DBL Group to set up $100m garment factory in Ethiopia
DBL Group, a leading apparel exporter, is investing $100 million to set up a garment factory in Ethiopia, encouraged by duty benefits for exports from the African nation to US markets, a top official of the company said yesterday.
“The new factory will go into production in February next year. We expect to employ 3,500 workers. Of them, 150 will be employed as executives -- all from Bangladesh,” the official said.
The integrated textile and garment factory to be built in the Tigray region of Ethiopia will add immense value to the Ethiopian economy and strengthen exports, according to news agency Bernama.
“We are going to Ethiopia as this African nation enjoys zero-duty benefits from the United States on exports. The benefits will continue for a long time as Ethiopia is a member of the least developed countries,” the official said.
The US government last year renewed the African Growth and Opportunity Act or AGOA for the African LDCs for the next 10 years to provide zero duty benefits on export.
Bangladesh, despite being an LDC, does not enjoy a duty benefit from the US as the American government suspended its generalised system of preferences in June 2013. Garment products were not included under the GSP scheme to the US market when it used to enjoy the GSP.
For construction of the factory in Ethiopia, DBL obtained $15 million in loans from the Swedish government's development fund Swedfund at an interest rate of 6 percent and $55 million from the Ethiopian Development Bank at nearly 7 percent.
The Ethiopian project is a debt-funded venture of DBL and is not a joint venture.
“We aim to export to the US and European, African and Middle Eastern countries from Ethiopia.”
DBL obtained permission for overseas investment from the central bank.
“DBL is a platinum-rated apparel supplier to Swedish retail giant H&M. Our main target is to supply to H&M,” the official said.
On the availability of a workforce in Ethiopia, the official said there may be a shortage of skilled workers initially, but after a few years, the number of skilled workers will increase due to training imparted by companies and the government.
“I hope the group would be able to bring back a substantial amount of foreign currency from its Ethiopian operations.”
DBL has already employed 30 Bangladeshis in construction work for the Ethiopian project, he said.
Currently, DBL, which produces items from yarn to garments, employed 22,600 workers in different factories in Bangladesh.
The group is expecting shipment of apparel worth $340 million by the end of the current fiscal year, which was about $320 million last fiscal year.
Bangladesh is the second largest apparel supplier worldwide after China. It exported apparel worth $26 billion last fiscal year.