Toray may sign investment deal next month

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FE Report
The Japanese Toray Group might sign a deal on its planned multi-million-dollar investment in the textile sector next month.
The Tokyo-based corporation, billed as the world's largest textile producer, is supposed to invest initially around US$90 million at the newly-developed Adamjee Export Processing Zone.
"Toray Group was to sign an agreement with the BEPZA this month. But it is yet to communicate with us until today," an official of the Bangladesh Export Processing Zones Authority (BEPZA) said.
"But the delay doesn't mean it has discarded its plan to invest. The company seems to be assessing the situation in the wake of workers' violence at Dhaka EPZ," the official added.
Referring to his previous communications with the company executives, he noted that Toray was expected to ink the deal sometime in October.
In its foray into the Bangladesh's booming textile and apparel market, Toray will also relocate its Malaysia-based subsidiary, Pan Fabric Toray, to Bangladesh, BEPZA officials said.
"The business group's feasibility study on the proposed plant and local market survey are being completed. If everything goes well, it will invest by the end of this year," the official added.
The official pointed out the Japanese company's investment plan reflects Bangladesh's competitiveness in the textile industry, driven mainly by cheap labour.
"The country's EPZs are increasingly becoming attractive locations in Asia for multinationals that want to invest in manufacturing sector, notably in the apparel and textiles," he maintained.
The sources at BEPZA said Toray has already recruited some local manpower and is imparting intensive training to them in Malaysia.
If implemented, the Toray Group's investments will dwarf those of India's textile giant Arvind Group that clinched a deal to pump nearly $ 66 million into the Comilla EPZ to manufacture textile products.
However, the sources pointed out the Japanese company wanted uninterrupted supply of power and treated water at the plant to ensure smooth manufacturing process.
"Power supply issue remains a challenge for us. But we'll be able to add electricity once the two proposed power plants are commissioned shortly," a BEPZA official said.
Toray's relocation move is thought to be part of the global structural change in business architecture, seeking low-cost manufacturing bases.
BEPZA officials said skill-intensive production facilities will stay in countries such as Malaysia, Thailand, Taiwan, and South Korea, while labour-intensive investments will continue to migrate to locations where wages are cheap.
"As the wage costs in Malaysia are rocketting, foreign companies will be relocating their factories to low-cost countries in the region like Bangladesh," a BEPZA official maintained.
But private sector experts say cheap labour is not the only factor that encouraged the Toray Group to invest in the country, rather Bangladesh's globally-competitive textile and apparel industry acted as an added incentive.
"Perhaps, they (Toray) want to capitalise on the country's longstanding expertise in apparel and textiles. A huge fabric market to feed the fastest-developing ready-made garment industry can be another reason for relocating its manufacturing facility," an official of the International Finance Corporation told the FE in a recent interview.
With a textile product line that extends to all three major groups of synthetic fiber (Toray Nylon), polyester (Toray Tetoron), and acrylic (Toray Toraylon), the Toray Group augments its primary focus on synthetic fibers, raw fibers and textiles with end products delivered straight to the market.
The company's goal is to transform its business structure to create new value by developing a new supply chain management format and building new business solution models, according to its web site.