10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Background  Traditionally a textile country.  Jute exports supported economy. Declined in 80’s due to technology and nationalization; had to look for alternative.  Textile & Clothing (T & C) replaced jute as the major export : (a) East Asian wages were going up (b) Problems in Sri Lanka (c) Labour intensive industry (d) Favorable quotas and GSP Policy from EU and USA

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 T & C Export Journey Initially garments were produced with imported yarn & fabric. Growth could not be sustained with imported inputs :  Cost too high  Smaller margins.  Inconsistent quality leading to claims / rejections.  Undependable deliveries  Extended lead times.  Unable to respond to fashion changes. Thus, Bangladesh Government and the Textile & Clothing (T & C) industry decided to approach the market with dual supply chain :  Export using imported fabric.  Export using local yarn and fabric.

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Policy Result :Domestic Market  Growth in population & per capita consumption, multifold increase in demand.  BTMA members & handloom weavers met market needs & kept foreign competition out. In spite of lowering import duties and lifting all import bans/restrictions. YearYarn (in mil kgs)Fabric (in mil mtrs) Demand in , Demand in , Projected ,600.00

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Description Spinning Capacity Ring - Spindle Open end - Rotor 1.40 million5.72 million 3,000 7,876 Looms3,31417,814 Export using local fabric NegligibleUS$ 4.78 bill. Foreign Exchange retention using local fabric NegligibleUS$ 3.58 bill. Value addition on Knit and Woven 25 %75 % Lead timeSubstantially reduced T & C Growth

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Knit garment export fueled by the supply of indigenous yarn has overtaken woven garment export Positive Impact of Using Local Inputs

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE Bangladesh T & C business & FE retention: (all figures in mil US $) ItemTotal Export Export using local inputs Export using foreign inputs ValueRetentionValueRetention Woven Garments 4,5451, , Knit Garments 4,3883,510 2, Home Textile Total9,1464,7843,5884,3621,091 Value Retention Using Local Fabric

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Export Growth to the EU  Huge local inputs & foreign exchange retention.  Massive domestic investment in T & C.  Industry very favorably responding to EU GSP facility. YearEuro (mil) ,625  Export using the GSP facility to the EU increased eleven fold in the period

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Home Textile – Bangladesh in the EU market  Bangladesh fastest growing exporter.  Grew from €49 mil 2003 to €98 mil in Country Turkey484,392601,944662,376 Pakistan381,694533,203567,470 Portugal394,085332,122322,354 India254,863242,025298,544 China244,763238,562265,600 Bangladesh 45,344 49,642 98,515 Source : EUROSTAT

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 DENIM Local availability of yarn stimulated growth in Denim fabric manufacturing : Denim fabric manufacturing capacity – per day ,000 yrd ,000 yrd 2007 (Estimated)700,000 yrd This resulted in :  Bangladesh top denim supplier to EU in 2006 (26.76% market share)  Growth  26.15% for Men’s denim  91.00% for Women’s & Girl’s denim  Export to USA in 2005  850,000 doz.  160 % Growth

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007  World T&C market growing at 5% annually.  Buyers moving to targeted countries. Large volumes and economies of scale needed. Bangladesh is strong in sweater, knit, denim and home textiles.  All buyers give preference to countries / companies with vertical operations to meet lead time and fashion changes, local fabric availability is necessary.  Bangladesh only nation excelling in dual supply chain management for export using  Local Inputs  Imported inputs Therefore, in order to maintain its competitive advantage in garment exports, Bangladesh supported local textile industry. Post MFA Challenges

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Country % change China 8, , , Indonesia 2, , , Vietnam 2, , , India 2, , , Bangladesh1, , , Cambodia 1, , , Sri Lanka 1, , , Pakistan 1, , , Thailand 1, , , Nicaragua Total24, , , Top Ten Gainers in USA Market Source : OTEXA. USA Bangladesh gains inspite of US import duty.

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Top Ten Losers in USA Market Country % change Mexico 6, , , Hong Kong 3, , , Honduras 2, , , Guatemala 1, , , Domican Republic 2, , , El Salvador 1, , , Canada 1, , , Taiwan 1, , , South Korea 1, , Turkey 1, Total24, , , Reduced from $24.94 Billion to $ Billion in two years. Source : OTEXA. USA

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Article Growth % T & C2,3712, Cotton Shirts Cotton Trousers Opportunities Bangladesh’s Post-MFA US Market Growth In Million $ GainersLosers China Mexico IndonesiaCanada VietnamCentral America IndiaKorea BangladeshTaiwan Hong Kong Export to the US Market Bangladesh has take steps to fill the space created by the above countries – inspite of uneven competition

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Position of our Competitors China:  Price deflation ended.  Domestic retails growing 20 – 25% yearly – 3.95 Trillion Yuan – 7.84 Trillion Yuan  Wages – upward.  Subsidies reducing.  Currency appreciation. India:  Hasn’t mastered high volume growth.  Very weak post spinning Textile industry.  Alternative export opportunity.  Still a low volume exporter.  Rising Wages.

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Position of our Competitors Vietnam, Sri Lanka & Mauritius :  Doesn’t have a local textile industry.  Skilled labour shortage.  Trying to get value added product. Africa:  Hasn’t picked up inspite of duty free access. NAFTA & Central America:  Losing out to Asia.  Inspite of duty free preference still occupies 6 of the top 10 losers to USA.  Reduction of US inputs.

10 th May, 2007 BANGLADESH INVESTOR CONFERENCE 2007 Bangladesh Textile & Clothing Export in Post MFA – Era Strengths  Aggressive investors  Efficient and trainable labour force  Dual Supply Chain Management :  Export with local inputs  Export with imported inputs  Backward linkage  Market access Areas for Growth 1. Knitting 2. Sweater 3. Denim 4. Bed sheet 5. Woven Garments