1. Textile & Clothing Sector in Bangladesh: Prospects & Challenges Md. Shafiul Islam Senior Vice President, FBCCI & Managing Director, Onus Group & 30 May, 2015

2. World trade in T&C 766 billion US$ in 2013 (clothing 460 billion US$) The global T&A trade is expected to grow at a CAGR of 5% GLOBAL MARKET OF TEXTILE & CLOTHING World Textile & Clothing Trade, Bil US$, WTO

3. BANGLADESH’S POSITION IN GLOBAL APPAREL MARKET The above figure shows the share of the competing countries in the world market. Bangladesh had a share of 2.56% in 2000 and now has a share of 5.11%. The graph shows Bangladesh has clearly overtaken Turkey and India in terms of global market share during the last 12 years. However, Vietnam has also significantly risen from a small position. US$ 460 Billion World exports of clothing in 2013 US$ 460 Billion World exports of clothing in 2013 US$ 23.5 Billion Bangladesh’s exports of clothing in 2013 US$ 23.5 Billion Bangladesh’s exports of clothing in 2013 5.11% Share Bangladesh holds this share in global apparel market 5.11% Share Bangladesh holds this share in global apparel market

4. STRUCTURE OF TEXTILES & CLOTHING SECTOR Sub-sectorNo of Units Installed Capacity Production Capacity Spinning Mills yarn 3949.6 million spindles 0.26 mln. rotor 2050 ml kg Weaving Mills77721907 SL/SLL 16118 SL/SL 2100 mln. mtr Dyeing, Printing, Finishing 238-----2200 ml meter Specialized textiles 106523000 SL/SLL400 ml meter Export Oriented RMG 3500+/-1.5 billion pieces RMG

5. EARNINGS FROM EXPORT OF TEXTILES & GARMENTS (IN MILLION US$) Item/ Year 2009-102010-112011-122012-132013-14 Knitwear 6483.2899482.069486.3510475.8812049.81 Woven 6013.4358432.899603.3411039.8512442.07 Home Textiles 402.49788.76906.07791.52792.53 Specialized Textiles 185.97164.55138.77124.52108.76

6. TEXTILE ITEMS PROCURED BY THE RMG INDUSTRY, VALUES MIL US$ In million US$2009-102010-112011-122012-132013-14 Back to back Fresh LCs opening3125.125654.905211.135898.826237.72 Cotton yarn624.991116.71900.63992.391078.58 Synthetic fibre & yarn702.29873.11537.37540.5599.37

7. GARMENTS ACCESSORIES & PACKAGING EXPORTS OF BANGLADESH (MILLION USD) The accessories industry caters to 100% need of total garments & other export oriented industries by producing more than thirty items like Carton, Poly bag, Hanger, Elastic, Zipper, Button, Label, Hang tag, Back Board, Neck Board, Sewing Thread etc.

8. OPPORTUNITIES

9. HISTORICAL TREND OF THE COUNTRY’S TOTAL EXPORT AND RMG EXPORT Bangladesh had a share of 2.56% in 2000 and now has a share of 5.11%. The graph shows Bangladesh has clearly overtaken Turkey and India in 2000. If we can increase the share to 8% by 2020 (of $650 billion), we can reach to $52 billion.

10. $50 BN RMG EXPORT BY 2021- OPPORTUNITIES FOR TEXTILE & ACCESSORIES (APPROX. FIGURES) $24.5 bn $50 bn $15 bn $30 bn $4 bn $7+/- bn RMG EXPORT FABRICS ACCESS. If Bangladesh could reach $50 billion by 2021, this would create a $28 billion market for fabric ($16 Bn woven and $12 Bn knitted fabrics) To maintain the current ratio of local fabric supply (which is around 55% on avg. now), our local fabric mills have to be able to supply $15 billion, currently our local mills can supply $7.5bn+. So a huge investment is required locally. Besides, we would need $13 billion worth of fabric to be imported, which can be manufactured locally if we can draw investment, especially FDI The demand for accessories will be $7+/- billion by 2021.

11. Projected Demand for Fabric & Yar (Fabric in million meter.& Yarn in million Kg) Year Total FabricYarn 2012-1390241289 2013-14101971457 2014-15114211632 2015-16126771811 2016-17139441992 2017-18151992171 2018-19164152345 2019-20175642509 Source: Ministry of Textile & Jute Report on Textile Sector Survey-2009.

