Shams Mahmud is the Managing Director of Shasha Denims Ltd. He has introduced innovative production management, incentive systems and marketing approaches for the company. Besides this, he has previously served as Director in Dutch Bangla Chamber of Commerce and Industry (DBCCI) Bangladesh Textile Mills Association (BTMA) and was Vice President of Bangladesh Philippines Chamber of Commerce and Industry (BPCCI). Mahmud is also a Capstone Fellow of the National Defence College and holds the distinction of becoming the youngest diplomat in Bangladesh at the age of 34 when he was appointed as the Honorary Consul of FDR Ethiopia to Bangladesh.
Recently Mahmud has been appointed President of the Dhaka Chamber of Commerce and Industry (DCCI), the largest private-sector chamber in Bangladesh with over 4000 members, for 2020. In a conversation with Textile Today, Shams Mahmud shared his goal as a President of the Dhaka Chamber of Commerce and Industry (DCCI), the impact of Coronavirus outbreak, Foreign Direct Investment, etc.
Textile Today: As the President of the Dhaka Chamber of Commerce and Industry (DCCI) what is your goal? In what policies do you want to help with the government, which will be helpful for the other businesses in the long run?
Shams Mahmud: DCCI is the largest chamber in Bangladesh with 4000 active members and 16000 passive members. This chamber also is spread across 32 sectors. Dhaka Chamber is the voice of small and medium
businesses. The Chamber has played a crucial part in the development of the private sector and we have always been the voice of the private sector in Bangladesh. DCCI is always vocal and gives suggestions to the government and pursues the government in the areas where the private sector business community sees scope for the government to do more to help create a booming business environment.
In a way, DCCI is the other hand of the government for the private sector where inputs are taken for budgetary, economic, taxation, business diplomacy policies, etc. along with the new avenues like the blue economy, infrastructure bonds, etc. We have seen in last year the private sector showed constriction with below 9% growth. Public sector borrowing increased many folds on the other hand. And whenever the business community put forward the issue of bringing more FDI, the infrastructure development issue stood as a barrier.
It is like a double-edged sword; we want infrastructure development first or FDI? The govt. as taken steps to develop infrastructure for which we witness a squeeze in the private sector.
But private sector growth is a must for the country to grow. That is why this year DCCI has given a proposal where the government will create a mechanism to launch infrastructure bonds in the market to get funds to implement infrastructure projects. Private companies can buy these bonds and be a part of the country’s development. Here it will give a win-win situation for both parties.
The government will get the necessary fund from – like US$ 1 to 10 billion. Then in return, the private companies will get a corporate tax waiver as per the invested amount. If we can make this model project successful, the infrastructure development funding will not be an issue anymore which will help banks to inject more funds into the private sector.
Textile Today: Tell something about the impact of Coronavirus.
Shams Mahmud: Bangladesh’s export basket is heavily reliant on RMG and textiles. Right now, we have reached a critical stage today. Because of Coronavirus, we are seeing our major export markets like the European Union, UK, USA going into lockdown, where mobility of people is being restricted through quarantine etc. As a safety measure stores are being shut down and business and economic activities are coming to a grinding stop.
This means the major export markets of Bangladesh overnight are going through a period of turmoil. This will also lead people to have less disposable income. As a result, RMG, textiles, shoes, leather, frozen food, flower, vegetable export sectors will be badly affected. We hope the situation will be bought under control within 6 months and things will get back to normal.
The government of Bangladesh, especially Bangladesh Bank has to provide monetary and fiscal relief packages for all export-oriented sectors and also at the same time to businesses who import goods to Bangladesh.
In the long run, I believe Bangladesh has an advantage here compared to other competitive RMG manufacturing countries like Vietnam, Cambodia. Bangladesh has a strong backward linkage.
Our competing countries do not have textile and apparel backward linkage industries, they are 90% or more than reliant on China for raw materials. On the other hand, our strong backward linkage industry will help RMG manufacturers to keep the wheel of garments export running.
Textile Today: In the current scenario of the critical banking sector and other trade barriers in the country, do you think new investments or FDI’s will be encouraged? And from your vantage position what are your vision and steps to move forward?
