• Wednesday, Dec 01, 2021
  • Last Update : 03:03 pm

IFC invests $22.7m in Bangladesh's Hamza Textile

  • Published at 03:31 pm October 19th, 2021
IFC

IFC has invested in five RMG manufacturers in Bangladesh to date

The International Finance Corporation (IFC) has invested $22.7 million in Hamza Textile Ltd, a dyeing and finishing company of Dulal Brothers Ltd (DBL) Group of Bangladesh in a bid to improve global competitiveness for Bangladesh's readymade garment (RMG) sector.

The financing will help build a new factory with advanced and resource-efficient technologies to respond to evolving demands of consumers and create more than 900 direct new jobs.

The new investment marks the IFC's first Covid-19 support in the RMG sector and includes financing from the International Development Association's Private Sector Window (IDA-PSW) set up to catalyze investment in low-income and fragile countries, said an IFC press release.

"The new factory will allow Hamza to work with new fabrics to meet increasing buyer requirements, widen its manufacturing base and highlight the effectiveness of advanced technologies to cut production costs and deliver climate benefits," said MA Jabbar, DBL Group's managing director.

The expanded operation is also expected to contribute $8 million to Bangladesh's economy directly and indirectly through local supply chains by 2028.

It might contribute $15 million to expected economic activities generated by additional income of employees, and boost opportunities for micro, small, and medium enterprises along with the supply chain.

Hamza Textile Ltd provides dyeing and finishing services for fabrics that are used in making RMG by its sister companies, owned by DBL Group, which is one of Bangladesh's largest integrated knitted apparel manufacturers and exporters.

The IFC's investment will help expand Hamza Textile Ltd’s finishing capacity by 80 tons per day to reach a total capacity of 103 tons per day at its new factory, which will also be a Leadership in Energy and Environmental Design (LEED) certified green building.

"Bangladesh's ready-made garment industry is vital for the country's economy and delivering on its ambitions to transform into an upper middle-income country," said Hector Gomez Ang, IFC's regional director for South Asia.

To remain competitive, the industry needs to evolve to higher value-added products and adopt modern technologies, which are even more critical given the impact of Covid-19, he said.

"Even prior to the pandemic, the industry was beginning to stagnate in terms of innovation and value addition. We hope this investment will serve as a demonstration model for others to move upmarket and remain competitive," added Gomez.

The IFC has been a strong supporter and financier to the critical RMG sector, which contributes to more than four-fifths of its export earnings, and which alone has created more than four million jobs, employing mostly women.

However, about 85% of exports in Bangladesh come from only low-value RMG products.

Investments in production and process technologies will allow the sector to enhance value addition and make progress in advanced manufacturing processes, which will help the sector withstand future shocks to the economy and protect export growth.

To date, the IFC has invested in five RMG manufacturers in Bangladesh and has provided more than $90 million, largely in the form of debt financing.

The latest investment marks IFC's second engagement with DBL Group. In 2013, IFC provided $10.5 million to Color City Ltd, another of the group's dyeing and finishing companies.

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