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Pakistan: Global demand drives home textile investmentTuesday, March 17, 2015 > 11:36:48
(The Financial Express)
A growing global demand for local home textile products lures entrepreneurs into making more investments in the sector despite challenges like European Union's GSP facility to Pakistan and current political turmoil, industry insiders said.
A good number of home textile manufacturers such as Unilliance Textile, Mom Tex, Fariha Group, Pakiza Group and Sad Musa have already invested millions of taka in new factories and expansion of their existing capacity, they added.
Even though local manufacturers are hopeful of facing the challenge of Pakistan's duty-free facility in the EU market, some of them have termed the country's ongoing political stalemate an impediment to the sector's growth.
China, India, Pakistan and Turkey which are traditional producers of home textiles have earned reputation for their product ranges. But Bangladesh's home textile industry is also growing fast, making it a promising contender among these competing countries.
Newer opportunities are emerging ahead as buyers from China are shifting to Bangladesh. Good quality, commitments, low production cost, cheaper wages, duty-free access to some developed countries are the factors that weigh in favour of Bangladesh for the retailers to source from here.
Unilliance Textiles Ltd has undertaken a Tk 3.0 billion project to double its production capacity in stitching and weaving segments mainly to grab international demand for quality cost-competitive hometex products, said its International Account Manager Sabbir Chowdhury.
"Our production will reach 50,000 sets per day from existing 22,000 sets on completion of the project," he told the FE.
Explaining the details about the company's expansion plan, Mr Chowdhury said despite the rising global demand, there are a small number of supply companies in the country that encourages his company to make more investments.
Pakiza Group that produces sari and salwar kameez and mainly focuses on the local market, now plans to enter the global arena with its new unit -Mom Tex that is expected to produce home textile products soon.
"The project has been launched last year aiming to diversify our product range and market," said Md Mogahid Hossain Bulbul, Manager (Admin) of Mom Tex, adding that they are expecting to start production at the end of this year.
Another company Sad Musa has come up with a huge investment plan worth Tk 25 billion (Tk 2,500 crore) to take hold of the growing demand for hometex products with a strong backward linkage support.
Eight factories would be set up on 100 acres of land in Chittagong, said Shaikh Hasan Zaman, director of Sad Musa Fabrics, adding that four units have already been set up with the production capacity of 30 tonnes of yarn and 50,000 metres of fabrics per day.
"Fifty per cent of the yarn and fabrics is locally consumed while the rest are sold to the exporters. We will need to stop outsourcing once all our units go into production," he said.
European Union GSP facility for Pakistan, appreciation of the local currency against the US dollar and depreciation of EU currency against US dollar and lingering political turmoil are seen as major factors blocking the growth of the country's potential home textile exports, industry insiders said.
According to a recent study conducted by Bangladesh Foreign Trade Institute (BFTI), Bangladesh is likely to face strong competitive pressure from Pakistan in home textile trade.
Pakistan has used the new GSP scheme more effectively than Bangladesh did, the study said.
"Due to the EU's new GSP scheme, Pakistan will become the main competitor of Bangladesh on the EU market. Our country may face pressure in the days to come," BFTI director Dr Mostafa Abid Khan said.
Home textile products will be the main victim of the new system, he lamented.
"Pakistan is a cotton-growing country now enjoying the new generalised system of preferences (GSP) on the EU market," said Nurul Islam, Chairman of Noman Group, one of the country's largest hometex product exporters.
So, Bangladeshi-made home textiles are lagging behind Pakistan in terms of cost-competitiveness, he said, adding that the appreciation of taka and depreciation of EU currency against the dollar also eat up the competitive edge of locally made hometex products.
"Political instability cast a negative impact on the overall export growth in this sector. Buyers are not coming to Dhaka to negotiate the future orders while call the local counterparts to a third destinations like Hong Kong and Singapore."
A stable political situation is a must to keep the business running, Mr Islam said.
Echoing Mr Islam, Sad Musa Director Mr Zaman said, "We could face the challenge of Pakistan GSP facility to EU only provided with a stable political situation."
Despite all the odds, Bangladesh has still some advantages against Pakistan, said Belayet Hossain, Managing Director of RTT Textile Industries Ltd. "The yarn Bangladesh produces is better than that of Pakistan."
The sector could not flourish to the expected level due to lack of the government policy support while financial institutions like banks did not come up with funds as did for the garment sector, he pointed out.
"But Bangladesh has potentiality of earning $2.0 billion in next couple of years," said Belayet, also former vice chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association.
The industry now needs capacity building to capitalise on the upcoming opportunities to take a sizeable part of the world home textile market, according to businesspeople.
They also sought government policy support, including cash incentives and reduction in bank interest rate.
Bangladesh exports home textiles such as bed sheets, bedcovers, pillow and cushion covers, curtains, rugs, quilts, kitchen aprons, gloves, napkins and tablecloths to European Union countries, the USA, Canada, Mexico, Australia, Japan and Dubai.
The country fetched $792.53 million by exporting home textiles in the fiscal year 2013-14 which was only $402.49 million in FY 2009-10.
According to BTMA, some 17 mills produce about 556.39 million metres of home textiles a year. Industry insiders said the number of such mills is much higher, although their export volume is scanty.