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Migration of textile industry to Bangladesh

21 February, 2013

KARACHI: Minister for Textile Makhdoom Shahabuddin and top textile managers of the country believe that the prime reason behind migration of textile industry from Pakistan to Bangladesh is Preferential Trade Agreements (PTAs) signed with European Union (EU), United States and Bangladesh.

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KARACHI: Minister for Textile Makhdoom Shahabuddin and top textile managers of the country believe that the prime reason behind migration of textile industry from Pakistan to Bangladesh is Preferential Trade Agreements (PTAs) signed with European Union (EU), United States and Bangladesh.

Talking to Our Sources on Wednesday, Mohammad Iqbal Badat, a Houston-based businessman said that the often-cited reason of energy crisis was important too but becomes less important when compared with signing PTAs.

In fact due to textile quota Bangladesh has become a rising global textile hub.

Importance of Bangladesh as a preferred and top supplier of textile products came into the limelight after the Pakistani government revealed in the last five years 40 percent of Pakistan's textile looms have been closed and moved to Bangladesh.

Shahabuddin said about 200,000 power looms, or two-fifths of the industry had moved to neighbouring Bangladesh, leaving around 200,000 families in the Punjab region without work.

Bangladesh turned out as a rising global textile hub due to its cheaper cost of production. It is estimated that textile production costs are around 35 percent cheaper in Bangladesh, mainly as a result of power costs.

Additionally many American and European buyers are increasingly concerned about the political instability in Pakistan and would rather send their representatives to Bangladesh where security arrangements are less onerous.

Growth in Bangladesh's textile industry is not just as the expense of Pakistan. The country has a strong underlying entrepreneurial spirit that has enabled a textile industry to adapt and thrive over the years.

The migration of textile industry from Pakistan to Bangladesh also highlights an evolving trend in labour and capital transfers in a globalised world.

Capital initially moved from developed economies or west to fast-developing economies and it is being reshuffled within territorial limits of developing economies.

There is a third wave of globalisation into frontier markets. As some emerging markets climb up the value-added ladder, frontier markets are increasingly finding a competitive niche, said Chief Asia economist at HSBC Hong Kong Frederic Neumann.

At a recent Finance Asia Business forum sponsored by HSBC, a number of representatives of the international textile industry were keen to support investment in Bangladesh to help its industry grow further.

The position of Bangladesh as a rising global textile hub was highlighted when one delegate pointed out that Bangladesh now manufactures one in 10 pairs of jeans in the world. It was estimated that Bangladesh textile exports in 2011 were worth $19 billion and although this was around 6.5 percent of the $300 billion global market, growth was 50-60 percent a year and could reach a tenth of the global market by the end of 2012.

The general view of the industry appears to be that Bangladesh needs better infrastructure to support the logistics involved in shipping textiles. Road and rail links to China are part of this. An example given at the Finance Asia summit was the pair of jeans that were manufactured in Bangladesh from denim produced in China but for a retailer based in Japan.

End.


 
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