DBL Group plans to invest $100m to set up garment factory in Ethiopia

DBL Group, a diversified business entity which has vertically integrated textile and apparel manufacturing facilities and a leading apparel exporter, encouraged by duty benefits for exports from the African nation to US markets plans to invest $100 million to set up an integrated garment factory in the Tigray region of Ethiopia.

The new factory will go into production in February next year and it is expected to employ 3,500 workers. Of them, 150 will be employed as executives — all from Bangladesh. The factory will also add immense value to the Ethiopian economy and strengthen exports, the official said.

The group’s decision to go to Ethiopia as this African nation enjoys zero-duty benefits from the United States on exports. The benefits will continue for a long time as Ethiopia is a member of the least developed countries, the official said.

The US government last year renewed the African Growth and Opportunity Act or AGOA for the African LDCs for the next 10 years to provide zero duty benefits on export.

Bangladesh, despite being an LDC, does not enjoy a duty benefit from the US as the American government suspended its generalized system of preferences in June 2013. Garment products were not included under the GSP scheme to the US market when it used to enjoy the GSP.

DBL for construction of factory in Ethiopia obtained $15 million in loans from the Swedish government’s development fund Swedfund at an interest rate of 6 percent and $55 million from the Ethiopian Development Bank at nearly 7 percent. DBL obtained permission for overseas investment from the central bank.

The Ethiopian project is a debt-funded venture of DBL and is not a joint venture. DBL has already employed 30 Bangladeshis in construction work for the Ethiopian project.

DBL is a platinum-rated apparel supplier to Swedish retail giant H&M. Their main target is to supply to H&M. DBL also aims to export to the US and European, African and Middle Eastern countries from Ethiopia.

Currently, DBL produces items from yarn to garments, employing around 22,600 workers in different factories in Bangladesh. The group is expecting shipment of apparel worth $340 million by the end of the current fiscal year.

DBL hopes that they would be able to bring back a substantial amount of foreign currency from its Ethiopian operations.