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III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 State of Cotton and Textile.

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Presentation on theme: "III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 State of Cotton and Textile."— Presentation transcript:

1 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 State of Cotton and Textile Industry of Bangladesh 2010 and Beyond Quamrul Ahsan, Ph.D. Editor-in-Chief Cotton Bangladesh editorinchief@cottonbangladesh.com

2 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Why Phenomenal Growth in Textile Sector Occurred in Bangladesh? Three synergic and intrinsic factors: Resources: Abundant Labor Forces, Energy and Natural Gas Population 140 m with Growth Rate 3% Improved Life Style and Increased Per Capita Income Opportunity: Preferential access of RMG to US and EU under MFA and GSP agreements (Prior to 2005) Policy Decision: Liberalization of Economy Encourage Private Sector Investment Favorable Textile Policy: Textiles a Thrust Sector`

3 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Labor and Power Cost in Bangladesh Parameters Bangladesh India Pakistan China Labor Cost (US $/hr)0.230.430.410.89 Energy (US cents/KWH)7.56*9.336.727.84 Energy (US cents/KWH) 1.90--- (Gas Burned) * Rural Electrification Board (REB)

4 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Textile Policy Introduced Support System Fiscal Benefits Duty Drawback- Draw back the duties paid for exported goods Cash Incentives – 25% (Until 2005 and now 5%) Cash payment by Bangladesh Bank who are not covered by the Duty Drawback or Bonded Warehouse program. Financial Benefits Bonded Warehouse – Allowed duty free import of Yarns and Fabrics Back-to-Back L/C – Exporters opened back-to-back LC to import raw materials Institutional Support Skill Development and Labor Training

5 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Textile Policy Tariff Structure Stimulated the BLI Growth ItemTariff Raw Cotton*0% Textile Machinery*0% (5% 2007-08) Import of Yarn5% (Total Duty is 28%) Fabrics37.5% (Total 60.5%) *Tariff in Spinning Sector is Strikingly Absent

6 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Textile Policy Directed to Expand the Domestic Textile Capacity Strengthened the Backward Linkage Industry (BLI) Achievements Made: Increased local value addition (1994-25%, 2006-75%) and lower lead-time Ensured uninterrupted supply of Yarns and Fabrics for RMG Generated a vibrant collaboration between all sectors vertically integrated that helps achieve innovation and product diversification and quality

7 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Ring Spinning Capacity 1996200120022003 20042005 Spindles (million) 0 1 2 3 4 5 6 Years 2006 7 Rotor: 1994-3,000 and 2006-7,876 Frames 5.7m 1.5m

8 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Textile Export 1999-00 Export Sales (billion US $) 0 1 2 3 4 5 Years 0 50 100 150 200 250 Knit ($) Woven ($) Knit (Doz) Woven Export Volume (million Dozens) 2003-042005-06 20061993-94 (Doz) US $9.56bUS $1.5b

9 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Components of Textile Industry, 2005-06 SectorNo of Units Installed Machine Production Units Capacity Capacity Cotton Spinning232 4.94 m Spindles 538* m Kg Weaving380 25,000 SL/SLL 1200 m meter Powerloom1066 23,000 SL/SLL 300 m meter Handloom148,342 498,000 Handlooms 837 m meter Knitting & Dyeing2,950 18,000 KM 2300 m meter Woven/Knit Fabrics 4637 m meter Dyeing and Finish310 - 1050 m meter RMG Factory4,400 - 300 m Doz * Total yarn Capacity 600.06 m Kg including Synthetic Yarn

10 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 (Market Share) Origin of Imported Cotton, 2006 CIS 70%

11 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 (Total 488,691 MT) Origin of Imported Cotton, 2006

12 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 (Market Share) Suppliers Origin, 2006

13 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Projected Demand by 2010 YearFabrics (m meter) Yarns (m Kg) Domestic Export Total 2004-05 (Base) 1,960 3,880 5,840 973 2005-06 2, 050 4,465 6,515 1,086 2006-07 2,150 5,055 7,205 1,201 2007-08 2,252 5,620 7,872 1,312 2008-09 2,360 6,160 8,520 1,420 2009-10 2,475 6,640 9,165 1,519

14 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Projected Capacity Building by 2010 Type of Present Production Demand Demand-Supply Number of Units Industry Capacity by 2010 Gap by 2010 Need to be Built Spinning Unit* 600 1,519 919 200 Weaving Units** 1,740 4,558 2,818 217 Knitting Units+ 2,300 4,558 2,258 216 W/Fabric Processing++ 1,050 4,558 3,508 175 *25,000 Spindle with 4.6 m Kg capacity **120 Shuttleless, 13 m meter capacity +1,725 Tons per year capacity ++ 20 m meter annual capacity

15 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 1998199920002001 20062010 Tons (1000) 0 200 400 600 800 1000 1200 Years Cotton Consumption Projected 1,045,087 MT

16 III International Cotton Fair and IV International Cotton and Textile Conference, Tashkent, Uzbekistan, September 17-19, 2007 Conclusions 1.A robust textile sector has been emerged over 20 years contributing US $ 9.5b to Bangladesh Economy 2.Textile sector is the key to export earning which accounts for 76% of total export 3.Bangladesh enjoys competitive advantage over China, India and Pakistan in terms of Labor and Energy. 4.Bangladesh will continue to stand high in the export market especially in knit garments 5.Significant capacity building is imminent 6.Favorable Conditions for Foreign Investment


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