http://www.thedailystar.net/newDesign/news-details.php?nid=169788
Denim makers on a roll as new rules fall into place
Refayet Ullah Mirdha
Businessmen are putting sizeable investments in the denim sector to cash in on the emerging prospects worldwide, thanks to the relaxation of trade rules and shifting of orders from China.
The industry owners are either expanding their capacity or setting up new plants as demand for denim products went up following a change in the fashion trends.
Previously, the majority of denim apparels were menswear and for winter season, but with the changing scenario, denim items are now made for men, women and children, and for all seasons, they said.
The relaxed rules of origin (RoO) by the European Union (EU) under its Generalised System of Preferences (GSP) opened up new opportunities for the denim sector, manufacturers said.
Under the new GSP rules, effective from January 1, exporters will get zero-duty facility even if the products are made from imported fabrics. Previously, the exporters used to get this benefit if only local fabrics were used.
The demand for local denim will rise due to such flexibility in GSP rules. Till now, the garment makers were importing fabrics from China, India, Pakistan and Indonesia, costing at least 45-day lead-time, experts said.
If the Bangladeshi garment makers get the fabrics from the local market, they will not import at higher costs, lead-time and freight charges, they added.
At present, 21 domestic denim makers supply 40 percent of the demand, while the remaining 60 percent is imported. On an average, every factory has a production capacity of six lakh yards per month.
Managing Director of Partex Denim Showkat Aziz Russell said he is investing another Tk 350 crore to raise the production capacity from 2 million yards per month to 4.5 million yards.
The relaxed RoO have both pros and cons, as the garment manufacturers will get zero-duty facility either way under the new GSP rules. “But, we have the advantage of lead-time now,” Russell said.
Syed Mohammad Kamruzzaman, a marketing executive of Ha-Meem Denim, said they will start production in the expanded unit of its Mauna factory, which has doubled its capacity to 1.7 million yards from 8.5 lakh yards per month.
The company invested Tk 100 crore for the expansion, he said. “We are waiting for the government’s permission for new gas connection. We hope to start production from June or July,” he added.
Obaydul Hoque, an adviser to Silver Denim Composite Ltd, said they are setting up a Tk 300 crore factory to produce eight lakh yards of denim fabrics per month, and will go for production within a year.
“The relaxation of the GSP rules is an added advantage. But we are predicting better future of denim in Bangladesh due to the China factor. Bangladesh will enjoy the advantage of lead-time in the demand driven market,” he said.
Hoque said the demand for Bangladeshi textile products is increasing since China, the largest apparel supplier in the world, is shifting its attention to other industries. Bangladesh is a good place for international buyers for its relatively lower production cost, he added.
In September last year, Nitol Group signed an agreement with Arvind, the largest denim company in India, to set up an 80:20 joint venture plant in Bangladesh under Comilla Export Processing Zone.
The investment will be about $69 million over a period of three years. In the first phase, a plant of 10 million-metre capacity will be set up at about $25 million and then it will be scaled up gradually.
Foreign investment is coming in the denim sector because the country has ready consumers and it enjoys the GSP facility to EU. Bangladesh exports products worth over $6 billion a year to EU, of which 90 percent are garment items.
Executive Director of Centre for Policy Dialogue (CPD) Mustafizur Rahman said the peaking demand should depend on competition. “If we can supply denim at a competitive price then the demand will increase obviously,” he said.
Although the backward linkage industries will face competition due to the EU move, Bangladesh has the advantage of reduced lead-time and transportation cost, he added.
Zillul Hye Razi, trade adviser to EU trade delegation to Bangladesh, said many more denim factories will come into production in the near future.
“If we can supply quality fabrics at a competitive price, the manufacturers will not go to other countries because Bangladesh will enjoy lead-time facility here,” Razi said.
Abdul Hai Sarker, former president of Bangladesh Textile Mills Association, said in the long run there will be a negative impact on local backward linkage industries’ growth in the textile sector.
“The backward linkage industries would be at risk because the manufacturers will get zero-tariff benefits if they make garment from the fabrics of other countries,” Sarker said.
Jahangir Karim, a teacher of a fashion and design institute, said now denim jeans for both men and women are in the market. “The denim products match almost all designs now and they are made for all seasons,” Karim said.
Jalal Ahmed, vice-chairman of Export Promotion Bureau, said in fiscal 2009-10 Bangladesh exported knitwear worth $4.71 billion and woven garment products worth $2.47 billion to EU. During the same period the country exported knitwear worth $891 million and woven garments worth $2.73 billion to the US.
“We are expecting a higher growth of both knitwear and woven garment to EU from now because of the latest EU move on GSP,” Ahmed said.
