When Bangladesh gained its independence from Pakistan in 1971, the new government nationalized the textile industry. All of the countryâ€™s textile factories were then organized under the Bangladesh Textile Mills Corp. (BTMC).
The role of BTMC within Bangladeshâ€™s textile industry has substantially been altered since the denationalization of a large number of public sector textile mills over the last decade and a half. Prior to denationalization, BTMC enjoyed a near-monopoly within the yarn and fabric market in Bangladesh.
At present, there are 21 textile companies under BTMC. They operate 24 spinning facilities with an installed capacity of 490,892 spindles and 1,036 looms. Out of that total, 13 of the companies â€” which operate 16 plants â€” utilize 320,228 spindles under the service charge system producing different counts of yarn in the range of 32/1 to 80/1. Another five companies have 128,088 spindles in operation.
Among the 21 mills, Valika Woolen Mills Ltd., Nasirabad, Chittagong, is the only specialized BTMC company, producing knitting wool, woolen suiting, menâ€™s and womenâ€™s woolen shawls, and woolen blankets.
Other leading textile associations in the country include the BGMEA, Bangladesh Jute Mills Association, and Bangladesh Knitwear Manufacturers and Exporters Association.
According to Bangladeshâ€™s Textile Minister Shajahan Siraj, the government had initiated various policy measures such as rationalization of tariffs and taxes on imports of capital machinery, raw materials, dyes and chemicals, and reduction of interest on long- and short-term loans.
Mahmudur Rahman, executive chairman of Bangladeshâ€™s Board of Investment, said in a recently published interview that in the next five years, the country needs an investment of US $3 billion in the textile sector. He said the countryâ€™s textile market, during the last fiscal year (July 2004-June 2005) totaled $21.5 billion, compared to $3.2 billion 20 years ago. Rahman predicted the market could grow to $23 billion in the next fiscal year.
The Bangladesh government offers great incentives for encouraging the use of local fabrics in the export-oriented garment industries. To encourage textile export, companies can import capital machinery duty-free. Cotton also may be imported duty-free. Moreover, the government recently has implemented several policy reforms to create a more open and competitive climate for foreign investment.
Rising garment export trends from Bangladesh, along with some benefits provided by the government, have created concerns for Pakistan's government. Textile tycoons in Karachi are thinking about shifting their business to Bangladesh.