German co invests $200m to set up mega textile factory in Bangladesh

http://www.thefinancialexpress-bd.com/2009/01/22/56689.html

German co invests $200m to set up mega textile factory in Bangladesh

Mushir Ahmed

A top German company is setting up one of the world’s largest textile factories in Gazipur as it sees Bangladesh textile and apparel export doubling to $22 billion by 2011, an official said Wednesday.

Steffen Mohler, marketing and sales director of Multiline Limited, said his company is investing $200 million in a state-of-the-art knit composite manufacturing facility, which will be five times bigger than its nearest local rival.

“We have already bought 80 bighas of land in Gazipur and are purchasing another 220 bighas in the same area. It will have 14 factory halls employing more than 10,000 workers, once it goes into production in early 2010,” Mohler said.

The factory will have all the forward and backward linkages— spinning, weaving, dying and washing and sewing in one compound– along with a three-star hotel to house German technicians, he said.

“It is going to be the one of the largest in the world, maybe the largest with an investment totalling at least $200 million,” he said.

This will be the biggest German investment in Bangladesh and by far the largest the country’s textile sector has attracted from a foreign investor.

Officials have said the previous largest investment in garment and textile sector never surpassed $25 million.

Mohler said the factory will be social and environment complaint, implementing strict Eco-Tex 100 guidelines and setting up the biggest effluent treatment plant in the country.

The investment comes in the backdrop of expanding apparel exports from Bangladesh despite global financial meltdown.

Industry and analysts have said despite the global retail gloom, Bangladesh shipments soared on the back of diversion of orders from China.

China which accounts for some 70 per cent of the world’s textile trade is fast losing out as a the favourite destination for low cost manufacturing due to a spike in wages and currency appreciation.

Mohler said Bangladesh has elbowed out Indonesia and Vietnam as the next chosen hub for textile and footwear manufacturing.

“In the 1990s and early 2000s we thought Indonesia and Vietnam were among the biggest low cost manufacturing hub for items such as textile, toys and footwear. But now Bangladesh is emerging as a big exporter, especially in textiles,” he said.

He said textile and apparels produced by the country’s over 4000 manufacturers remained the cheapest in the world, prompting most of the world’s retailers to set up buying houses here.

“I don’t know of any German or European departmental stores or trading firms who don’t have a buying house in Bangladesh. On a narrow Gulshan avenue one will see at least 400 such buying houses,” he said.

Bangladesh has exported apparel and home textiles worth $11 billion dollars in the year to June 2008. “I am sure it will double by 2011,” he said.

His comments came as big retailers from Japan, which buy some 95 per cent of its apparel from China, have focused their eyes on Bangladesh for the first time in the country’s history.

Appreciation of the Japanese currency has prompted the companies to diversify their supply chains, with Bangladesh emerging as a favoured destination for offering items at least 20-30 per cent lower than that of China.

“It’s a sure sign that Bangladesh is becoming one of the next big manufacturing hub in Asia,” said Ifty Islam, a managing partner of Asian Tiger Capital, an investment bank.

“If you can fast solve the energy problem, we will even grow faster than India,” he added.