40 64.28 40.65 38.33 12,870.17 471.34 454.53 417.42 84.54 46.68 31.70 (26.39) (14.89) (13.65) 31.32 14.83 (17.30) Source: EPB

  6. Textile & Clothing Contribution I Development of Textile and Clothing since 1971 A great achievem ent for the people, governm ent, A great achievem ent for the people, governm ent, L abour and entrepreneurs of B angladesh. L abour and entrepreneurs of B angladesh.

  7. Textile & Clothing Contribution II Growth Local yarn stimulated knit export growth Knit export overtook woven RMG with huge FE retention & employment

  8. Textile & Clothing Contribution III Overseas Dependency of RMG Export Reduced (1994-2008)  PTS reduced Back to Back L/C from 67% to 32 %  Local input increased from $ 739 million to $ 7,511 million FE Retention increased 10 folds

  9. Textile & Clothing Contribution IV 2008-09 Foreign Exchange Retention F E R etention with local fabric 5 tim es that of Im ported F abric Item Total Export Export using local inputs Export using foreign inputs Value Value Retention Retention 6,429 5,919 5,786 1,775 643 Knit Garments Woven Garments Home Textile + Towel Total 4,339 1,331 160 4,143 1,036 522 522 00 392 00 12,870 8,083 6,062 4,786 1,196 (all figure s in mil US $) P TS H elped  I ncre ase E xports  I ncre ase R etention  Cre ate Banglade sh as a M ajor H ub for Textiles and R M G

  10. Textile and Clothing Contribution V Effect of Cash Assistance Payments A SUCCESS STORY 1991 to 2006 $ 802.52 Million 2007 to 2008 $ 77.35 Million Total Cash Assistance Paid 1991-2008 Impact of this scheme resulted in a massive multiplie r e ffe ct Proven success for Bangladesh Must be pursued with a higher % to survive in current global crisis   

  11. GLOBAL COMPETITIVE RACE & POSSIBILITIES FOR BANGLADESH

  12. Global Com petitive R ace and P ossibilities for B angladesh I Facilitie s Give n * Between 1.10.08 to 31.03.09 – IRS 14,701 crore ($ 3.12 billion) was paid.

  13. Global Com petitive R ace and P ossibilities for B angladesh II US A ppare l I mpo rts 1 990-2008 US$ in Million 21,937 34,649 57,232 68,713 73,922.59 71,568.54100.00% 100.00% W orld SL. No. 01 02 03 04 05 06 07 08 09 10 11 12 Share 1995 Share 2008 Country 1990 1995 2000 2005 2007 2008 China Vietnam Indonesia Mexico Bangladesh India Honduras Thailand El Salvador Pakistan Sri Lanka Guatemala Dominican Rep 2,739 3,518 4,499 15,143 22,745.59 22,922.00 10.20% 33.02% 0 17 47 2,725 4,358.52 629 1,183 2,055 2,875 3,981.07 508 2,566 8,413 6,078 4,523.38 429 1,067 2,116 2,372 3,103.35 557 1,098 1,786 2,976 3,169.93 113 918 2,323 2,622 2,511.01 437 1,037 1,820 1,808 1,766.31 54 582 1,583 1,619 1,486.10 206 550 920 1,259 1,498.58 425 928 1,472 1,650 1,573.36 191 682 1,487 1,816 1,450.58 5,223.44 4,028.43 4,014.50 3,441.65 3,073.36 2,604.03 1,667.81 1,533.58 1,489.56 1,466.97 1,388.16 0.00% 3.40% 7.40% 3.10% 3.20% 2.70% 3.00% 1.70% 1.60% 2.70% 2.00% 7.57% 5.79% 5.52% 5.08% 4.28% 3.59% 2.26% 2.13% 2.09% 2.04% 1.82% 694 1,731 2,425 1,849 1,056.52 840.55 5.00% 1.13% 13

