New investment focus on compliance and value-added products
In the just-concluded year, export-oriented apparel entrepreneurs made an investment in setting up 123 garment units paving ways to generate employment for over 67,500 people mostly for women workers.
According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a total of 78 new factories registered with BGMEA in 2019, which is a positive indicator for the $34 billion apparel industry.
According to the trade body, these new units will create employment for about 47,500 people. Of the total units, some of them already went on production and the others are very close to starting production.
On the other hand, 70 new apparel units registered with Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), which would generate employment for about 20,000 people.
Of the new units, 50% of entrepreneurs are fresh, while the rest investment is made by the existing entrepreneurs as a part of their expansion.
One of the most important aspects of investment is all of the entrepreneurs have focused on compliance and technology to meet the buyer’s requirement and workplace safety.
On the other hand, some of them also concentrated on producing value-added products.
“We are already in the apparel business for years. The new units of Magic Works Limited located in Bhaluka is a part of our expansion,” Shah Mohammad Mohit, Chairman and Managing Director of Magic Works Ltd, a woven product manufacturer told Textile Today.
Since workplace safety and compliance is an important issue, in the new venture, we have given importance to safety standards and compliance, said Mohit.
In addition, the latest technology and innovation are core in the investment as the consumer behavior and test changing very fast in the fast fashion industry, he added.
Magic Works have made an investment of Tk120 crore, which employs about 4,000 workers and manufacturers woven products with an annual production capacity of 1.58 lakh pieces.
“In 2019, 78 apparel entrepreneurs become our members but all the new units have not gone for full production yet,” Md. Rezwan Selim, a BGMEA Director said.
Of the new members about 50% are new investors, while the rest are existing members new units as they have gone for expansion, said Rezwan, also Managing Director, Softex Sweater Inds. (Pvt) Ltd.
Newcomers are focusing on safety and compliance, he added.
Though the trade leaders, as well as the economists, welcomed new investors but they urged to make an investment in new and prospective products for sustaining in the business.
“Amid negative export growth, new investment, as well as expansion by the existing ones, is a positive sign for the sector as well as the economy,” Khondaker Golam Moazzem, Research Director of Center for Policy Dialogue (CPD) told Textile Today.
Right now, Bangladesh has overcapacity in some products and segments. So, the new investment and expansion should focus on new products, which have prospects, said Moazzem.
To this end, the trade body has to give a forecast on the future direction of product markets and demands so that the newcomers can take the proper decisions. On the other hand, the association has to give information about the capacity to discourage to invest in a product, which already has overcapacity, the economist added.
He also suggested not to give membership, where there are already enough entrepreneurs.
“New ventures need more investments on modern technology, enhanced efficiency, productivity, compliance and environment-friendly measures to be sustainable and competitive in the global supply chain,” he noted.
According to BGMEA, there are 4,621 garment factories registered with BGMEA, while the BKMEA has about 2,000 members. But all of them are not in operations.