The New Nation - Internet Edition

LIKE their support to the readymade garment (RMG) industries, the banks can now come forward wholeheartedly to invest in the second generation of industries linked to the garment sector. There is a huge opportunity awaiting for anybody wanting to invest in the backward linkage industries needed by the RMG sector. Investment in such industries may prove to be just as rewarding-- if not more-- like in the RMG industries. There are also compelling reasons to invest in the linkage industries. The USA is about to withdraw its restrictions on export of cheap Chinese apparels to its markets which were expressly designed to help countries such as Bangladesh to survive the post-multi-fibre arrangement (MFA) era. European Union (EU) countries are also likely to link 30 per cent local value addition in countries that export RMG products to them.

Bangladeshi RMG industries are also required to absorb higher wages for workers to meet pressures for the same from the buyers. Thus, this advantage of cheap labour for Bangladesh is also getting squeezed. Under the circumstances, the RMG sector must improve its competitiveness to survive in the future. And one major way of boosting this competitiveness is through the establishment of linkage industries for this sector. At present, there is a scope for the establishment of 148 spinning mills, each with 25,000 spindles, and 295 weaving and 280 dyeing cum finishing units. Thus massive investments are waiting to be made profitably in the textiles sector. One may contend that establishment of even a single spinning mill to make yarn or a composite mill to produce both yarn and fabric requires huge investments that even a dozen medium to large RMG industries did not require. The banks can get around this problem by forming consortiums among themselves to pool enough resources into a fund for investment exclusively in backward linkage industries for the RMG sector.

These would be sound investments with good returns in the long run. The banks would also be hedging their investments made in the first generation of RMG industries. If the RMG industries face setbacks for insufficiency in the number of locally available linkage industries, then the effects of the same will be passed on to the banks. Thus, in their own interests the banks should be specially enthusiastic to encourage such establishments. The past governments should have been playing leading roles in promoting the linkage industries. Steps could have been taken to mobilise a special fund, independent of the banks, to set up linkage industries. But no such seriousness was seen on the part of the previous governments although an investment scheme for RMG's linkage industries drawn up by them and funds mobilised for the purpose, could be very helpful in securing the interests of the RMG sector. It is better to be late than never. The incumbent government, the banks, other financial institutions and all potential investors should waste no more time to facilitate investment in RMG sector's linkage industries.