Bangladesh FDI in Bangladesh apparel, textile industries

Bangladesh textile and apparel industries received $408 million in foreign direct investment (FDI) in 2018, down by $13 million from the previous year. While total FDI in the country saw a 68% rise to $3.61 billion in the same year, the plunge in overseas investment in the textile and apparel sector raised a question about its reasons and effectiveness. For the last couple of years, FDI in the apparel and textile has been hovering around $400 million.

When Bangladesh badly needs to produce high -end products and increase production capacity in the apparel industry, FDI in the area can play an important role in technology transfer from the skilled foreign professionals, economists and trade analysts believe.

“In increasing the export earnings and sustaining the current growth of exports, Bangladesh needs to increase production capacity and move for high-value goods to get better deals from foreign brands for its apparel items. To this end, the sector needs a huge amount of capital and skilled workforce where FDI can play an important role,” Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem has told to media.

He thinks such FDI should come in backward linkage textile and high-end products of the readymade garment as it will help transfer foreign and latest technologies to embolden the local industry. FDI in these segments can be a boon for Bangladesh's economy is moving towards the value-added products, the economist adds.

Bangladesh is doing well in basic and medium-end products in RMG, where primary textile is supplying fabrics and yarn. But there is a huge scope of investment in the primary textile, especially in high-end fabric textiles.

“Since there is a gap between demand and supply of raw materials for the apparel, we need foreign investment in the primary textile, which needs huge investment,” Bangladesh Textile Mills Association (BTMA) president Mohammad Ali Kokhon says.

But the FDI will not be attracted unless the government policy becomes favorable and production cost is reduced offering utility services including gas and electricity at affordable prices, Kokhon points out.