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Global demand lures Bangladeshi home textile manufacturers to make invest

YarnsandFibers News Bureau 2015-03-16 12:15:00 – Dhaka

Bangladeshi home textile entrepreneurs despite challenges like European Union’s GSP facility to Pakistan and current political turmoil are lured to make more investment in the sector due to the growing global demand for local home textile products. A good number of home textile manufacturers such as Unilliance Textile, Mom Tex, Fariha Group, Pakiza Group and Sad Musa have already invested millions of taka in new factories and expansion of their existing capacity.

China, India, Pakistan and Turkey which are traditional producers of home textiles have earned reputation for their product ranges. But Bangladesh's home textile industry is also growing fast, making it a promising contender among these competing countries.

Newer opportunities are emerging ahead as buyers from China are shifting to Bangladesh. Good quality, commitments, low production cost, cheaper wages, duty-free access to some developed countries are the factors that weigh in favour of Bangladesh for the retailers to source from here.

Unilliance Textiles Ltd has undertaken a Tk 3.0 billion project to double its production capacity in stitching and weaving segments mainly to grab international demand for quality cost-competitive hometex products. Their production will reach 50,000 sets per day from existing 22,000 sets on completion of the project, said its International Account Manager Sabbir Chowdhury.

Mr Chowdhury said that despite the rising global demand, there are a small number of supply companies in the country that encourages the company to make more investments.

Pakiza Group that produces sari and salwar kameez and mainly focuses on the local market, now plans to enter the global arena with its new unit -Mom Tex that is expected to produce home textile products soon.

The project has been launched last year aiming to diversify theirr product range and market, said Md Mogahid Hossain Bulbul, Manager (Admin) of Mom Tex. They are expecting to start production at the end of this year.

Another company Sad Musa has come up with a huge investment plan worth Tk 25 billion (Tk 2,500 crore) to take hold of the growing demand for hometex products with a strong backward linkage support.

Eight factories would be set up on 100 acres of land in Chittagong, said Shaikh Hasan Zaman, director of Sad Musa Fabrics, adding that four units have already been set up with the production capacity of 30 tonnes of yarn and 50,000 metres of fabrics per day.

Fifty percent of the yarn and fabrics is locally consumed while the rest are sold to the exporters. They will need to stop outsourcing once all their units go into production.

European Union GSP facility for Pakistan, appreciation of the local currency against the US dollar and depreciation of EU currency against US dollar and lingering political turmoil are seen as major factors blocking the growth of the country's potential home textile exports, industry insiders said.

According to a recent study conducted by Bangladesh Foreign Trade Institute (BFTI), Bangladesh is likely to face strong competitive pressure from Pakistan in home textile trade.

Pakistan has used the new GSP scheme more effectively than Bangladesh did. Due to the EU's new GSP scheme, Pakistan will become the main competitor of Bangladesh on the EU market. Bangladesh may face pressure in the days to come as home textile products will be the main victim of the new system, said BFTI director Dr Mostafa Abid Khan.

According to Nurul Islam, Chairman of Noman Group, one of the country's largest hometex product exporters, Pakistan is a cotton-growing country now enjoying the new generalised system of preferences (GSP) on the EU market.

So, Bangladeshi-made home textiles are lagging behind Pakistan in terms of cost-competitiveness. The appreciation of taka and depreciation of EU currency against the dollar also eat up the competitive edge of locally made hometex products.

Political instability cast a negative impact on the overall export growth in this sector. Buyers are not coming to Dhaka to negotiate the future orders while call the local counterparts to a third destinations like Hong Kong and Singapore. A stable political situation is a must to keep the business running.

Despite all the odds, Bangladesh has still some advantages against Pakistan, said Belayet Hossain, Managing Director of RTT Textile Industries Ltd. The yarn Bangladesh produces is better than that of Pakistan.

The sector could not flourish to the expected level due to lack of the government policy support while financial institutions like banks did not come up with funds as did for the garment sector, he pointed out.

But Bangladesh has potentiality of earning $2.0 billion in next couple of years, said Belayet, also former vice chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association.

According to businesspeople, the industry now needs capacity building to capitalize on the upcoming opportunities to take a sizeable part of the world home textile market. They also sought government policy support, including cash incentives and reduction in bank interest rate.

The country fetched $792.53 million by exporting home textiles in the fiscal year 2013-14 which was only $402.49 million in FY 2009-10.

According to BTMA, some 17 mills produce about 556.39 million metres of home textiles a year. Industry insiders said the number of such mills is much higher, although their export volume is scanty.

Bangladesh exports home textiles such as bed sheets, bedcovers, pillow and cushion covers, curtains, rugs, quilts, kitchen aprons, gloves, napkins and tablecloths to European Union countries, the USA, Canada, Mexico, Australia, Japan and Dubai.

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