Towel makers go for expansion, target higher exports
Bangladesh's towel manufacturing sector saw investments of more than Tk 1,000 crore in the last three years, with new entrants coming in to export high-quality products.
“A number of factories [towel] have come up with big investments. These factories produce high-end items,” said Khandakar Muktadir, managing director of Shabab Fabrics, one of the new entrants.
Shabab Fabrics invested around Tk 250 crore, particularly with the view to export its superior-quality terry towel products.
The company has recently installed a production line that can produce 28 tonnes of towel products a day.
Noman Group, a famous readymade garment manufacturer, is another one of the newcomers, who invested around Tk 150 crore for a towel factory.
Meanwhile, ACS Textile has invested more than Tk 100 crore to produce high-end terry towels.
Polytex and Bismillah Towel, too, undertook further investments to expand their production capacity.
Towel manufacturing in Bangladesh, until recently, has been the domain of Pakistani producers, with the first Bangladeshi-owned towel factory being set up in Chittagong in 1984.
Presently, around 100 factories, mostly by Bangladeshis, are manufacturing and exporting towels, with towel exports fetching $140 million in fiscal 2011-12.
Generally, Bangladesh produces terry towel products, which are low-end, average-quality towels mostly worth $3-7 per kilogram.
But, as per the industry insiders, the new entrants have targeted the high-end segment of the market -- that costs $8-13 per kilogram.
“Towel doesn't need accessories like readymade garments. Cheap labour is the additional advantage,” said Enamul Haque of the Chittagong-based Shah Amanat Towel.
Shahadat Hossain Sohel, managing director of Towel Tex, sees a good prospect for Bangladesh in towel exports.
“It can be as big as readymade garments. But a few exporters are damaging the potential in the international markets,” added Sohel.
He said some exporters quoted the price of their low-end products as high as $12.5 per kilogram -- for the purpose of securing government incentives.
But these vested people offer $3 per kilogram to foreign buyers who visit Bangladesh instead of the minimum $3.5 per kilogram, he added.
“Foreign buyers get puzzled to see a big difference in price between the local exporters,” said Sohel.
But what is heartening for the exporters is that the central bank and the Anti-Corruption Commission are looking into the issue of incentive misuse by certain firms, added the industry insiders.
The government gives 5 percent incentive for towel exports to traditional markets such as Europe, Canada and the US, and 10 percent for the non-traditional markets.