Denim makers on a roll as new rules fall into place
Refayet Ullah Mirdha
Businessmen are putting sizeable investments in the denim sector to cash in on the emerging prospects worldwide, thanks to the relaxation of trade rules and shifting of orders from China.
The industry owners are either expanding their capacity or setting up new plants as demand for denim products went up following a change in the fashion trends.
Previously, the majority of denim apparels were menswear and for winter season, but with the changing scenario, denim items are now made for men, women and children, and for all seasons, they said.
The relaxed rules of origin (RoO) by the European Union (EU) under its Generalised System of Preferences (GSP) opened up new opportunities for the denim sector, manufacturers said.
Under the new GSP rules, effective from January 1, exporters will get zero-duty facility even if the products are made from imported fabrics. Previously, the exporters used to get this benefit if only local fabrics were used.
The demand for local denim will rise due to such flexibility in GSP rules. Till now, the garment makers were importing fabrics from China, India, Pakistan and Indonesia, costing at least 45-day lead-time, experts said.
If the Bangladeshi garment makers get the fabrics from the local market, they will not import at higher costs, lead-time and freight charges, they added.
At present, 21 domestic denim makers supply 40 percent of the demand, while the remaining 60 percent is imported. On an average, every factory has a production capacity of six lakh yards per month.
Managing Director of Partex Denim Showkat Aziz Russell said he is investing another Tk 350 crore to raise the production capacity from 2 million yards per month to 4.5 million yards.
The relaxed RoO have both pros and cons, as the garment manufacturers will get zero-duty facility either way under the new GSP rules. “But, we have the advantage of lead-time now,” Russell said.
Syed Mohammad Kamruzzaman, a marketing executive of Ha-Meem Denim, said they will start production in the expanded unit of its Mauna factory, which has doubled its capacity to 1.7 million yards from 8.5 lakh yards per month.
The company invested Tk 100 crore for the expansion, he said. “We are waiting for the government’s permission for new gas connection. We hope to start production from June or July,” he added.
Obaydul Hoque, an adviser to Silver Denim Composite Ltd, said they are setting up a Tk 300 crore factory to produce eight lakh yards of denim fabrics per month, and will go for production within a year.
“The relaxation of the GSP rules is an added advantage. But we are predicting better future of denim in Bangladesh due to the China factor. Bangladesh will enjoy the advantage of lead-time in the demand driven market,” he said.
Hoque said the demand for Bangladeshi textile products is increasing since China, the largest apparel supplier in the world, is shifting its attention to other industries. Bangladesh is a good place for international buyers for its relatively lower production cost, he added.
In September last year, Nitol Group signed an agreement with Arvind, the largest denim company in India, to set up an 80:20 joint venture plant in Bangladesh under Comilla Export Processing Zone.
The investment will be about $69 million over a period of three years. In the first phase, a plant of 10 million-metre capacity will be set up at about $25 million and then it will be scaled up gradually.
Foreign investment is coming in the denim sector because the country has ready consumers and it enjoys the GSP facility to EU. Bangladesh exports products worth over $6 billion a year to EU, of which 90 percent are garment items.
Executive Director of Centre for Policy Dialogue (CPD) Mustafizur Rahman said the peaking demand should depend on competition. “If we can supply denim at a competitive price then the demand will increase obviously,” he said.
Although the backward linkage industries will face competition due to the EU move, Bangladesh has the advantage of reduced lead-time and transportation cost, he added.
Zillul Hye Razi, trade adviser to EU trade delegation to Bangladesh, said many more denim factories will come into production in the near future.
“If we can supply quality fabrics at a competitive price, the manufacturers will not go to other countries because Bangladesh will enjoy lead-time facility here,” Razi said.
Abdul Hai Sarker, former president of Bangladesh Textile Mills Association, said in the long run there will be a negative impact on local backward linkage industries’ growth in the textile sector.
“The backward linkage industries would be at risk because the manufacturers will get zero-tariff benefits if they make garment from the fabrics of other countries,” Sarker said.
Jahangir Karim, a teacher of a fashion and design institute, said now denim jeans for both men and women are in the market. “The denim products match almost all designs now and they are made for all seasons,” Karim said.
Jalal Ahmed, vice-chairman of Export Promotion Bureau, said in fiscal 2009-10 Bangladesh exported knitwear worth $4.71 billion and woven garment products worth $2.47 billion to EU. During the same period the country exported knitwear worth $891 million and woven garments worth $2.73 billion to the US.
“We are expecting a higher growth of both knitwear and woven garment to EU from now because of the latest EU move on GSP,” Ahmed said.
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