Shams Mahmud: We are working closely with the Bangladesh Investment Development Authority and other related trade bodies to remove trade barriers and welcome more and more FDI. Everyone is positive and everyone wants the best in the country. As for the barriers, two things hinder FDI most. Number one is high taxation and the absence of long-term policies for electricity prices.
The government should have a long-term policy to increase energy prices. So, the investors can come and invest in the long-term vision and plan. As for the new investors, most of our investors follow a typical path.
Suppose if one manufacturer goes or a green factory then others also follow and start making green factories without understanding the whole system. Our investors should come out of this mindset.
I would recommend, before starting any investment, a businessman should first go to the Commerce Ministry for the HS code and other related data to see which sector is performing well and which sector is better to do the investment.
Also, they can go to any freight forwarders to see which factories are delivering on time, export amount, destinations to get the exact figure and get a true picture of the scenario for investment.
Another obstacle is that most of the investors are doing the same type of products or in the same type of categories. This kills the price margin and ultimately destroys an industry. This practice is not sustainable at all. We should have a policy where FDI, in new sectors, should be welcomed with open arms. There should be a transfer of technology and also knowledge.
Textile Today: We know your factory Shasha Denims Ltd. When other factories are providing denim with $2 or less, you are giving the U.S. 2.6 dollars price tag per denim. Give your suggestion for other denim factories.
Shams Mahmud: Everything has a cost. Cost of Research and Development (R&D) for product development, management, workers, etc. I should include the costs of these things. Once a manufacturer reduces the price, then he cannot increase the prices in the future.
We have to be very rigid on certain things to keep the company healthy. I have faith in my company and that the products we are coming up with commands the premium. Right now, the main competition in terms of business Shasha Denims faces are from mills in Turkey, Spain and Italy.
We have invested heavily in research and development, and slowly but surely, it’s beginning to pay off. One has to decide if he wants to be a big fish in a small pond or a small fish in a big pond at the end of the day.
Textile Today: How do you deal with your workers as they become motivated and committed to contributing more?
Shams Mahmud: We see everyone involved with Shasha Denims Ltd as one big family working towards a common goal. We believe that every individual from the work they do has an important role in this journey.
Everyone in Shasha as a sense of ownership in the company. We have encouraged people to share their thoughts and always come up with innovative and best practice solutions. We encourage a linear management style where everyone is answerable and accountable. We encourage people to develop themselves professionally and be abreast of the latest industry news, trends, technology.
If anyone wants to do any courses in abroad, Shasha encourages this and we bear the financial expenses for it. We want everyone to also grow.
One particular aspect of the industry in Bangladesh which disturbs me and whereas a businessman I feel we have failed is that we have not invested enough to help people grow professionally.
That is the reason we make it a point in Shasha that people need to keep learning.
I feel proud when these people come up with new solutions and innovations with their newly acquired knowledge. This creates a symbiotic relationship between Shasha and its family members. Textile Today: The textile and apparel industry of Bangladesh mostly works with cotton and cotton blend fibers. The industry as a whole is looking at the synthetic fiber sector. How do you evaluate this?
Shams Mahmud: Everyone has their philosophy for making certain kinds of products. At the end of the day, everybody has to develop research and development, new products to get a better advantage in the global apparel market. The synthetic fiber sector is almost non-existent in Bangladesh at the moment. FDI should be encouraged in this sector. Manufacturers need to come out of the copy-paste mentality and invest heavily in R&D and the design team plays a crucial role.
Keeping the SDG goals in mind and making progress aligning with the goals is vital for the world. Adopting new technologies to minimize the usage of water consumption and energy should also be part of the company philosophy.
Textile Today: We have made a study where it shows that if a denim factory increases 7-8% annual efficiency of workers then it can earn 35 to 36 crores more annually. What is your view regarding human capital transformation to increase workers’ efficiency?
Shams Mahmud: It has been almost 20 years for Shasha Denims Ltd and we have 98% efficiency. One of the reasons behind that is we share our profit every month. Annually we share 5% profit with the workers from top to bottom.
We are the only textile mill in Bangladesh to do so. Besides this, we also provide 4 bonuses annually. We all need to work for human capital transformation to increase efficiency. At the end of the day, we are one family and it is because of the hard work and dedication of everyone in Shasha, we are what we are today and have reached new milestones and are contributing to the beautiful story of Made in Bangladesh. At the end of the day, Bangladesh is building Bangladesh.