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“Higher bank interest rate impedes to produce value-added products”

Shangu Group, trusted name for quality garments to the brands and buyers. Recently Shangu Group Chairman M. A. Taher shared his thought and views on the recent scenario of Bangladesh textile industry with Textile Today. A glimpse of the discussion revealed for the Textile Today readers.

M. A. Taher, Chairman, Shangu Group
Figure: M. A. Taher, Chairman, Shangu Group.

Textile Today: In the 2018-19 FY, BD RMG sector exported $34.133 bn which is 84.21% of total national export. How this growth can be continued in the 2019-20 fiscal year, though lots of challenges are arising frequently?

M. A. Taher: It’s true that presently Bangladesh textile and apparel industry is passing a very challenging time. Due to less price, increased raw materials price, higher gas price, increase of worker wages etc. a lot of small and medium mills already closed down. And still, there are lots of challenges arising regularly.

As for Shangu Group, we are doing fine, and negotiating the challenges really well. But the overall scenario of the textile and apparel sector of Bangladesh is under a severe strain and our competitors are always breathing on our neck.

On the other hand, due to the trade war between the US and China, Bangladesh textile and apparel industry suppose to be benefited. Frankly speaking, I am seeing a lot of opportunities for Bangladesh textile and RMG industry.

In previous years, as an apparel manufacturer, we did not use to get a lot of orders from the US. Whereas, at present Bangladesh is getting a lot of orders from the US buyers. Which means the trade war between the US-China has given a boom for the Bangladesh textile and apparel industry.

Bangladesh is in this textile business for the last 40 years and we have gained a lot of experience over the years. The whole workforce of the industry gets experienced in dealing with from fiber to finished RMG. So, we are confident to deal not just the US buyers but any top brands in the world. But for the woven fabric we are still not capable to meet the 100% demand locally.

“The government also can play a vital role in this by providing incentives, tax exemption, and other facilities for the sector”

Though Bangladesh exports 6.5% (in 2018) of global ready-made garments – 2nd largest RMG exporters – and we must aim to grab 10% to 15% global share.

Yes, we have a lot of hurdles to overcome. Bank interest rate is still in the double-digit, energy price hike, etc. and the government support will be critical for Bangladesh’s textile and apparel industry to win over the challenges. Our concerned organizations like BGMEA, BKMEA, BTMA all together with a joint and teamwork effort is also required. But it has to be in a more effective way.

Textile Today: Why is Bangladesh garments industry still not going for more value-added products? What are the major challenges here?

M. A. Taher: Shangu Group is doing value-added products, and other leading factories in Bangladesh is also doing it for top global brands. But as a country, we are behind in this criterion than our competitors like Vietnam and Turkey. But if I talk about the majority of the entrepreneurs, their profit margin is not sufficient to invest more in this segment.

Manufacturing value-added products need specialized machinery, yarn, fiber and other things, which costs higher. Here, bank loan plays a vital role. As I said earlier, bank loan in Bangladesh is difficult for the RMG manufacturers as the interest rate is beyond our capacities, ranging from 12% to 14%. Whereas, our profit margin is less than 6%.

The government also can play a vital role in this by providing incentives, tax exemption, and other facilities for the sector.

Today: In which sector should a new investor invest considering the current situation of Bangladesh textile industry?

M. A. Taher: It is really a good question. Bangladesh should not only excel in RMG, rather we should diversify into other sectors. Also, we need to think about investing in the gas and energy sector as power is the backbone of other industries. If you have enough energy and power then entrepreneurs will feel confident investing in other sectors.

We have Golden fiber jute which is one of our main strength, at the same time leather industry, paper mills, mobile handset, IT sector, agro-food industry -these are the sectors where we have huge potentials to grow.

Textile Today: Please share about Shangu Group’s strengths and why Shangu is different from others?

M. A. Taher: Of course, we are different, here at Shangu Group believe service comes first. We believe in commitment and honesty; we believe in hard work and teamwork.

Also, we believe in our workers. We say to our workers, the company belongs to you, not to the management. If anyone wants to go for a better opportunity, we help them. So, the workers own my company and we believe in them.

We have an experienced team who knows what to do and how to do. We work in collaboration and this is our strength and set us apart from others.

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

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