Bangladesh TEXTILE SECTOR

1. PRESENTATION ON
THE IMPORTANCE OF THE
BANGLADESH PRIMARY
TEXTILE SECTOR
A. Matin Chowdhury
Managing Director,
Malek Spinning Mills
Ltd.
Southeast University
Seminar Hall, Dhaka
7th September ,
2009
TToo
FFrreesshheerr’’ss RReecceeppttiioonn PPrrooggrraamm
SScchhooooll ooff SScciieennccee && EEnnggiinneeeerriinngg
SSoouutthheeaasstt UUnniivveerrssiittyy

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

6. Textile & Clothing Contribution I
Development of Textile and Clothing since 1971
A great achievement for the people, government,
A great achievement for the people, government,
Labour and entrepreneurs of Bangladesh.
Labour and entrepreneurs of Bangladesh.

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. Item Total
Export
Export using local inputs Export using foreign
inputs
Value Retention Value Retention
Knit Garments 6,429 5,786 4,339 643 160
Woven
5,919 1,775 1,331 4,143 1,036
Garments
Home Textile
+ Towel
522 522 392 00 00
Total 12,870 8,083 6,062 4,786 1,196
(a ll fig ure s in m il US $)
Textile & Clothing Contribution IV
2008-09 Foreign Exchange Retention
FE Retention with local fabric 5 times that of Imported Fabric
PTS Helped
 Inc re a s e Exports
 Inc re a s e Retention
 Cre a te Ba ng la d e sh a s a Major Hub for Textiles and RMG

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

11. GLOBAL COMPETITIVE
RACE & POSSIBILITIES
FOR
BANGLADESH

12. Global Competitive Race and Possibilities for Bangladesh I
Fa c ilitie s G ive n
* Between 1.10.08 to 31.03.09 – IRS 14,701 crore ($ 3.12 billion) was
paid.

13. Global Competitive Race and Possibilities for Bangladesh II
US Ap p a re l Im p o rts 1 9 9 0 -2 0 0 8
SL.
No.
World 21,937 34,649 57,232 68,713 73,922.59 71,568.54100.00% 100.00%
Country 1990 1995 2000 2005 2007 2008
US$ in Million
Share
1995
Share
2008
01 China 2,739 3,518 4,499 15,143 22,745.59 22,922.00 10.20% 33.02%
02 Vietnam 0 17 47 2,725 4,358.52 5,223.44 0.00% 7.57%
03 Indonesia 629 1,183 2,055 2,875 3,981.07 4,028.43 3.40% 5.79%
04 Mexico 508 2,566 8,413 6,078 4,523.38 4,014.50 7.40% 5.52%
05 Bangladesh 429 1,067 2,116 2,372 3,103.35 3,441.65 3.10% 5.08%
06 India 557 1,098 1,786 2,976 3,169.93 3,073.36 3.20% 4.28%
07 Honduras 113 918 2,323 2,622 2,511.01 2,604.03 2.70% 3.59%
08 Thailand 437 1,037 1,820 1,808 1,766.31 1,667.81 3.00% 2.26%
09 El Salvador 54 582 1,583 1,619 1,486.10 1,533.58 1.70% 2.13%
10 Pakistan 206 550 920 1,259 1,498.58 1,489.56 1.60% 2.09%
11 Sri Lanka 425 928 1,472 1,650 1,573.36 1,466.97 2.70% 2.04%
12 Guatemala 191 682 1,487 1,816 1,450.58 1,388.16 2.00% 1.82%
13
Dominican
Rep 694 1,731 2,425 1,849 1,056.52 840.55 5.00% 1.13%

14. Global Competitive Race and Possibilities for Bangladesh III
US Ap p a re l Im p o rts Q1 & Q2 , 2 0 0 8 vs 2 0 0 9
SL. No. Country
January – June January – June %
Change
%
2008 2009 Share
1 World 32,995.69 28,907.09 -12.39 100.00
2 China 9,069.47 9,421.44 3.88 34.49
3 Vietnam 2,349.51 2,347.60 -0.08 7.74
4 Indonesia 2,020.72 1,947.20 -3.64 5.86
5 Bangladesh 1,623.46 1,741.16 7.25 5.27
6 Mexico 1,991.32 1,612.67 -19.02 5.39
7 India 1,744.13 1,593.69 -8.63 4.33
8 Honduras 1,222.49 958.744 -21.57 3.47
9 Cambodia 1,155.46 889.819 -22.99 3.13
10 Thailand 835.607 614.707 -26.44 2.14
11 Salvadr 744.493 606.596 -18.52 2.07
12 Sri Lanka 727.443 634.239 -12.81 2.04
13 Pakistan 688.391 597.867 -13.15 2.07

15. Possibilities for Bangladesh - 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. Possibilities for Bangladesh - 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. Possibilities for Bangladesh - III
AREAS FOR GROWTH
 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
Infrastructures:
Ports, roads, industrial estates, etc. need development to cut costs of doing business this cutthroat competitive environment.
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.
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