Policy promises lift new investors' confidence amid wave of factory closures
While industry leaders acknowledge that current investment cannot yet absorb the massive pool of displaced workers, optimism is rising.
Bangladesh's apparel sector is undergoing a sharp structural shift. Over the last six months, more than 100 factories shut down and another 50 executed mass layoffs, cutting roughly 180,000 jobs, according to trade body data.
Yet, beneath this wave of closures lies a resilient counter-current: nearly 70 new factories have entered the pipeline or begun operations, generating 60,000 new jobs driven by major corporate expansions and a new wave of debt-averse entrepreneurs.
While industry leaders acknowledge that current investment cannot yet absorb the massive pool of displaced workers, optimism is rising. Manufacturers credit a series of aggressive government policy interventions and new budget incentives for reviving investor sentiment.
Fazlee Shamim Ehsan, president of the Bangladesh Employers' Federation, noted that while market exits and entries are normal, the pace of job losses has recently outstripped growth. "That trend has now reversed, with the pace of job losses accelerating over the past six months," Ehsan told The Business Standard. However, he expressed confidence that the government's new measures – including targeted funding to revive shuttered units and enhanced cash incentives – will stem the tide of closures and stimulate fresh capital injection.
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Unlike past growth cycles heavily reliant on basic garment assembly, the latest wave of investment focuses on backward linkages, capacity expansion, and high-value accessories.
Industry giants Envoy Group and Ha-Meem Group are leading the charge, alongside upcoming investment plans from DBL Group. Envoy Group is currently injecting capital into two new cotton and man-made fibre (MMF) yarn units with a combined daily capacity of 40 tonnes, a move expected to create 500 jobs.
M Saiful Islam Chowdhury, company secretary of Envoy Textile, said recent policy measures have solidified their long-term outlook. "As yarn is an essential product, we don't expect global demand to decline, nor do we see this business shrinking in Bangladesh over the next two decades," Chowdhury told TBS. He added that China's ongoing transition away from basic apparel toward tech-intensive manufacturing will inevitably redirect long-term textile orders to Bangladesh. "Producing it ourselves instead of importing will strengthen our supply chain and improve efficiency."
Similarly, Ha-Meem Group recently launched Ha-Meem Ching Tai Pocketing and Accessories, a massive joint venture with a Chinese partner built on the site of a former jute mill in Narsingdi. Starting with 200 workers, the facility is projected to employ over 10,000 people at full capacity. At its June inauguration, Ha-Meem Group Chairman AK Azad noted the project would significantly slash lead times, substitute costly imports with local components, and conserve vital foreign exchange.
MA Jabbar, managing director of DBL Group, told The Business Standard that the company is planning fresh investments in lingerie and garment accessories.
Separately, data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) show that 44 garment factories have started production over the past six months, most of them small and medium-sized enterprises.
Job losses continue despite fresh investment
Data compiled from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), and Bangladesh Textile Mills Association (BTMA) show that more than 100 factories across the sector shut down between January and June, leaving around 180,000 workers unemployed.
During the same period, around 70 new factories either started operations or entered the investment pipeline, creating or expected to create more than 60,000 jobs.
Figures from a law enforcement agency paint a slightly different picture, showing that 79 factories closed during the six-month period. However, the agency did not provide data on newly opened factories.
The same agency's data show that 457 factories, including businesses outside the apparel sector, have closed over the past two years. It did not disclose how many workers lost their jobs or how many new factories opened and how many jobs they created during the period.
According to BGMEA, at least 23 garment factories shut down between January and June, while around 57 others laid off workers because of declining work orders. Together, these 80 factories left around 40,000 workers without jobs.
During the same period, 44 new garment factories started production, creating employment opportunities for about 16,000 workers.
BKMEA data show that more knitwear factories closed than opened during the six-month period, leaving around 18,000 workers unemployed. New investments, meanwhile, have created about 10,000 jobs.
BTMA said at least 62 textile mills ceased operations during the period, leaving around 120,000 workers unemployed. However, 14 new mills began production, creating about 25,000 jobs.
Separately, at least 20 member factories of the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) shut down, leaving more than 2,000 workers unemployed, according to the association's President Md Shahriar.
However, new investments in the accessories segment have created around 12,000 jobs.
New investors bet on recovery, avoid bank borrowing
A defining characteristic of the new crop of entrepreneurs is a strict avoidance of commercial bank loans, driven by soaring borrowing costs.
Yeahiya Khan, managing director of Stylomore Limited, spent 12 years working in the industry before pooling personal resources with partners to launch a mid-sized factory in a rented building. "We entered this business out of optimism," Khan told TBS. "We started small and didn't take any bank loans. We've already begun receiving work orders and are hopeful of succeeding."
Jasim Uddin, managing director of Fashion Floor BD Limited, took a similar route, launching a 950-worker facility inside his own building using personal savings and family financing. "With lending rates now close to 15%, while profit margins are less than half that level, it is very difficult to sustain a garment business through bank borrowing," Uddin said.
Policy promises lift confidence, but investors seek implementation
Industry leaders said a series of investment-friendly measures introduced by the government had improved business confidence, although they stressed that effective implementation would be key to sustaining fresh investment.
Among the measures announced in the budget is a nearly Tk20,000 crore fund aimed at reviving closed garment and textile factories.
Last Sunday, the government also raised the cash incentive for apparel exports using locally produced yarn to 5% from 1.5%. Tax relief has also been extended to several sectors.
Entrepreneurs said these policy decisions had sent a positive signal to investors, but believed more reforms were needed.
"The government, particularly the prime minister, has made its intentions clear. We've already seen some encouraging policy actions, boosting our confidence," said Jabbar.
"But it will take time for the impact to become visible. We also want to see concrete implementation in addition to policy announcements," he added.
