Businesses not in favour of FDI in basic RMG sector
Chinese FDI encouraged in high-end productsMoinul Haque
The country’s readymade garment manufacturers are not in favour of foreign direct investment by China in basic RMG sector; rather they want investment in high-end products.
The industry people say they find no reason to encourage foreign direct investment in basic garment items as the local players are strong enough in the sector.
A good number of China entrepreneurs have recently expressed their interest to invest in readymade garment sector in Bangladesh. But the local entrepreneurs said they expected China investment in high-end products, and spinning and woven textile where the country has lack of enough expertise and technology.
Some of the entrepreneurs from China also showed interest to relocate their production units of high-end products including backward linkage industry and dyeing chemical industry. But they feel poor infrastructures, including shortage of power and gas, are the main obstacles for the relocation.
Recently, a number of China business delegation visited Bangladesh to examine and explore more trade and business opportunities in garments and clothing sector.
Two top Chinese delegations also signed two separate memorandums of understanding with the country’s two apex apparel bodies — Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association — to promote bilateral trade and investment.
China, the largest apparel exporter in the world, has recently become a major export destination for Bangladesh as Chinese manufacturers are now unwilling to produce basic RMG items.
According to the BGMEA, China exported apparels worth $143 billion out of $410 billion clothing export in the world.
The Chinese manufacturers have started to shift their basic readymade garment items to high-end apparels. A significant number of garment factories that used to manufacture basic RMG products faced closure in China recently.
In the past two years China set up seven RMG factories in Bangladesh, six of them are joint venture and remaining one is under the Chinese ownership.
Out of seven factories, five factories have got BGMEA membership.
BGMEA vice-president Md Siddiqur Rahman told New Age that without fulfilment of certain requirement they did not approve any foreign factory as their member.
He said, ‘We always encourage foreign investment in the sectors where we could not invest due to lack of expertise or funds but we never prefer FDI in the basic RMG area’.
Siddiqur also said that they invited China entrepreneurs to invest in specialised textile products so that the garment makers could purchase fabrics from the local market.
Faruque Hassan, another vice-president of BGMEA, said local manufactures could not utilise their best production capacity for lack of infrastructure, power and energy supply. So it is difficult to manage gas and electricity for foreign investors.
He said they had developed expertise over the past 30 years in RMG sector and the government should manage required infrastructure, energy and power supply for the existing manufacturing units.
BKMEA vice-president Mohammad Hatem said most of the China entrepreneurs were interested to invest in RMG sector where the local manufactures were strong enough.
‘We urged China manufacturers to invest in the spinning, woven textile segments and chemical industry as we spend billions of taka for importing 70 per cent of the required fabrics and 100 per cent of raw materials,’ he said, adding that that would be beneficial for us.
Hatem also said some of the companies expressed their interest to shift their total industry including textile and dyeing chemical but they wanted assurance on infrastructural support including uninterrupted power and adequate supply of gas.
The country’s RMG export earning fetched around $19 billion in the 2011-2012 fiscal year.
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