Bangladesh will lift restrictions on foreign investment in garment manufacturing industry

According to a report by Bangladesh’s “Financial Express” on July 18, the Bangladesh Garment Manufacturers and Exporters Association finally confirmed that it will no longer oppose foreign direct investment (FDI) in setting up garment processing enterprises outside the Export Processing Zone (EPZ). Foreign capital establishing export-oriented garment processing enterprises in Bangladesh must apply for relevant certificates from the Bangladesh Garment Manufacturers and Exporters Association. Only by obtaining this certificate can garment processing companies have the right to use bonded warehouse facilities and enjoy tariff-free imported raw materials under the bonded warehouse system. However, the Bangladesh Garment Manufacturers and Exporters Association refuses to issue such certificates to non-member foreign-invested enterprises, resulting in a relatively high market threshold for foreign investment to enter the garment manufacturing industry. The reason for refusing to issue the certificate is that foreign garment enterprises outside the economic zone will cause chaos in the garment manufacturing industry. Foreign garment manufacturing enterprises pay higher wages to workers, making it difficult for local garment manufacturing enterprises to survive due to a sharp increase in costs. Typically, foreign garment manufacturing companies pay monthly wages of Tk 8,000 to low-skilled workers, while local companies pay Tk 5,000.

Bangladesh Commerce Minister Bose said that Bangladesh hopes to attract foreign investment in all fields, including attracting foreign direct investment to set up garment manufacturing enterprises outside the economic zone. Foreign investors are usually only interested in investing in high-end fashion clothing in Bangladesh, while local garment manufacturing companies in Bangladesh are generally engaged in the processing and production of low-end clothing and have almost no market share in the high-end market. Therefore, foreign investment in local clothing manufacturers in Bangladesh The impact is very limited. Bangladesh’s garment export revenue in the 2016/17 fiscal year was US$28.14 billion, compared with US$28.09 billion in the previous fiscal year. Bangladesh will lift restrictions on foreign investment in garment manufacturing industry

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