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Garment and textile machinery imports saw an 11% fall in FY19

Textile and garment machinery imports declined by 11% to $1.42 billion in the last fiscal year, thanks to stagnation in investment.

According to Bangladesh Bank (BB) data, in the fiscal year 2018-19, Bangladesh’s imports of textile and garment machinery have registered an 11.04% decline of $1.42 billion, which was $1.60 billion the in the previous year.

T&A machinery imports fall FY19
Figure: A rise in production cost, lack of new investment and expansion of the existing businesses are the main reasons behind the downward trend.

Imports of textile machinery saw 18.40% decline to $663 million, which was $812.58 million a year ago. While garment machinery imports fall by 3.52% to $767.15 million, which was $795.17 million in the previous fiscal year.

Talking to primary textile and garment makers said that imports of capital machinery for the sector went down due to lack of new investment and expansion of the existing business. They also said that the investment was hit due to a cash crunch in the banking sector.

In addition, rise in production cost in both the textile and garment industry has also put a bar in new investment.

BD T&A machinery imports

“The apparel industry has been at a matured stage for quite a few years and we should not expect the growth in capacity expansion like a rising industry, unless a significant change becomes visible in innovation,” BGMEA president Rubana Huq told Textile Today.

In addition, production cost has significantly gone up, especially the increase of minimum wages in 2018, a reconsolidation of the industry can be noticed where SMEs are winding up and the better factories are expanding, said Rubana.

Since the entry barrier has become significantly higher especially for SMEs due to compliance and safety requirement, and less value-added capacity for mediocre factories, this may be an early signal of lesser new investment in this sector, said the business leader.

Unless there are some changes in this situation that restores confidence in the entrepreneurs and new investors, expecting new investments is a fallacy of truth, she added urging effective measures to ensure a business-friendly environment, she added.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a number of new factories registered with BGMEA in FY2017-18 was 82 which came down to 60 in 2018-19 fiscal.

“Downtrend in the imports of capital machinery reflects the real scenario of the country’s private investment, which is going through stagnation,” former caretaker government adviser AB Mirza Azizul Islam told Textile Today.

It is also proven by the sluggish import of industrial raw materials, which mean the production did not increase and there were no new investments, said the economist.

On top of that, a crisis in the financial sector especially banks have hindered the investment, which is a big reason for the downtrend in overall imports of capital machinery, said Islam.

Meanwhile, uneven competition by the illegal import of Indian and Pakistan products and a rise in production cost discouraged new investment in the primary textile industry.

“Huge amount of fabrics and yarn piled up at factories’ warehouses in the country’s primary textile sector. But the manufacturers cannot sell as illegal import has taken lead over the local industry,” Khorshed Alam, a former Director of Bangladesh Textile Mills Association (BTMA) told Textile Today.

It has become very difficult to compete with the Indian and Pakistani fashion goods, while due to a rise in production cost apparel makers are preferring to import yearn and fabrics, said Alam.

As a result, new investment in the sector is not seen in the recent years, while existing businesses are fearing to expand business as they have already more capacity and illegal imports have taken a toll on the local industry, he claimed.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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