The investment in the garment accessories sector stands at $5 billion now with more than 1,900 factories operating and supplying almost all the required accessories to the garment industry. Photo: Star/file
The flow of fresh investments in the garment accessories segment slowed in the last two years mainly for the severe fallout of Covid-19, the Russia-Ukraine war, and the US dollar crisis.
Currently, the investment in the garment accessories sector stands at $5 billion with more than 1,900 factories operating and supplying almost all the required accessories to the garment industry, according to data from the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA).
The number of such factories was below 50 at the beginning of the garment accessories business in the country in 1989. And most of the essential items used to be imported from India, China, Hong Kong and other destinations.
Now, more than seven lakh workers are employed in the sector and the export value of the accessories is $7 billion, BGAPMEA data showed.
Of the exported amount, $6.25 billion comes in the form of deemed exports and $0.75 billion in the form of direct exports.
And just before the outbreak of Covid-19, the inflow of investment to the sector surged, prompting many new entrepreneurs to come up with fresh investment plans. The existing plants expanded a lot.
For instance, the number of garment accessories-producing factories with Tk 500 crore in investment is more than 35. This was non-existent a few years ago, said Mohammad Moazzem Hossain Moti, president of the BGAPMEA.
“There are several plants with more than Tk 1,200 crore in investment and they are performing strongly in both domestic and international markets.”
The flow of investment began slowing down after the beginning of Covid-19 in 2020. The impacts of the global health crisis have petered out. Now, the fallout of the war is hurting the sector as investment fell.
Moreover, many investors are failing to import capital machinery because of the dollar crisis in the banking sector since June last year.
Bangladesh has been witnessing a shortage of the American greenback since the war erupted, sending the prices of commodities higher. As a result, the international currency reserves of have declined since the country has to pay more to buy essentials from external sources.
Thus, banks don’t have enough US dollars so they can’t open letters of credit in line with the demand.
As a result, many projects have not been able to begin their journey as per plans as entrepreneurs have not been able to import vital capital machinery.
“Banks are unwilling to open LCs worth $10,000 due to the current volatility in the dollar market,” Moti said.
Owing to the volatile global economic situation and the fall in demand from local garment exporters, accessories plants in Bangladesh are running at 75 per cent of their capacity.
“But investment is needed if the country wants to achieve the target of earning $100 billion from apparel shipment by 2030,” Moti said.
“And when the garment export grows to $100 billion, the amount of the accessories export will also cross $15 billion.”
Since many investors could not open new plants, several existing plants have expanded their capacity to meet the growing demand from local and international customers.
The interview of Moti comes as four trade shows are set to take place simultaneously at the Bashundhara International Conference Center from January 11 to showcase the goods in the garment and garment accessories.
The four-day shows — 20th Garments Technology Show Bangladesh; 12th International Garments Accessories and Packaging; maiden India Textile Trade Fair Bangladesh; and International Yarn and Fabrics Expo – would remain open to visitors from 10am to 7pm.
The BGAPMEA and Chennai-based ASK Trade & Exhibitions Pvt Ltd are jointly organising the shows.
Nanda Gopal K, director of the Indian firm, said 250 exhibitors from 18 countries would display their products at 650 stalls.
The shows would showcase the products and technologies that are related to productivity, manufacturing value-added garment items and technologies used in reducing wastage, and yarn and fabric made up of manmade fibre.
