Taiwanese relocating factories to Bangladesh
$200m FDI in six months in EPZs
Jasim Uddin Khan
Taiwanese entrepreneurs are relocating their shoe, furniture and tent fabric manufacturing units to Bangladesh from China and Vietnam as the US and EU imposed anti-dumping duties on the two Asian countries.
The relocation of factories by the Taiwanese helped Bangladesh to receive over $200 million foreign direct investment (FDI) in the first six months of 2008, which is two-third of the investment the Export Processing Zones Authority (Bepza) received in 2007-08 fiscal.
In April 2006 the European Commission formally approved anti-dumping duties on shoes and furniture made in China and Vietnam. In March 2008 EU member states voted in favour of a regulation, which extends the anti-dumping duty until October 2008.
However, it is widely expected that the European shoe industry will request for a further extension of the ant-dumping measure.
“Another reason for shifting the plants to South Asian countries from China and Vietnam is the soaring production costs. Production cost increased over 30 percent in the two countries during the first six months of 2008 due to appreciation of local currencies against US dollar,” Frank Wen-Yan Chen, representative of Taipei Representative Office in Dhaka, said yesterday.
According to sources at the Taiwan Trade Centre (TTC) in Dhaka, during the period seven Taiwanese leading furniture, shoe and tent fabric manufacturing companies shifted their factories in China and Vietnam to Bangladesh.
TTC sources said Trendex Industries Ltd, a global leading furniture maker, invested around $55 million in April of this year to set up a new plant at Karnaphuli EPZ in Chittagong.
Mark Hsu, chief executive of Trendex, signed an agreement with the government under which the company bought 27 plots inside the EPZ for the project.
Another big tent manufacturing company Eusebio Sporting Co Ltd invested $50 million for establishing a tent fabric manufacturing plant in Comilla EPZ. But now the production cost of the fabric has increased over 40 percent in China.
Chief executive officer of Eusebio Sporting Co Ltd Lin signed the investment agreement this month and got 22 plots allocated for the factory.
Eusebio is the number one Taiwanese owned Chinese sleeping bag, rucksacks and tent producing company.
Zhong Shan Glory Shoes Ind Co Ltd will shift its shoe factory from China to Karnaphuli EPZ as export of the product to Europe and US markets has been reduced by around 60 percent due to anti-dumping duty. Company’s Managing Director Ho signed an agreement with Bepza in May of this year for setting up its plant on 22 industrial plots in Karnaphuli EPZ.
“Like Zhong Shan Glory Shoes many Taiwanese shoe manufacturers with manufacturing units in China and Vietnam are seriously thinking of shifting their plants to South Asia,” the representative of Taipei Representative Office in Dhaka said.
He said Taiwanese investment in India also jumped to $ 600 million this year.
Genfort Shoes Ltd and La Luna Shoes signed agreements in May and this month, respectively, to invest around $35 million and $ 22 million.
La Luna Shoes will also establish a separate shoe machinery manufacturing plant in Karnaphuli EPZ.
Representative Yan Chen said more Taiwanese investment will come and get registered for industrial plots in Bangladesh.
He pointed out that Bangladesh EPZs do not have adequate plots for the Taiwanese firms with plans to investment in Bangladesh.
“If the government allocate separate industrial plots exclusively for Taiwanese companies investment from Taiwan will double within the next year, Yan Chen hoped.