1) The document discusses financing strategies to transform Bangladesh's garment industry to reach $50 billion by 2021 through urgent short-term needs and important long-term goals. 2) A two-stage financing strategy is proposed, with Stage 1 focusing on realizing short-term goals through initiatives like soft loans, and Stage 2 focusing on long-term goals like infrastructure development through partnerships with development organizations. 3) Both stages require billions of dollars in investment and outline action plans to develop the industry through measures like improving access to financing for SMEs and workers, increasing foreign investment, and diversifying markets.

1. Transformation Challenges
and Opportunities
for Bangladesh
Garments Industry

2. Financing
the Transformation
of Bangladesh
Garments Industry

3. Anis A. Khan
Managing Director & CEO
Mutual Trust Bank Limited
Dhaka, Bangladesh
Presented by

4. The road to
US $50b industry
is exciting and
challenging if an enabling
environment is created

5. Introduction

6. 2014 2015 2016 2017 2018 2019 2020 2021
24.5b
27.2b
30.2b
33.5b
37.2b
41.3b
45.8b
50.9b

7. "We consider Bangladesh free from major macroeconomic
imbalance despite several fiscal constraints, a low income
economy and heavy development needs."
Standard and Poor (S&P)

8. FINANCING STRATEGY
What is urgent
vs.
What is important
A two-stage strategy is proposed
to finance the RMG sector of the country
Identify

9. Stage 1 Strategy
Stage 2 Strategy
FINANCING STRATEGY

10. Urgent Needs
Stage 1 Strategy
Long-term Needs
Stage 2 Strategy
Continued

11. Expand &
Diversify
Consolidate
Strength
Thrive in Global
Market
We are Here
Attain
Self-sufficiency

12. In the medium term, Bangladesh looks to be
the sourcing country of choice
Mckinsey & Company

13. Stage
1
Invest in Realizing Short Term Strategy

14. in investment is what the RMG industry
needs over five years, to make long-term
improvements needed to effectively
support its reform process and achieve
self-sustainability
US $
Stage1.
Invest in achieving
Short Term Goals
>1b

15. 3 YEAR ACTION-PLAN
•
•
•
•
•
•
Meeting Urgent Needs

16. Soft Loan by
JICABDT1B
VF-IFC to
InvestUS$10M
RMG remediation finance
guidelines developed by Accord
Credit Facility
by AllianceUS$35M
Remediation Financing: Developments

17. Support RMG Village
Project
1

18. Hurdles
RMG Clustering Initiative (Continued)
Proposed
Measures
•
•
•
•
•

19. 3
2
1
Proposed Relocation
Financing Roadmap

20. Everyone has the right to life, the right to work,
to free choice of employment, to just and
favorable conditions of work.”
Universal Declaration on Human Rights

21. Concessional Interest
Rates during Reforms2

22. Remove Financing Difficulties in the
Domestic Market and Tapping
International Capital Markets
3

23. Inefficient Domestic Financial Market
•
•
•

24. We should open up more
to FC Borrowing
4

25. Exchange rate fluctuations
Borrowing from off-shore banking units
Difficulties: External Borrowing
Lengthy procedure of loan approval

26. Policy Amendments
to Support Industry Reform
5

27. US Tariff
Reform
Policy Amendments: USA

28. Protect against Cotton
Price Swings
•
•
•
6

29. "Bangladesh shows us that even in circumstances
that seem the most hopeless there are ways forward
if the right strategies are applied, and if the right
combination of investments is made"
Jeffrey Sachs, Earth Institute, Columbia University

30. Stage
2
Invest in Realizing Long Term Strategy

31. in investment is what the RMG industry
needs, over ten years, to make the long-
term improvements needed to effectively
build on its large export base and sustain
future growth
Stage2.
Invest in Achieving
Long Term Goals
US $
1b

32. NY Firm
to Investus$200M
IDA-WB
to InvestUS$300M
Development Financing:
Recent Initiatives

33. Government Initiatives
•
•
•
•
•
•

34. 10 YEAR ACTION-PLAN
•
•
•
•
•
Fulfilling Long-term Goals

35. Invest in RMG Infrastructure &
Backward Linkage Financing Project
1

36. Invest in RMG Infrastructure &
Backward Linkage Financing Project

37. GoB & Development
Partners
Bangladesh Bank
Project Wing
Participating FIs
Private Investors
PPP Backward Linkage
Projects
Project Promoter
Fund Flow Example

38. Development Partners
Participating FIs
Offshore Unit
Private Investors
PPP Backward Linkage
Projects
Project Promoter
Alternate Fund Flow Example

39. Reallocate IPFF Funds
for Investment in the RMG Sector

40. A Renewed
Focus on SME2

41. “In my experience, poor people are the world's greatest
entrepreneurs. Every day, they must innovate in order to survive.
They remain poor because they do not have the opportunities to
turn their creativity into sustainable income.”
Nobel Laureate Dr. Muhammad Yunus

42. Collateral Based
Lending
Financing Difficulties SME Owners Face
Fiscal Policy
Non-pecuniary
Problems
High Interest
Rate
Solution

43. Database for
Targeted Credit
Other Measures
Worker Welfare
Fund
Tailor-made SME
Loan Products
Inclusion in
RMG Village

44. Venture capital
financing for SMEs
3

45. Lack of Security
Difficulties Venture Capitalists Face
Communication
Gap
Structural
Deficiency
Absence of
Regulations
Solution

46. Upscale to the
Premium Market4

47. Invest in developing
Competitive Advantage in the
Premium/Specialized Segment

48. To What Extent Should we allow
FDI in RMG Sector?

49. Bangladesh is one of the hottest emerging
market having the potential of attracting
increased foreign investment.
Investor Chronicle, a UK based research organization

50. Invest in Market
Diversifications
5

51. The Next Eleven (N-11) are eleven countries among which
Bangladesh has a high potential of becoming one of the
world's largest economies along with BRICS.
Goldman Sachs research report

52. We Need Initiatives From All Fronts
Governments
Financial
Institutions
Buyers
Development
Partners

53. Conclusion