Bangladeshi apparel sector draws investors

13 Oct '11

2 min read

Bangladeshi apparel sector is drawing both local and foreign investors, especially because the country enjoys a preferential treatment in foreign trade with developed countries like the US and EU.

According to the Board of Investment (BoI) data, local entrepreneurs enlisted 476 new projects worth US$ 1.2 billion during the first eight months of the current year in the garment and textiles sector. 645 new projects worth US$ 1.89 billion were registered in the sector during the corresponding period of 2010.

Similarly, the number of overseas investment proposals in apparel sector is growing and foreign investors have registered 55 projects worth US$ 160.14 million with the BoI in fiscal 2010-11.

Bangladesh is among the major garment producing nations in the world and being a least developed country, it enjoys preferential duty for exports to the US and zero-duty benefit for exports to the EU markets. This has spurred the interest of several foreign investors, particularly from Japan, China and India.

Investment from Japanese entrepreneurs increased after the Japanese Government announced the 'China plus one' strategy in 2008. Bangladesh has become lucrative destination for Japanese investors after their Government proposed diversification of investment beyond China.

Another chunk of investment is from Chinese entrepreneurs who are keen on investing either in joint ventures or with full ownership of apparel manufacturing project. The main reason for the growing number of Chinese investment proposals is the increase in the cost of production in mainland China.

The duty-free benefits are also attracting investors from neighbouring India to Bangladesh. The cost of apparel production in Bangladesh being lower than in India is also a reason for the rising trend in investment by Indian entrepreneurs. Indian apparel companies have set up 35 factories at a cost of US$ 79 million till date, according to BoI data.

At present, there are around 340 spinning mills and over 950 dyeing, finishing, printing and weaving units in Bangladesh. Primary textiles sector has a total investment of nearly Tk 300 billion. In addition, there are more than 1,500 knitwear garment factories and 4,800 woven factories. As a result, both raw materials and skilled labour are available for upcoming garment projects.

Moreover, the Bangladeshi Government provides duty-free import facility of raw materials for projects set up in the export processing zones (EPZs). Factories built with foreign investment also enjoy a tax-holiday facility, strong safety facilities and regular supply of utilizes inside the EPZs.

Fibre2fashion News Desk - India

More Apparel/Garments News - Bangladesh...