Chinese firm wants to invest Tk 14b for garment village in Bangladesh

A Chinese firm has shown its interest to invest Tk 14 billion for land and infrastructure development of the proposed garment industrial park at Bausia in Munshiganj, sources said.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) will jointly form a company by December to sign a deal with the Chinese company by this month, they added.

"A Chinese firm is willing to fund land and infrastructure development of the garment palli (village) in Bausia," BGMEA vice president Md Shahidullah Azim told the FE Saturday.

Negotiation is going on to set the terms and conditions of memorandum of understanding for Tk 14 billion fund with the company, he said adding they are likely to sign the MoU by December, 2013.

The BGMEA and the BKMEA leaders held an emergency meeting in this regard at the BGMEA's headquarters in the city Saturday.

BKMEA vice president Md Hatem said according to the recommendation of the central bank, both the BGMEA and the BKMEA will form a joint company to sign the MoU to meet the legal bindings.

"We have discussed with the Bangladesh Bank and the Board of Investment in this regard and they have given green signal," he said.

Sources said the Chinese company has sought guarantors of their fund. The apparel leaders too held several rounds of talks with the leaders of the Bangladesh Association of Banks and the Association of Bankers Bangladesh and they have agreed. Some seven to ten commercial banks are likely to take the responsibility.

The loan will be available at a rate of four per cent, they added.

The two apex trade bodies will formulate a guideline regarding allocation of plots. The guideline says a garment factory that annually exports more than $12 million needs to pay 40 per cent of the total price of plot as down payment with three years of repayment period.  Manufacturing units with annual exports less than $12 million have to pay 20 per cent of the plot's price with a repayment time of four years, Mr Azim said.

He said they will give priority to those factories located in shared or rented buildings in allocating plots.

In June last, the BGMEA and the BKMEA invited expression of interest from apparel makers to know about their willingness in shifting factories to the palli. They got applications for allocating plots on 2,200 bighas of land while the capacity of the palli is 577 plots totalling 1,100 bighas.

The demand for setting up the garment village for relocation of the rented and vulnerable garment units has become strong after the Tazreen fire incident. Later, the Rana Plaza collapse that killed more than 1100 workers, highlighted the need for speedy relocation.

These incidents drew extensive local and global attention and the global buyers asked for ensuring health, fire safety and other compliant issues.

Buyers' demand for proper working environment with Bangladesh's emergence as the second largest RMG exporter after China and the surging export demand also forced the government to think about the garment village.

The government has finally allocated 500 acres of land for the garment palli at Bausia. The Prime Minister also gave directives to all concerned to implement the project on a priority basis.

The process of land acquisition has been completed by the government authority concerned. The BGMEA and the BKMEA have been asked to pay the amount which is about Tk 7.77 billion.

The two associations are expected to pay the amount within two months, Mr Hatem said.

The garment industrial park will have plots with infrastructural facilities, utility services, medical facilities, CETPs (central effluent treatment plants), day-care centres, roads, drainage facilities, waste-dumping yards, fire-fighting equipments, banks, insurance offices and IT (information technology) parks.