Transcript BTMA Thanks - Cotton Bangladesh

Bangladesh Cotton & Textile Convention 2006
Opportunities for Increased Trade In Cotton Textiles
Presentation
on
Growth of Textile and Clothing Industry in Bangladesh
A. Matin Chowdhury
Managing Director
Malek Spinning Mills Ltd.
Hotel Dhaka Sheraton
23rd April, 2007
23rd April, 2007
Background
 Traditionally a textile country.
 Jute exports supported economy. Declined in 80’s due to
technology and nationalization; had to look for alternative.
 Textile & Clothing (T & C) replaced jute as the major export :
(a) East Asian wages were going up
(b) Problems in Sri Lanka
(c) Labour intensive industry
(d) Favorable quotas and GSP Policy from EU and USA
23rd April, 2007
T & C Export Journey
Initially garments produced with imported yarn & fabric.
Growth could net be sustained with imported inputs :
 Cost too high
Smaller margins.
 Inconsistent quality leading to claims / rejections.
 Undependable deliveries
Extended lead times.
 Unable to respond to fashion changes.
23rd April, 2007
Post MFA Policy Statement
• In a quota free world, all textile manufacturers will have free access and
hence will be competing against Bangladesh for garment export.
• Competing countries are trying to reduce export of basic and intermediary
raw materials / products and pushing for finished goods.
• As these countries opt for value added products, supply of yarn and fabric
will be reduced. Bangladesh, relying on these countries for raw material,
will be at a disadvantage.
• All buyers give preference to countries / companies with vertical operation
to meet lead time and fashion changes, local fabric availability is
necessary.
Therefore, in order to maintain its competitive advantage in garment
exports, Bangladesh supported local textile industry.
23rd April, 2007
Policy Result :Domestic Market

Growth in population & per capita consumption, multifold
increase in demand

BTMA members & handloom weavers met market needs &
kept foreign competition out. In spite of lowering import duties
and lifting all import bans/restrictions.
Year
Yarn (in mil kgs)
Fabric (in mil
mtrs)
Demand in 1995
172.91
1,265.22
Demand in 2006
358.00
2,010.32
Projected 2010
425.00
2,600.00
23rd April, 2007
T & C Growth
Description
1994
2006
1.40 million
5.72 million
3,000
7,876
3,314
17,814
Export using local
fabric
Negligible
US$ 4.78 bill.
Foreign Exchange
retention using local
fabric
Negligible
US$ 3.58 bill.
25 %
75 %
16 weeks
6 weeks
Spinning Capacity
Ring - Spindle
Open end - Rotor
Looms
Value addition on Knit
and Woven
Lead time
23rd April, 2007
Positive Impact of Using Local Inputs
Million US$
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1993-00
19992000
264
1,035
2,148
3,817
4,725
1,292
2,984
3,538
4,083
4,736
Knit m il dozens
11
44
92
165
Woven m il dozens
34
78
92
108
Knit m il $
Woven m il $
2003-04 2005-06
2007-08
Est.
180
160
140
120
100
80
60
40
20
0
Million Dozens Pcs.
Knit garment export fueled by the supply of indigenous yarn has
overtaken woven garment export
23rd April, 2007
Challenges

World T&C market growing at 5% annually.

Buyers moving to targeted countries. Large volumes and
economies of scale needed. Bangladesh is strong in sweater, knit,
denim and home textiles.

