1. 23 rd April, 2007 Presentation on Growth of Textile and Clothing Industry in Bangladesh A. Matin Chowdhury Managing Director Malek Spinning Mills Ltd. Hotel Dhaka Sheraton 23 rd April, 2007 Bangladesh Cotton & Textile Convention 2006 Opportunities for Increased Trade In Cotton Textiles

2. 23 rd April, 2007 Background  Traditionally a textile country.  Jute exports supported economy. Declined in 80’s due to technology and nationalization; had to look for alternative.  Textile & Clothing (T & C) replaced jute as the major export : (a) East Asian wages were going up (b) Problems in Sri Lanka (c) Labour intensive industry (d) Favorable quotas and GSP Policy from EU and USA

3. 23 rd April, 2007 T & C Export Journey Initially garments produced with imported yarn & fabric. Growth could net be sustained with imported inputs :  Cost too high Smaller margins.  Inconsistent quality leading to claims / rejections.  Undependable deliveries Extended lead times.  Unable to respond to fashion changes.

4. 23 rd April, 2007 Post MFA Policy Statement In a quota free world, all textile manufacturers will have free access and hence will be competing against Bangladesh for garment export. Competing countries are trying to reduce export of basic and intermediary raw materials / products and pushing for finished goods. As these countries opt for value added products, supply of yarn and fabric will be reduced. Bangladesh, relying on these countries for raw material, will be at a disadvantage. All buyers give preference to countries / companies with vertical operation to meet lead time and fashion changes, local fabric availability is necessary. Therefore, in order to maintain its competitive advantage in garment exports, Bangladesh supported local textile industry.

5. 23 rd April, 2007 Policy Result :Domestic Market  Growth in population & per capita consumption, multifold increase in demand  BTMA members & handloom weavers met market needs & kept foreign competition out. In spite of lowering import duties and lifting all import bans/restrictions. YearYarn (in mil kgs)Fabric (in mil mtrs) Demand in 1995172.911,265.22 Demand in 2006358.002,010.32 Projected 2010425.002,600.00

6. 23 rd April, 2007 Description19942006 Spinning Capacity Ring - Spindle Open end - Rotor 1.40 million5.72 million 3,000 7,876 Looms3,31417,814 Export using local fabric NegligibleUS$ 4.78 bill. Foreign Exchange retention using local fabric NegligibleUS$ 3.58 bill. Value addition on Knit and Woven 25 %75 % Lead time16 weeks6 weeks T & C Growth

7. 23 rd April, 2007 Knit garment export fueled by the supply of indigenous yarn has overtaken woven garment export Positive Impact of Using Local Inputs

8. 23 rd April, 2007  World T&C market growing at 5% annually.  Buyers moving to targeted countries. Large volumes and economies of scale needed. Bangladesh is strong in sweater, knit, denim and home textiles.  Bangladesh only nation excelling in dual supply chain management for export using  Local Inputs  Imported inputs  Growth potential very large. Can aim at $20 billion export by 2011 with 65% local inputs. Challenges

9. 23 rd April, 2007 EU Growth Results: Export under GSP to the EU increased eleven fold. 1998 - Euro 329 mil 2005 - Euro 3.625 mil Huge local inputs & foreign exchange retention. Massive domestic investment in T & C. USA Market Total T & C import YearImport% Change 200464,767 mill. $- 200568,713 mill. $6.09 200671,629 mill. $4.24

10. 23 rd April, 2007 Country200420052006% change 2005 - 2006 China 8,927.8615,142.8718,517.5222.29 Indonesia 2,402.832,875.423,670.4827.65 Vietnam 2,562.462,724.663,222.1218.26 India 2,217.112,976.183,186.97.08 Bangladesh 1,977.562,371.732,914.1622.87 Cambodia 1,428.991,712.842,135.7124.69 Sri Lanka 1,549.391,650.211,682.431.95 Pakistan 1,137.671,258.871,411.9712.16 Thailand 1,799.371,807.791,839.671.76 Nicaragua 594.71715.59879.3322.88 Total24,597.9533,236.1639,460.2918.73 Top Ten Gainers in USA Market 2004 - 2006 Source : OTEXA. USA

11. 23 rd April, 2007 Top Ten Losers in USA Market 2004 - 2006 Country200420052006% change 2005 - 2006 Mexico 6,684.846,078.335,296.52-12.86 Hong Kong 3,848.983,510.572,810.96-19.93 Honduras 2,673.352,622.312,440.25-6.94 Guatemala 1,946.691,816.241,666.25-8.26 Domical Republic 2,058.801,849.161,547.68-16.30 Salvador 1,720.261,619.191,407.73-13.06 Canada 1,504.411,273.401,166.73-8.38 Taiwan 1,548.921,134.431,004.81-11.43 Korea Republic 1,808.821,154.62912.73-20.95 Turkey 1,168.60943.77726.07-23.07 Total24,963.6724,002.0218,979.73-13.74 Source : OTEXA. USA

12. 23 rd April, 2007 USA Market Gainer * China * Indonesia * Vietnam * India * Bangladesh Looser * Mexico * Canada * Central America * Korea * Taiwan *Hong Kong Bangladesh has taken steps to fill the space created by the above countries. Article20052006Growth % T & C2,3712,91422.87 Cotton Shirts 105 18070.99 Cotton Trousers 308 54576.83 Opportunities Post-MFA US Market Growth In Million $

13. 23 rd April, 2007 2006 Bangladesh T & C business & FE retention: (all figures in mil US $) ItemsTotal Export Export using local inputs Export using foreign inputs ValueRetentionValueRetention Woven Garments 4,5451,136 852 3,409852 Knit Garments 4,3883,510 2,632 878220 Home Textile 213138 104 7519 Total9,1464,7843,5884,3621,091 Value Retention Using Local Fabric

14. 23 rd April, 2007 Home Textile – Bangladesh in the EU market  Bangladesh fastest growing exporter.  Grew from €49 mil 2004 to €98 mil in 2005. Country200020032004 Turkey484,392601,944662,376 Pakistan381,694533,203567,470 Portugal394,085332,122322,354 India254,863242,025298,544 China244,763238,562265,600 Bangladesh 45,344 49,642 98,515 Source : EUROSTAT

15. 23 rd April, 2007 DENIM Local availability of yarn stimulated growth in Denim fabric manufacturing : Denim fabric manufacturing capacity – per day 2005 85,000 yrd 2006550,000 yrd 2007 (Estimated)700,000 yrd This results in : Bangladesh top denim supplier to EU 2006 – 26.76% market share - Growth - 26.15% for Man denim - 91.00% for Woman & Girl’s denim Export to USA 2005 - 850,000 doz. Growth- 160.00%

16. 23 rd April, 2007 Yarn Requirement  Ring spinning meeting demands for knit.  Open End yarn required for woven especially denim.  Yarn for sweater. FUTURE  Raw cotton requirement will continue to grow  Bangladesh domestic & export market based on cotton products.  All types of cotton demand is developing.

17. 23 rd April, 2007 Bangladesh Textile & Clothing Export in Post MFA – Era Strengths  Aggressive investors  Efficient and trainable labour force  Duel Supply Chain Management : Export with local inputs Export with imported inputs  Backward linkage  Market access Areas for Growth 1. Knitting 2. Sweater 3. Denim 4. Bed sheet 5. Woven Garments

18. 23 rd April, 2007 THANK YOU FOR YOUR KIND ATTENTION