  14. Global Com petitive R ace and P ossibilities for B angladesh III US A ppare l I mpo rts Q1 & Q2, 2008 vs 2009 % January – June January – June 2008 % SL. No. Country Change Share 2009 32,995.69 9,069.47 2,349.51 2,020.72 1,623.46 1,991.32 1,744.13 1,222.49 1,155.46 835.607 744.493 727.443 688.391 28,907.09 9,421.44 2,347.60 1,947.20 1,741.16 1,612.67 1,593.69 958.744 889.819 614.707 606.596 634.239 597.867 -12.39 100.00 3.88 -0.08 -3.64 7.25 -19.02 -8.63 -21.57 -22.99 -26.44 -18.52 -12.81 -13.15 World China Vietnam Indonesia Bangladesh Mexico India Honduras Cambodia Thailand Salvadr Sri Lanka Pakistan 1 2 3 4 5 6 7 8 9 34.49 7.74 5.86 5.27 5.39 4.33 3.47 3.13 2.14 2.07 2.04 2.07 10 11 12 13

  15. P ossibilities for B angladesh - I 1. Initially focused on stitching only with imported fabric. Developed spinning and local fabrics capabilities after mid 90’s. 2. Has a large textile base with a double digit growth. 3. Big base allows further growth possibilities as many companies have reached economies of scale. 4. Adequate manpower has been developed. 5. Aggressive investors. 6. 3rd largest exporter to the European Union. 5th largest to the U.S. in 2008 - Overtook Mexico for 4th position in 2009. Will also have a presence in the Asian market as Japan decided to divert 20.00% import from China.

  16. P ossibilities for B angladesh - II 7. Till now produced basic products – Plans now: - Upgrade 25% product to value added category which will yield additional $ 2.00 billion. - Build on existing base by growth of 15% yielding additional $ 2.00 billion. - Take on capacities vacated by Mexico, Turkey, ASEAN & Latin America. - Chase India & China on Price.

  17. P ossibilities for B angladesh - III AREAS FOR GR OW TH  All circular knit products - move aggressively to synthetics.  Sweaters - with emphasis on upstream activity including yarn.  Trousers – Denim - all ready leader. Need to develop fabric, finishing & washing.  Home Textile - bed sheets, curtains, towels.  Shirts - develop fabric.  Synthetic Garments - import high quality fabric.  Develop value addition with printing, embroidery, embellishment etc.  Develop all types of accessories and packaging.

  18. CHALLENGES

  19. Challenges - I Bangladesh T&C Industry has tremendous prospects. Can very easily take Global second position after China. A difficult task, but achievable and requires concerted and determined effort from all – Government, Entrepreneurs, workers, financiers, etc. National Aim 1. Government of Bangladesh had given initial support to the T&C. For the last 8 – 10 years withdrawn support. Needs to believe the possibility of T&C and therefore should: • Draw out a policy • Make a long term plan with targeted products, production and value. • Support the education and training of all levels of personnel involved with the industry. • Activate an export campaign improving the country’s image.

  20. Challenges - II 2. Labour relations and labour productivity: a. T&C is a labour intensive industry and therefore strict regulation on workers rights and privileges – A Must. b. Strict law enforcement for industrial disputes . c. Disciplined workers and owners. d. Having reached a global level, cannot progress on cheap labour-need training. Therefore, labour productivity and use of equipment, automation has to be encouraged and achieved. 3. Energy: T&C requires a lot of energy and has to go for high capacity utilization. Have time bound commitments- regular and good quality energy is essential. This needs to be solved otherwise all orders and investments will go in vain.

  21. Challenges - III 4. Infrastructures: Ports, roads, industrial estates, etc. need development to cut costs of doing business in this cutthroat competitive environment. 5. Law and order: T&C requires a lot of processing, movement of goods and sub-contracting and also produces a huge amount of salvageable waste. Strict law and order is essential for the security and successes of the industry. 6. Financial costs: The T&C business has a lot of transactions which are made through investments, L/Cs, acceptance, etc. These costs has to be maintained at a sustainable level, otherwise, it will hamper growth.

  22. Conclusion 1. Government support and private investments into T&C paid handsomely with exports, employment and FE retention. 2. Best possible product to meet future development and exports, thus should be planned for growth. 3. Competitive Government giving policy advantages to their industry. We need policy support to balance this. 4. Law and order and labour management must be improved. 5. Energy and infrastructure to be improved. 6. Huge funding for growth to be arranged. 7. Industrial estates need.

  23. THANK YOU FOR YOUR KIND ATTENTION

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