Bangladeshi garments accessories and packaging makers have made a massive new investment year-on-year of around Tk. 1,000 crore to push up export earnings and meet the demand of the apparel sector.
Accessibility of the workforce at reasonable wages, duty-free market access in major export destinations, preferential location in the heart of the Asia-Pacific region acted as a pivotal player to lure foreign investment in the textile and apparel industry, said an industry insider.
Abdul Kader Khan, president of the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), told The Independent that every year around 100 factories are coming up with new investment to manufacture accessory products.
Last year, investments worth Tk. 1,200-1,500 crore were made in this sector, and more projects are waiting in the pipeline. Talking about the reason behind the investment, he said as Bangladesh is the second largest exporter of apparel products in the world after China, there is a huge investment opportunity in the textile and garment industry.
So far, Tk. 35,000 crore have been invested since the inception of this sector, said Khan.
The government has reduced the corporate tax rate from 15 per cent to 12 per cent in the RMG sector, which eventually led the local investors to make the decision for investment, said Khan.
Since the demand of accessory products is growing at a faster rate at home and abroad, around 100 new factories started their operations this year. Presently, around 1,200 factories are producing accessory items in the country. Most of them are compliant factories.
Talking about fully compliant accessories factories, the BGAPMEA president said: “Dekko Accessories Ltd, Babylon Group, Montrims Ltd, KDS Accessories, Mastex Accessories are some of the fully compliant factories that we have in the accessories industry among many others.”
He said: “We have to emphasise more on producing high-quality accessory items and establish this sector as an individual sector, not to be recognised as the backward integration of the readymade garment (RMG) industry.”
“However, the new investment is also focusing on exporting accessory items directly, because we have the capacity to meet approximately 95 per cent of the local demand,” he said.
When asked about the items, Khan replied that Bangladesh produced and exported accessories like woven labels, leather badges, stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers, price tags, buttons and zippers.
The indirect contribution has always been 15 to 20 per cent of the net export earnings of the RMG sector. Export earnings for the RMG sector in 2017–18 FY totaled USD 30.61 billion, of which approximately USD 7.10 billion came from accessory items used in the RMG, leather, pharmaceutical and other export-oriented sectors.
Currently, the export contribution of accessory items is USD 7.10 billion, of which USD 1.42 billion are direct exports to the Middle-East, South Africa, Sri Lanka, Malaysia, Europe, Vietnam, Cambodia, and Laos.
Giving an example, he said suppose a T-shirt is sold at USD 20, the contribution of accessory items is USD 3-4. So, the capacity is increasing. Therefore, accessory items can be another major export earner for the country.
Some factories are exporting accessory items directly, he said.