10 MNCs to invest Tk2,000cr in textile chemicals

Ten multinational companies are going to invest around Tk2,000 crore in Bangladesh to boost local production and marketing of textile chemicals, which are now largely import dependent.

According to sources at the Bangladesh Investment Development Authority (Bida) and the Bangladesh Economic Zones Authority (Beza), four multinational companies have already been allocated space in various economic zones for the production of textile chemicals, while six more multinational companies have submitted investment proposals to Bida.

The four companies are Germany-based firm RUDOLF GmbH, the largest supplier to the textile chemical market in Bangladesh, and CHT Group, Japan's NICCA Chemical Ltd, and Huntsman (Singapore) Pte Ltd.

Industry insiders have said the present size of the textile chemical market in Bangladesh is Tk1,000 crore and only 20% of the demand is met by a number of local manufacturers. Around 15 multinational companies cater to the rest of the demand through imports.

The multinational companies will be producing textile chemicals in Bangladesh for the first time which will make quality chemicals less costly.

The companies will produce chemicals for various processes including yarn production from cotton and finishing, dyeing, cleaning, and quality improvement of fabrics produced from yarn. The chemicals include detergents, enzymes, acetic acid, entry foaming agents, peroxides, stabilisers, wetting agents, softeners, well marks, sodium acetate, PVA gum, alginate gum, optical brighteners, hydrose, and bio-scouring chemicals.

The investment will also have a positive impact on the entire readymade garments industry as the use of various chemicals for the production of yarn and cotton is indispensable, industry people say.

Monsoor Ahmed, additional director and CEO of the Bangladesh Textile Mills Association (BTMA), told TBS that there are 317 textile mills under the BTMA. Also, there are many other factories locally, he added.

That multinational companies are going to manufacture the essential chemicals locally is big news for textile factories in the country, he said. 

"This will make quality chemicals cheaper. It is also possible that the companies will be able to sell chemicals at lower prices than if we made them. This is because the government offers various facilities to such factories. In this way, VAT on chemicals will be less, and the time spent on importing will also be saved."

The use of chemicals is a must in textile factories, said Monsoor Ahmed, adding various types of chemicals are used to colour and shape raw or unprocessed fabrics made from yarn in textile factories.

Mazakat Harun, president of the Bangladesh Chemical Importers and Merchants Association told TBS that the local chemicals production will benefit traders and textile millers.

They now face various problems while importing these items, including delays, payment problems, and LC problems, he noted, adding, "If chemicals are produced locally, these problems will not be there any longer. The business of some chemical importers may shrink, but they will be able to take dealerships to do business with new manufacturing companies. Maybe, more new entrepreneurs will be able to get involved in the chemical business."

Commerce Minister Tipu Munshi said the government is working to attract such multinational and foreign companies to invest in Bangladesh.

The government will provide all kinds of facilities to foreign companies to produce these chemicals in Bangladesh as these products are mostly import dependent. Multinational companies can set up such factories in the economic zones here.

Who is investing how much?

RUDOLF GmbH is going to invest about Tk350 crore. The company has already been allotted five acres of land in Bangladesh Special Economic Zone (BSEZ) in Araihazar, Narayanganj, said Beza.

Soumitra Ganguly, managing director of RUDOLF Bangladesh Ltd, told The Business Standard that the construction work of the chemical production factory will start this March and it is expected to go into production by June next year.

RUDOLF now supplies textile chemicals from Germany, said Soumitra, adding that the company wants to become a leader in the Bangladesh market by producing the chemicals locally.

Also, the new factory will directly create employment opportunities for over 100 people, while a huge number of manpower will be involved in the business, he continued.

Soumitra further added, "The new factory will be part of RUDOLF's global services as a secure and transparent fulfilment partner for brands/retailers and their supply chain partners."

"With unique innovations in textiles, RUDOLF has always been considered a forerunner in the industry. Pioneering spirit and tradition combined with forward-looking technologies and highly specialised employees continue to define the company's actions today," said Oliver Kusterle, managing director of RUDOLF, and chairman of RUDOLF Bangladesh Ltd.

According to industry people, RUDOLF presently holds the top position in Bangladesh's textile chemical market by occupying about 20% share of it.

According to Bida sources, Japan-based NICCA Chemical Ltd has been allotted three acres of land at Bangladesh Special Economic Zone in Araihazar. The company is going to make an initial investment of around Tk200 crore.

Germany-based CHT Group, has been allotted around four acres of land in Meghna Economic Zone. The company will also invest around Tk200 crore initially.

Meanwhile, Huntsman (Singapore) Pte Limited has been allotted three acres of land in Abdul Monem Economic Zone, Munshiganj, and is set to invest about Tk200 crore initially.

An official of Huntsman told TBS that the construction of the factory will start by May this year, while the production is expected to commence by the end of the next year.

Another six companies – Swisscolor (Switzerland), Merk (Germany), Archroma (Switzerland), Kyung-In Synthetic Corporation (Korea), Novozymes (Denmark), and Global Chemicals Co Ltd (China) – have submitted investment proposals to the tune of some Tk1,050 crore to Bida, sources said.