Bangladesh is the second largest manufacturer and exporter of readymade garments globally and is second only to China!
The apparel manufacturing behemoth as it is, it was but natural that the bigger and well-established players in the realm of apparel making in the country would sooner or later start spreading their wings and start operations from other countries as well on account of various reasons and they have been doing so since some time now.
Take for example the case of DBL Group, which launched its garment manufacturing unit in Ethiopia in 2018 to take advantage of the Ethiopia’s duty-free access to the US market, low prices of land and cheap labour.
DBL Group is a family-owned business which started in 1991. The first company was named as Dulal Brothers Limited and, over the years, the organisation evolved into a diversified conglomerate in Bangladesh with business interests in apparels, textiles, textile printing, washing, garments accessories, packaging, ceramic tiles, pharmaceuticals, dredging, semiconductor design (VLSI), ICT, and telecommunications and boasting of a dedicated workforce of around 39,000 employees, registering an annual turnover of US $ 780 million for the year 2020-21.
In its first offshore business in Ethiopia for apparels and textiles, the group has reportedly created employment opportunities for around 4,500 people.
“The new factory will go into production in February next year. We expect to employ 3,500 workers. Of them, 150 will be employed as executives — all from Bangladesh,” reportedly underlined a company official then underlining the integrated textile and garment factory will come up in the Tigray region of Ethiopia, and added, “We are going to Ethiopia as this African nation enjoys zero-duty benefits from the United States on exports. The benefits will continue for a long time as Ethiopia is a member of the least developed countries.”
It is a different story though that following the endless strife in Tigray region has now reportedly led the US to rethink on its trade benefit to Ethiopia as part of the African Growth and Opportunity Act or AGOA for the African LDCs, which it renewed earlier.
Then there is Sparrow Apparels of Bangladesh, which through a joint venture with India’s Ambattur Clothing Ltd. (ACL), set up a manufacturing unit in Jordan.
It may be mentioned here that Jordan’s Free Trade Agreement (FTA) with the USA has made the country a favourable destination for apparel manufacturers from foreign countries. Besides Jordan’s multitude of FTAs with other countries has made its economy one of the most open in the Middle East even as the country has long been hailed as an island of stability in the midst of politically volatile Middle East even if the Jordan Government also provides various facilities to foreign investors, as a result of which, investors from Bangladesh, India and Sri Lanka are going to Jordan, and Sparrow from Bangladesh is one such name which set up production facility there to avail of the duty-free privilege, by coming up with Tusker Apparel Limited through the joint venture.
“In 2010, my Indian partner and I were working for the same brand. At that time, we considered setting up a factory abroad where Bangladeshi workers would produce apparels. We searched for opportunities in Bahrain, Ethiopia and Jordan,” maintained Shovon Islam speaking to the media, adding that at first, they were very close to buying a factory in Bahrain, but there was a risk as the country’s duty-free market access would expire by 2014.
So, finally, they moved to Jordan considering its geographical location and strong trade relations with the US.
“We would be able to use Israeli ports. Ships from those ports usually go to America faster than those from other ports. An Israeli port is only 40 kilometres away from Jordan’s Al Dulayl Industrial Park and Real Estate where their factory is located,” explained Shovon Islam while adding when they were planning to set up factories in Jordan, Classic Group, owned by a Hong Kong-based Indian, had already established its factory in Jordan, which was run by Sri Lankan workers.
As per reports Tusker Apparel Ltd. started operations with two production lines employing 450 workers. Later, it increased production lines to 16 and number of workers to 2,000.
The trend of investing overseas got a further shot in the arm recently after a growing number of entrepreneurs set their sights on international markets to grow by joining the global value chain even if the country’s central bank (Bangladesh Bank) started allowing local firms to make investments abroad in 2014 and, till last year, it reportedly gave the nod to 10 firms to establish subsidiaries or open offices in various countries such as Malaysia, Singapore, Ethiopia and Kenya.
The central bank reportedly gave approval for US $ 52.2 million to be invested altogether even as the firms subsequently doled out US $ 40 million and at the end of June this year, the central bank granted permission to six more firms to invest a total of US $ 7.77 million in India, Ireland, the US, Singapore and Saudi Arabia.
And among the names in this direction are NASSA Group of Industries, DBL and MBM Garments Limited, which are renowned names in Bangladesh and have strong interest in the apparel and textile domain.
Meanwhile, speaking to the media, a top official of a company making foreign investment reportedly underlined that it becomes a matter of dignity now to have investment and own wealth abroad, while also adding that the next generation stays abroad for education and family purposes and they are more interested to do business in foreign countries, which is why, many people have started running business abroad even as Research Director of the Centre for Policy Dialogue (CPD) Khondaker Golam Moazzem, on his part added the interest in investing abroad has been positive since the competitiveness of local firms had increased while adding that over the past decades, particularly from 1980 onwards, liberalisation of policies encouraged private sector-led industrialisation, and beginning with garments, industries expanded to other export and domestic market-oriented sectors.
“Now, we see a sense of confidence among entrepreneurs. They want to go abroad to try to expand the business,” maintained the CPD Research Director, adding, “It can be said that our entrepreneurs have got a certain level of upgradation, and they are ready for global exposure.”
Khondaker Golam Moazzem, however, requested the Government to ensure transparency in the whole process.
“As we are a country with a small foreign currency reserve base, the regulator should monitor whether investments are being made transparently and profits are being repatriated properly,” said the CPD Research Director underlining a separate policy is needed for overseas investments, and that time has now come to evaluate the performance of firms that have already invested abroad while Atiur Rahman, a former Governor of the Bangladesh Bank who had overseen granting of a number of investment proposals while in office, said Bangladesh’s entrepreneurs should continue learning by conducting experiments.
“We should keep the window open. But the authority should give permissions on a case-to-case basis. We can explore business prospects in countries where Bangladesh has already earned goodwill,” explained Atiur even if according to recent reports, Bangladesh Government has framed draft rules to allow local firms to set up subsidiaries or buy shares in companies in other countries with a view to facilitating investment abroad.
The rules, drawn up under the Foreign Exchange Regulation Act 1947, come at a time when Bangladesh’s businesses are increasingly looking to invest abroad to expand their footprint even if the Bangladesh Bank has so far allowed 15 firms to set up subsidiaries or open offices in other countries while earlier, the central bank permitted 10 companies to open subsidiaries in countries such as Malaysia, Singapore, Ethiopia, and Kenya.
Central bankers say they framed the new rules in order to have a framework at hand so that local investors get a clear guideline on the issue, while adding the rules will be finalised upon approval from the Government.
Given these recent developments, one would but expect that more and more entities from Bangladesh would now venture overseas to prove their mettle and dominance in the realm of apparel manufacturing and in other sectors as well!
