Primary textiles see slow investment

Fresh investment in the primary textile sector is declining because of an uncertainty in the gas and power connections and a lack of capital adequacy, said businessmen.
The primary textile sector, which includes spinning, weaving, printing, dyeing and finishing, plays a vital role as backward linkage industries for woven and knitwear garments by supplying fabrics and yarn.
Currently, primary textiles meet the demand for more than 80 percent fabrics in knitwear and 40 percent in woven, the businessmen said.
According to Bangladesh Textile Mills Association (BTMA), a total of 13 new spinning mills were set up during January-August this year, while the number was 10 last year, seven in 2009 and 44 in 2008.
The number of new initiatives in weaving is also on the decline, as 19 new units were set up during January-August this year, while the number was 34 last year, 49 in 2009 and 66 in 2008, the BTMA data showed.
Only five units were set up in dyeing, printing and finishing in the January-August period this year, 10 units last year, one in 2009 and 24 in 2008.
Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS), blamed the slowdown on gas and power crises, low incentive from the government, relaxation of rules of origin by EU and inadequate fund from banks.
He also linked political unrest and weak infrastructures to the sluggish investment in primary textile.
“The primary textile sector needs huge capital, and huge investment is linked with many risks. Entrepreneurs invest cautiously in the capital intensive ventures,” Bakht said.
According to AK Azad, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), the flow of investment in the textile sector is on the wane due to the gas and power crises and the recent changes in the rules of origin by EU.
The local investors feel discouraged as the readymade garment makers prefer importing fabrics, rather than buying from the local millers as they can enjoy duty benefits from the EU even from export of garment made from the imported fabrics, Azad said.
“If the gas and power supply does not improve, investment in the primary textile sector will slow down further,” he said.
Jahangir Alamin, president of BTMA, also echoed the views of Bakht and Azad, and said many mills cannot go into operation for the lack of gas and power supply although their construction was completed years ago.
“Moreover, the millers have slashed down their production capacity by nearly half for the market situation and inadequate supply of gas and power,” he said.
A vibrant primary textile sector is the strength of apparel industry, he said.
“If we cannot increase the volume of the textile sector, we might not be able to maintain the strong values in export of garment items,” he said.
He said no government has taken any step to protect the local investment in the textile sector.