Big groups are now investing in the apparel accessories segment mainly to meet their own requirements and grab the growing demand both in local and international markets, industry insiders said.
In the last couple of years, some groups including Meghna, Simtex, Baly, Davonair, Al-Mostafa, Aman and Esquire made fresh investments in setting up new units or expanding their existing capacities, according to the sector trade body-BGAPMEA.
The sector, which meets nearly 95 per cent of the country's readymade garment (RMG) sector's requirements for accessories, made deemed exports worth $ 6.70 billion in the last fiscal year. The sector fetched $ 2.75 billion in the fiscal year 2010-11.
Some 20 per cent of total $ 6.70 billion deemed export is directly shipped to various destinations of the world including the Netherlands, South Africa, Pakistan, India, Middle East, Ethiopia, Indonesia, Italy, Sri Lanka, Turkmenistan, Germany and Austria, according to the association.
Both deemed and direct exports are gradually increasing each year, said Abdul Kader Khan, president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA).
"With the growth in local RMG industry, the demand for accessories and packaging products is increasing and such potentials encourage many to invest in the segment," he told the FE.
More fresh investment is needed in the sector to make it grow in line with the RMG sector that has targeted to achieve $50 billion export earnings by 2021, he said, adding that to meet the target, some $12 billion worth of accessories would be needed.
Envoy Group set up Oishee Accessories Ltd two years back mainly to meet its own requirements, said its managing director Abdus Salam Murshedy.
"It also gives confidence to the buyers about timely-shipment and products' quality if all the required things are met from single premise or same management," he added.
The production capacity of the unit that produces PP bag is 80,000 pieces per day in one shift, he said, explaining the reasons that it is an important product and can be delivered within the shortest possible time to avoid costly air shipment through own backward linkage.
Uniglory Packaging Industries Ltd of Meghna Group was set up last year mainly to meet the local RMG sector's demand, said its deputy general manager Faruque.
Big brands and retailers including H&M have now started nominating the company that has another accessory unit following their production of quality products, he added, explaining the group's purpose of fresh investments in the segment.
Rafez Alam Chowdhury, former president of BGAPMEA, said investment in this sector now stands at Tk 350 billion and value addition is about 40 per cent.
Currently, some 1,600 accessories and packaging companies are registered with the BGAPMEA and produce more than 30 items including corrugated carton, poly bag, hanger, elastic button, button, label, zipper, hang tag, gum tape, twill tape, embroidery and quilting, according to the association.
The majority of the companies are small and medium categories, its officials said, adding that only some dozens are big in size.
Khondaker Golam Moazzem, additional research director of Centre for Policy Dialogue (CPD), told a recent seminar that the government should provide policy support including cash incentives to help the sector flourish further and expand its footprint in the global market.
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