The Bangladesh Investment Climate Fund (IFC) has signed a cooperation agreement with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to conduct a pre-feasibility study for a special economic zone for the knitwear industry, The New Nation said on Friday. The objective of the partnership is to help assist the BKMEA with developing a Knit Village based on a proper feasibility study which includes market demand forecast and financial and economic viability.

BKMEA’s President Fazlul Hoque, 1st Vice President Alhaj Rashedul Haque, 3rd Vice President Zahidul Hoque Bhuiyan, Chairman of the Standing Committee on Knit Village Abdus Salam and Co-Chairman of the standing Committee Abdul Khaleque were present at the signing ceremony, as were, IFCBICF’s Thomas Davenport, Senior Manager of the Foreign Investment Advisory Services of the World Bank Group and Mr. James Crittle, Head of International Finance Corporation in Bangladesh.

During the signing ceremony, experts highlighted the need for a special Economic Zone like the Knit Village, especially for the Bangladesh knitwear industry. Fazlul Hoque, President of BKMEA pointed out that knitwear is the biggest export earning sector in the country where recent growth rates have been phenomenal and Bangladesh knitwear exports volume is in third position globally with only China and Turkey ahead. BKMEA says that every year more than 300 new factories enter the industry and investment growth is very promising. It also says that Bangladesh has great potential to become the world’s top knitwear exporter, and needs to plan ahead and maximize output, through building public-private partnerships.

James Crittle pointed out the need for special economic zones in a country like Bangladesh where land is a scarce resource. Whilst explaining the technical aspects of the feasibility study, Crittle highlighted that local expertise is crucial in analyzing whether an area is feasible for a special economic zone. “The basic criteria for an economic zone are the site, access to transportation, utilities, benchmarking, financial and economic analysis,” Crittle said.  

"Economic Zones create opportunities for boosting economic growth and social development. Economic Zones were not a choice between agriculture and industry, but an excellent tool to integrate industrial, agricultural and service sectors. Allowing more productive use of land, labour, capital and infrastructure - leading to greater investment and job creation," said Tom Davenport.

BKMEA says factories are scattered and their backward linkage industries have also developed in a very scattered manner, and as a result, production related utilities and supports are being managed far away from manufacturing units. It stresses that the process of completion of a RMG product requires 4-8 production stages. For knitting, dyeing, and printing or for any other technical value addition purpose, in almost all the cases, a RMG product has to travel 50 to 100 km from the main factory. This wastes valuable time and affects the quality of the products and increases production costs, which is why BKMEA says, factories are not receiving the benefits of clustering due to the existing scattered industrial set up.

BKMEA thinks that establishing economic zones namely 'Knit Village' for the sector would be a remedy of these production problems, as 'knit villages' will intake all kinds of factories in a selected area and significant manufacturing unit can be established within this area. These factories will be eligible to complete all their production stages within the area and factories such as knitting, printing, and dyeing could also provide their support in a structured way there.

IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments.

IFC Bangladesh Investment Climate Fund (BICF) is a long-term technical program targeting a better operating environment for businesses. IFC BICF is funded by the UK Department for International Development (DFID) and the European Commission (EC). Its objectives are consistent with the Bangladesh Government's strategic vision for private sector development within its poverty reduction strategy. Government agencies and IFC BICF-in close collaboration with key stakeholders- jointly design and implement programs to institute business friendly policies, laws and regulations, and strengthen the institutions that implement them.

Source: The New Nation