At least six new denim mills will come into operation in Bangladesh in the next two years with an investment of $100 million.
The increasing demand for denim fabrics from garment makers has encouraged the investors to establish new factories here, Mostafiz Uddin, organiser of Bangladesh Denim Expo, said yesterday.
“The response we are getting from both the local millers and foreigners is huge,” he told The Daily Star on the sidelines of the show, at International Convention City Bashundhara in Dhaka.
A total of 65 exhibitors from 12 countries are participating in the seventh edition of the two-day event.
Currently, Bangladesh has 30 denim mills with a capacity to produce 435 million yards of fabrics a year, said Mostafiz, who is also the managing director of Denim Expert Ltd.
Local suppliers can meet only 40 percent of Bangladesh's annual demand for denim fabrics and the rest is met through imports from China, India and Pakistan, he said.
Last fiscal year, Bangladesh exported denim goods worth $2 billion.
Existing investment in the denim sector is more than $1 billion and every year more people are showing interest to invest in the sector, Mostafiz said.
“However, it is my request to the investors not to make new investments in basic denim fabrics,” he said.
“We are already strong in basic denim products. Now what we need is very fine fabrics to produce very high-end denim products.”
He also said the prices of fabrics declined in Bangladesh due to the price war among the local fabrics producers.
Six months ago, a yard of denim fabrics was sold in Bangladesh at $2.5, which came down to $2 now, Mostafiz said.
As a new hub for denim products, many foreign companies are now coming to open offices or factories in Bangladesh, he said.
Landes, a German denim accessories maker, is the latest on the list to start production in its new factory in Savar on November 1.
“We opened the factory in Bangladesh as we think this is the hub for denim business and there are a lot of business prospects here,” Manfred Slowik, chief operating officer of Landes, said at his stall at the expo.
The company has already invested $500,000 in the new factory that has 30 employees, Slowik said.
“By the end of next year, the total workforce in our new plant will be 120 as we are going for new recruitments.”
Landes has a target to annually produce 500 million pieces of leather patches—an accessory for making denim trousers—at its Savar plant, Slowik said.
Such accessories will be supplied to the whole Asian region, he said. “All big brands like H&M, VF and Walmart are my customers.”
Similarly, Nezahat Boni, senior accounts manager of Orta, a Turkish denim maker, said her company now supplies three million metres of denim fabrics to Bangladesh every year, which was only 800 metres in 2011.
“We opened an office in Bangladesh in 2011 as we cannot ignore the importance of this country as a denim hub.”
Md Mujibul Hoque, sales director for Bangladesh at China's Prosperity Textile, said his company opened an office in Dhaka last year. Hoque's company sells four million yards of denim fabrics a year in Bangladesh and targets to increase the amount to 40 million yards.
With the higher demand for denim, Bangladesh has overtaken China to become the largest denim supplier to the European Union – a development that would give confidence to the country's garment sector as it looks to hit $50 billion in exports by 2021.
In the January-June period of 2016, Bangladesh exported €567.97 million worth of denim products to the 28-nation bloc with a 21.18 percent market share.
Bangladeshi entrepreneurs supply denim products to major global retailers, including Levi's, Diesel, G-Star RAW, H&M, Uniqlo, Tesco, Wrangler, s.Oliver, Hugo Boss, Walmart, and Gap.
Annually 2.1 billion pieces of denim are sold globally. In 2014, the size of the global denim market stood at $56.20 billion. By 2020, the global denim market will reach $64.1 billion, while Bangladesh's denim export is forecasted to reach $7 billion by the end of 2021.