Bangladesh only nation excelling
management for export using


Local Inputs

Imported inputs
in
dual
supply
chain
Growth potential very large. Can aim at $20 billion export by 2011
with 65% local inputs.
23rd April, 2007
EU Growth
Results:
•
•
•
•
Export under GSP to the EU increased eleven fold.
1998 - Euro 329 mil
2005 - Euro 3.625 mil
Huge local inputs & foreign exchange retention.
Massive domestic investment in T & C.
USA Market
Total T & C import
Year
Import
% Change
2004
64,767 mill. $
-
2005
68,713 mill. $
6.09
2006
71,629 mill. $
4.24
23rd April, 2007
Top Ten Gainers in USA Market 2004 - 2006
Country
2004
2005
2006
% change
2005 - 2006
China
8,927.86
15,142.87
18,517.52
22.29
Indonesia
2,402.83
2,875.42
3,670.48
27.65
Vietnam
2,562.46
2,724.66
3,222.12
18.26
India
2,217.11
2,976.18
3,186.9
7.08
Bangladesh
1,977.56
2,371.73
2,914.16
22.87
Cambodia
1,428.99
1,712.84
2,135.71
24.69
Sri Lanka
1,549.39
1,650.21
1,682.43
1.95
Pakistan
1,137.67
1,258.87
1,411.97
12.16
Thailand
1,799.37
1,807.79
1,839.67
1.76
594.71
715.59
879.33
22.88
24,597.95
33,236.16
39,460.29
18.73
Nicaragua
Total
Source : OTEXA. USA
23rd April, 2007
Top Ten Losers in USA Market 2004 - 2006
Country
2004
2005
2006
% change
2005 - 2006
Mexico
6,684.84
6,078.33
5,296.52
-12.86
Hong Kong
3,848.98
3,510.57
2,810.96
-19.93
Honduras
2,673.35
2,622.31
2,440.25
-6.94
Guatemala
1,946.69
1,816.24
1,666.25
-8.26
Domical Republic
2,058.80
1,849.16
1,547.68
-16.30
Salvador
1,720.26
1,619.19
1,407.73
-13.06
Canada
1,504.41
1,273.40
1,166.73
-8.38
Taiwan
1,548.92
1,134.43
1,004.81
-11.43
Korea Republic
1,808.82
1,154.62
912.73
-20.95
Turkey
1,168.60
943.77
726.07
-23.07
24,963.67
24,002.02
18,979.73
-13.74
Total
Source : OTEXA. USA
23rd April, 2007
Opportunities
USA Market
Gainer
Looser
* China * Indonesia * Vietnam * India * Bangladesh
* Mexico * Canada * Central America * Korea
* Taiwan *Hong Kong
Bangladesh has taken steps to fill the space created by the above
countries.
Post-MFA US Market Growth
Article
T&C
2005
In Million $
2006
Growth %
2,371
2,914
22.87
Cotton Shirts
105
180
70.99
Cotton Trousers
308
545
76.83
23rd April, 2007
Value Retention Using Local Fabric
2006 Bangladesh T & C business & FE retention:
(all figures in mil US $)
Items
Total
Export
Export using local
inputs
Value
Retention
Export using foreign
inputs
Value
Retention
Woven
Garments
4,545
1,136
852
3,409
852
Knit
Garments
4,388
3,510
2,632
878
220
Home
Textile
213
138
104
75
19
Total
9,146
4,784
3,588
4,362
1,091
23rd April, 2007
Home Textile – Bangladesh in the EU market
 Bangladesh fastest growing exporter.
 Grew from €49 mil 2004 to €98 mil in 2005.
Country
2000
2003
2004
Turkey
484,392
601,944
662,376
Pakistan
381,694
533,203
567,470
Portugal
394,085
332,122
322,354
India
254,863
242,025
298,544
China
244,763
238,562
265,600
45,344
49,642
98,515
Bangladesh
Source : EUROSTAT
23rd April, 2007
DENIM
Local availability of yarn stimulated growth in Denim fabric
manufacturing :
Denim fabric manufacturing capacity – per day
2005
85,000 yrd
2006
550,000 yrd
2007 (Estimated)
700,000 yrd
This results in :
Bangladesh top denim supplier to EU 2006 – 26.76% market
share
- Growth
- 26.15% for Man denim
- 91.00% for Woman & Girl’s denim
Export to USA 2005
- 850,000 doz.
Growth
- 160.00%
23rd April, 2007
Yarn Requirement
 Ring spinning meeting demands for knit.
 Open End yarn required for woven especially denim.
 Yarn for sweater.
FUTURE
 Raw cotton requirement will continue to grow
 Bangladesh domestic & export market based on cotton
products.
 All types of cotton demand is developing.
23rd April, 2007
Bangladesh Textile & Clothing Export in Post MFA – Era
Strengths
 Aggressive investors
 Efficient and trainable labour force
 Duel Supply Chain Management :
Export with local inputs
Export with imported inputs
 Backward linkage
 Market access
Areas for Growth
1. Knitting
2. Sweater
3. Denim
4. Bed sheet
5. Woven Garments
23rd April, 2007
THANK YOU FOR YOUR KIND
ATTENTION
23rd April, 2007