Spinners treading a tightrope

Spinners' plans to pour in hundreds of crores of taka to expand domestic capacity and slash reliance on foreign markets have been pushed back by the coronavirus pandemic, forcing local exporters to continue footing more than $5 billion in annual import bills for yarn and fabrics.

In Bangladesh, local garment exporters have started manufacturing high-end garment items, raising the demand for specialised yarn and fabrics such as the yarn from PET bottles, man-made fibre and durable fabrics used in sports garments and activewear.

This prompted top spinners and weavers to invest in the production of specialised yarn and fabrics.

Bangladesh has witnessed heavy investment in the spinning sector, the main pillar of the country's primary textile sector, over the last four decades because of higher export of apparels. The investment in weaving is relatively low.

The combined investment in the primary textile sector has reached more than $10 billion, of which 60 per cent took place in the spinning sector and the rest in the dyeing, finishing, weaving and washing sectors.

Consequently, local spinners can supply 40 per cent of raw materials for the woven sector. Garment exporters import specialised yarn and fabrics from China, India, Pakistan, Vietnam, Malaysia, Turkey and Indonesia.

Although investment had been taking place gradually in the production of the raw materials, the pandemic has put the plans on hold.

"I was supposed to start constructing a big spinning mill in Narsingdi in March spending Tk 450 crore. However, I had to delay the project and I hope that I will be able to start in November," said Abdullah Al Mahmud Mahin, managing director of Mahin Group, one of the leading garment manufacturers.

The planned spinning mill will produce specialised yarn from US cotton. The yarn would be used to make fabrics at the group's weaving factory for its international customers such as Hugo Boss, Abercrombie & Fitch, Tommy Hilfiger, Calvin Klein, PVH, H&M, M&S, Espirit and s.Oliver.

Mahin is going to set up the new spinning mill to produce the raw material on his own as he now has to rely on imported yarn from India, Indonesia, Vietnam, Turkey and Malaysia.

Of the proposed investment amount, 60 per cent will come from foreign sources and the rest from local and own funding, said Mahin, whose weaving mill consumes 50 tonnes of yarn every day.

The planned mill will produce 30 tonnes of yarn daily, which will meet 60 per cent of the demand of the weaving mill. The rest of the requirement would be met through imports.

MA Jabbar, managing director of DBL Group, one of the leading garment groups, said he would start the construction of a spinning mill at the group's economic zone in Habiganj in June or July next year to produce specialised yarn.

"I have a target to invest Tk 400 crore initially in the proposed spinning mill to produce specialised polyester yarn for our factories," Jabbar said. Currently, the entrepreneur imports specialised yarn.

Many investors are coming up with new proposals for setting up spinning mills because the demand for yarn and fabrics has been increasing as the garment export is on the rise, said Monsoor Ahmed, secretary of the Bangladesh Textile Mills Association (BTMA).

Most of the investments are coming in the recycling yarn manufacturing as the demand for man-made fibre is rising globally, he said.

Bangladesh is one of the largest cotton yarn producers in the world. However, the ratio of cotton yarn and man-made fibre production has reached to 80 per cent and 20 per cent in recent years as local entrepreneurs invested money in the manmade fibre production, Ahmed said.

The construction of a Tk 115-crore plant of Debonair Group for the production of yarn from collected PET bottles in Bhaluka has come to a halt because of the pandemic, said Mohammad Ayub Khan, managing director of Debonair Group.

"We will re-start the construction next year in our convenient time," he said.

He said the demand for high-end garment items declined worldwide, a development that has affected the demand for specialised yarn and fabrics.

"Before the pandemic, the demand for the yarn made from plastic bottles was very high. So, we took up the project."

The experts who were employed in the plant came from Germany and China but they left due to the pandemic, he said.

Khan's target was to produce 40 tonnes of yarn per day mainly from the flakes of plastic bottles. The yarn would then be used to make jackets for western consumers.

Mohammad Ali Khokon, president of the BTMA, said some millers have been expanding their capacity but the applications for fresh investment proposals are not seen.

With the reopening of the economies in the western world, the local textile sector is rebounding. But the sustainability of the revival is depending on how the fallouts of the second wave of Covid-19 are managed, he said.

"We are expecting a strong revival of our business by January next year if the second wave does not wreak any havoc."

The number of spinning mills in the country is more than 500. Of them, 450 units are in operation.