Bangladesh is set to emerge as the next manufacturing hub of global footwear industry as cheap labour coupled with weak currency is prompting top manufacturers to relocate their factories in the country.
Officials said in the last two months alone the export promotion zones authority have signed agreements with at least three top global footwear manufacturers, who have promised to invest more than $118 million dollars.
Local manufacturers said most of the factories outside EPZs are also undergoing massive expansion while at least six new local companies are debuting in the coming months amid a rush of export order from top world buyers.
And in June, work will begin on the country's largest footwear factory in the Korean Export Processing Zone, its owner Youngone Corp. has said, adding the $100 million plant would be able to manufacture 30 million pair shoes a year.
Officials have termed the last half a year being 'revolutionary and epochal' for the footwear industry.
"The figure is at least 10 times the amount of what the EPZs have wooed in footwear sector since our inception more than two decades ago," said a senior Bangladesh Export Promotion Zones Authority (BEPZA) official.
The investment deals include $52.50 million by Genfort Shoes Limited, $50.09 millions by Xin Chang Shoes and $15.47 millions by Super Protective Shoes. All three are Taiwanese companies with huge markets in Europe and North America.
"All three have big manufacturing facilities in China. But they are relocating their factories to Bangladesh as labour has become much expensive in China," said a top Taipei government official who is facilitating the factories' relocation.
According to the Wall Street Journal newspaper at least 6000 footwear factories housed in Dong Guan, the world's biggest footwear hub, have either closed down or become sick due to massive rise in wages and appreciation by Chinese currency.
In addition, shoes manufactured in China have been slapped with up to 16 per cent anti-dumping duties by the 27 European Union countries, the world largest market for shoes.
The three companies would employ tens of thousands of Bangladeshi workers in the EPZs, with at least two keeping provisions for further expansion once they start exporting shoes, BEPZA officials said.
The top Taipei official who does not want to disclose his identity said Taiwanese investors are particularly interested in Bangladesh, as labour is the cheapest in the region while workers have been traditionally strong in artisan works.
"Some of the investors are impressed with the skill of the Bangladesh female workers. Their hands are the nimblest in the world, which is good for footwear manufacturing," he said.
Already eight top factories are lining up to invest in the country's EPZs or outside, he said adding he expect signings of the deals within this year. "Apart from the eight, every week we have visitors from Taiwan and China."
The official however said availability of land poses a threat to relocation of footwear factories from China.
"Land has emerged as the main problem. Some of the investors want land as big as stadiums where 30,000 to 40,000 workers can work in one shift. But BEPZA does not have such a huge land," he said.
Local manufacturers said a weak Bangladeshi Taka against a falling dollar has also driven the growth of the footwear industry.
"Our currency is still weak against dollar compared to the Chinese Yuan or Indian Rupee. As a result our footwear items have become cheaper in the world market," said Saiful Islam, president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh.
Islam, the owner of leading local footwear exporter Picard, said most of the country's 47 exporters are expanding fast to cope with increased orders from the top global buyers.
"We are now manufacturing high class and fashionable leather footwear at a minimum of cost. Top foreign investors are also rushing in here to exploit these facilities," he said, adding six new local companies will also start operation very soon.
The rush in order has seen footwear export greww by a 21.32 per cent to $ 120 millions in the first nine months, according to the Export Promotion Bureau.
"We are hopeful footwear export will fetch at least one billion dollars by 2011. And if everything goes well, it can be as big as the garments industry within a decade," Islam said.