12. DENIM: THE NEXT HORIZON OF OPPORTUNITY FOR BANGLADESH Bangladesh’s Denim apparel export in 2014: $2.5 billion (approx.) and if we include other denim articles then our export is $3.5 billion. Bangladesh’s Denim export growth CAGR during 2009-2014: 11.16% Investment in Denim textile mill has increased significantly in last decade; more investments are still being made as our local mills can supply only 50% of the required fabrics Bangladesh’s Denim apparel export forecasted to reach by 2021: $7+ billion

13. CHALLENGES

14. COTTON VOLATILITY Bangladesh is the second largest cotton importing country in the world Out of our $24.5 billion export last year, more than 80% products were made of cotton This indicates a vulnerability state of our industry, because any fluctuation in global cotton supply or price may impact our industry. Bangladesh’s textile industry is totally dependent on imported raw cotton Bangladesh imports around 50% of her total demand of raw cotton from CIS countries Any crisis in the global cotton market may pose a serious threat for sourcing our raw cotton and to our T&C industry

15. COMPETITIVENESS FactorsBDINDIAVIETNAMPAKISTAN Min. Wage$69$71$78$79 PRODUCT IVITY 77%92%90%88% BANK INTT. >16%8%13%7%

16. GAS & INFRASTRUCTURAL ISSUES Embargo on new gas connection & transfer of address of existing gas connection is a barrier to new investment and ongoing factory safety efforts. Dhaka – CTG highway, Dhaka – Mymensingh highway and Dhaka – Tangail highway to be completed soon. Dhaka-Chittagong dual gauge rail track is urgently needed with enough ICDs. Activating New Mooring Container Terminal, Mongla Port and Pangaon port; improving the capacity of Chittagong port and its automation; Need Special Economic Zones immediately to rehabilitate vulnerable and shared building factories, and also to facilitate new investment.

17. End DateUSD/EURUSD/CADUSD/RUB USD/INRUSD/VND BDT/USD 3-Apr-2015 0.911.2556.6962.0721322.0075.79 3-Mar-2015 0.891.2562.2061.7921075.0076.44 3-Feb-20150.881.2769.06 61.8421066.6076.12 6-Jan-20150.841.1859.37 63.4421166.8076.72 2-Dec-20140.801.1450.26 61.9821106.2075.97 4-Nov-20140.801.1343.42 61.2621229.8076.56 7-Oct-20140.801.1239.86 61.5421069.7076.31 2-Sep-20140.761.0937.30 60.4820940.7076.14 5-Aug-20140.751.0935.77 61.0121189.6577.41 1-Jul-20140.731.0733.90 60.0621317.40 77.68 3-Jun-20140.721.0734.23 57.9720582.40 74.79 6-May-20140.721.1035.77 60.0021070.00 76.34 1-Apr-20140.731.1035.33 59.8820895.10 76.26 4-Mar-20140.731.1136.48 61.8720969.20 76.38 CHANGE25.41%12.70%55.41%0.31%1.68%-0.76% weaker Stronger EXCHANGE RATE MOVEMENTS Against 1 USD

18. DYNAMICS IN GLOBAL TRADE & TARIFF REGIME Pakistan started enjoying GSP Plus in EU from 1 January 2014. The result during Jan-Nov is – – full waver from 9.6% duty – Export growth registered 28.31% Philippines was granted EU GSP Plus from 1 January 2015 The Trans Pacific Partnership will enable Vietnam to get DFQF in USA India is negotiating FTA with EU Vietnam is also negotiating FTA with EU

19. IMPORTANCE OF THE RMG INDUSTRY FROM MACRO-ECNOMIC PERSPECTIVE

20.  Lion Share of Exports: 81.16% of the country’s total export earnings  Employment Generation: Created employment for 4.4 million people, 80% of them are female  Empowering Women: RMG employs 3.5 million women, making them economically empowered, self aware, and independent. In a moderate Muslim country, the industry brought a silent social revolution.  Alleviating Poverty: The poverty rate has dropped from 40% in 2009 to 26.45% at present, & RMG playing a critical role.  Contribution to GDP: The RMG sector contributes more than 14%+ to Bangladesh’s GDP  Less dependant on Aid: Enhanced trade helping the country to reach its economic prosperity SOME MAJOR CONTRIBUTIONS OF THE RMG INDUSTRY TO BANGLADESH ECONOMY

21. 30 years of experience & reputation in garment manufacturingCompetitive PriceInternational standard qualityVibrant population, 70% below 40 years age, quick learning & dedicated Irresistible & resilient entrepreneurial spiritDuty free market access in most of the developed countries & PTA in India, China, Korea, MalaysiaRapid adoption of environment friendly, energy efficient and green concepts Rapidly developing backward linkage/Washing/Dying/Finishing/Embroidery, etcVersatility of factories to produce different type of products Increasing trend of direct sourcing through local liaison offices at Dhaka STRENGTHS OF BANGLADESH’S RMG INDUSTRY

22. Thank You !