Apparel Online Bangladesh Magazine Magazine March 2018 | Page 32

EXPORTER PROFILE TO ADVERTISE GOING TO A GOOD EVENT? Contact Rani Mahendru [phone] (512) [email protected] Send your industry gossip, photos and news to [email protected] Challenges: Inherent and Avertable MD of SMH New Generation Apparels Ltd. & President of BMCCI underlines how lack of foresight and proper planning are jeopardising the future of the industry B angladesh could be the second biggest garment exporter globally but the scenario back home is not very conducive for business growth, at least so, feels Syed Moazzam Hossain, Managing Director of SMH New Generation Apparels Ltd. The company produces around 1.80 million pieces of sweater per year to cater to a host of clients worldwide. He minces no words to underline the same. He explicitly outlines the challenges faced by the industry, most of which he attributes to lack of planning and necessary action plans rather than anything else, in a no-holds-barred interaction with Apparel Online. “We only have vision but no mission…,” clearly states Hossain, who is also the President of Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI), pertaining to the country’s goal of reaching US $ 50 billion by 2021 in particular and the so-called roadmap for the industry’s overall growth and development in general. Catering to names such as UK- based New Look (brand as well as retailer), DOROTHY PERKINS UK, DEBENHAMS UK, VISAGE UK, DUNNES UK, BROKEN STANDARD UK, 2ND CHAPTER UK, CYNICAL UK, THREADBARE UK, NEWYORKER GERMANY, JEANS FRITZ GERMANY, CECIL GERMANY, BRANDBASE 86, FASHION GERMANY, TAKKO FASHION GERMANY, GIANT TIGER CANADA, CLEO GERMANY,ALCOTT ITALY, SONNY BONO ITALY, SEDETEX The 0.70 per cent tax at source deducted by the Government and the continuous inflation of Taka as compared to US Dollar is also a big concern for the industry, underlines the MD of SMH New Generation Apparels Ltd. FRANCE, US POLO INDIA, ED HARDY INDIA, PANTALOON INDIA, and, RELIANCE INDIA, from his Accord-certified 726-machine strong (650 hand flats and 76 Chinese jacquards) manufacturing unit in both basic (30%) and value-added (70%) offerings, Hossain believes the target of 50 billion is a mere wishful thinking. Registering a growth of just 0.20% in FY 2016-17 (the lowest in last 15 years), the Director of SMH New Generation Apparels underlines that achieving around 30 per cent growth in the next FY to keep in track with the 50 billion target is almost impossible. If that was not all, Hossain is also less hopeful about the industry’s future, Syed Moazzam Hossain, Managing Director of SMH New Generation Apparels Ltd. 32 Apparel Online Bangladesh | MARCH 2018 | www.apparelresources.com more so considering the existing scenario. “The reasons are many…, The first challenge is how to run a business profitably when margins are decreasing while production cost is spiralling out of control,” asks the current BMCCI President. He then goes on to add that most of the manufacturing units have spent somewhere around Taka 20 million to 150 million (the average cost for remediation) towards correcting the structural defects keeping in line with the compliance bodies’ directives and yet continue to be in the business. But this is proving a bit too much for many entrepreneurs, especially the ones with small- and medium-sized manufacturing units and limited financial prowess. Adding to this is the 12 to 13 per cent interest rate claimed by banks on lending to those who borrowed money from financial institutions to carry out the remediation, Hossain maintains, citing examples in contrast to India and China (Bangladesh’s competitors). According to him, these major banks charge interest rate of 7 and 6 per cent, respectively. “As far as I know, the Indian Government provides subsidy on capital machinery to set up new manufacturing units even while also providing for workers’ salary partially, but back in Bangladesh, the only benefit we get from the Government is that of bonded warehouse facility…,” says Hossain. The 0.70 per cent tax at source deducted by the Government and the continuous inflation of Taka as compared to US Dollar – for which