The apparel sector is the largest contributor to Bangladesh’s export earnings, and the industry is now being led by a new generation of dynamic leaders. One such leader is Mr. Nafees M. Khan Managing Director of Gears Group, who plays a crucial role in the ongoing success of the company.
Textile Focus: Could you briefly explain the current situation of the RMG industry in Bangladesh, particularly after recent changes?
Nafees M. Khan: The recent political changes will have multiple challenges in both the short and long term for the RMG industry but may also bring opportunities. As you can see, there is currently some instability in the administrative sector of Bangladesh. This has resulted in us not receiving the necessary support during crisis moments. Some recent factory closures prompted work disruptions in neighboring factories where the affected workers barricaded roads and also forced the neighboring workers to stop working. However, we have not seen any active role from Industrial Police and other government agencies in ensuring other factories are not affected by issues spilling over from these factories.
Additionally, during the recent countrywide protests, almost all industries were closed for around 8 days and caused severe disruption in the port operations, which massively affected our production, supply-chain and export-import capabilities. Furthermore, the recent floods halted all transport to and from Chittagong for about 5 days. All these delays have put a pressure on port capacity and created a shortage in containers which is causing further delays in large shipments. We are trying to convince buyers to be more flexible in this regard but they too have deadlines to meet. As a result of it all, we are facing the risk of losing out on order placements in the immediate future, potentially causing huge losses and cash flow problems. In order to navigate through this crisis period, BGMEA has already requested the Finance Ministry for small-scale soft-loans, which can ease our hardships a little and help us weather the storm. Going ahead, it’s crucial that we work together with the government on policy support and engage with our foreign stakeholders. For years we have been asking for positive changes in customs and bonds’ acts and rules, for ease of doing business. Now, we feel it is the right time to make these changes. We also need to quickly engage and start G2G dialogues to facilitate GSP+ benefits with the European Union and reinstatement of GSP with the United States, which can be a significant achievement not just for textiles but for all industries in Bangladesh, opening the doors to immense possibilities.
Textile Focus: How are the current orders coming in for Bangladesh, and what challenges are you facing?
Nafees M. Khan: In the past month, buyers have been slightly delaying their orders to Bangladesh, and we are constantly trying to convince them otherwise. We may see a dip in orders in the short term. However, we hope it won’t be as bad as the 2022-23 fiscal year when there was a 30% drop in orders, due to the high stock levels on the customer end and a fall in demand due to the Ukraine-Russia war. Stability and disruption-free operations going forward can regain buyer confidence. It is imperative that the new government will take note of these issues and stand by us.
Textile Focus: What are the future investment plans for Uni Gears Ltd, and what steps are they planning to take?
Nafees M. Khan: In 2022, we planned to establish a green industry in the Dhaka EPZ, and our investment in that is ongoing, with an expected launch around mid-2025. Once the green industry is operational, we expect our current capacity in Gears Group to double. We’ve received positive feedback from our existing buyers who indicated that they could properly utilize the increased capacity. We primarily produce apparels using synthetic fabric. We have seen robust growth in this segment worldwide and feel this is where the industry shall grow. With Bangladesh lagging behind in backward linkage of synthetic fabric, it is high time the industry starts diversifying our textiles manufacturing into this promising segment. Additionally, with our production costs increasing, we have noticed a large number of cotton-related orders shifting to our neighboring countries like India and Pakistan, who have the advantage of producing their own fiber. Since a large portion of our industry growth has been focused on cotton items, we now need to give more attention to man-made fiber-related products. Due to environmental pollution, China is cutting back on its dyeing industries, which is making Bangladesh increasingly important in venturing into synthetic textile production. In this context, we must strengthen our backward linkage by collaborating with various research and educational institutions to make research based, data driven investments. All these can be possible with favorable policy support nationally and G2G engagements internationally.
