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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 Transcript
slide1

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

slide2

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

slide3

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.
slide4

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.
slide5

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.
slide7

Positive Impact of Using Local Inputs

Knit garment export fueled by the supply of indigenous yarn has

overtaken woven garment export

slide8

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.
slide9

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
slide12

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 $

slide13

Value Retention Using Local Fabric

2006 Bangladesh T & C business & FE retention:

(all figures in mil US $)

slide14

Home Textile – Bangladesh in the EU market

  • Bangladesh fastest growing exporter.
  • Grew from €49 mil 2004 to €98 mil in 2005.

Source : EUROSTAT

slide15

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%

slide16

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.
slide17

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