Garment accessories see bright prospect
News Type: Marketing News
Source from: theIndependent
Makers of garment accessories and packaging have made an enormous investment of about Tk. 1,200 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, and preferential location at the heart of the Asia-Pacific region have lured foreign investment to the textile and apparel industry, said Abdul Kader Khan, president of the Bangladesh Garments Accessories and Packaging Manufacturers’ and Exporters’ Association (BGAPMEA).
Around 100 newly built factories are coming up each year to manufacture accessory products.
Last year, investments worth Tk. 1,000–1,200 crore were made in this sector. Even more projects are now waiting in the pipeline, Abdul Kader Khan said.
Talking about the reason behind the huge investment, Khan said since Bangladesh is the world’s second largest exporter of apparel products after China, there is a huge investment opportunity in the textile and garments industry.
So far, Tk. 40,000 crore has been invested since the inception of this sector, he added.
“We have urged the government to reduce corporate tax to 10–12 per cent from 35 per cent to ensure more growth in the garment accessories sector. We have seen how the government's decision to reduce corporate tax rate from 15 per cent to 12 per cent in the readymade garments (RMG) sector eventually inspired local investors to make investment decisions,” said Khan.
Since the demand for accessory products is growing at a faster rate at both home and abroad, around 100 new factories have 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 in the accessories industry."
“We have to put more emphasis on producing high-quality accessory items. We must establish this sector separately and not as the backward integration of the readymade garments (RMG) industry,” he also said.
“However, the new investment will focus on direct export of accessory items because we can meet approximately 95 per cent of the local demand,” he added.
He said Bangladesh produces and exports accessories like woven labels, leather badges, stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers, price tags, buttons and zippers.
Indirect contributions have always made up 15–20 per cent of the net export earnings of the RMG sector. Export earnings from the RMG sector in FY2017–18 totalled USD 30.61 billion. This includes approximately USD 7.10 billion 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, among which USD 1.42 billion comes from direct exports to the Middle-East, South Africa, Sri Lanka, Malaysia, Europe, Vietnam, Cambodia, and Laos.
Some factories are already exporting accessory items directly, Khan said.
“Bangladesh yearly exports basic polo shirts, which are worth USD 6 billion, among which our contribution stands at USD 1.2 billion,” he added.
Export Promotion Bureau stats show that exports of yarn and fabrics rose by 20.16 per cent to USD 141.12 million between July and May of FY2018-19 compared to the same period in FY2017-18. This scenario clearly depicts that Bangladesh could be a major source of garments raw materials, said Khan.