The International Finance Corporation (IFC) chips in with $22.7 million in Hamza Textiles Limited, a dyeing and finishing arm of Dulal Brothers Ltd or DBL Group.
It will help build a new factory with a cutting edge to meet growing demands of consumers and create over 900 new jobs, reads an IFC statement issued on Tuesday.
The funding will amplify Hamza's finishing capacity by 80 tonnes daily to reach 103 at the plant, which will be a leadership in energy and environmental design (LEED)-certified green building.
Hamza provides dyeing and finishing services for fabrics used in making garment by its sister companies, owned by DBL Group, one of the largest integrated knitted apparel manufacturers and exporters.
The new IFC investment marks its first Covid-19 support in the apparel sector and includes financing from the International Development Association's Private Sector Window (IDA-PSW), according to the statement.
The IDA-PSW has been set up with intent to catalyse investment in low-income and fragile countries.
The expanded operation is expected to contribute $8.0 million to Bangladesh's economy through local supply chains by 2028, $15 million in expected economic activity generated by additional income of employees.
It will also boost opportunities for micro, small and medium enterprises along the supply chain.
"The new factory will allow Hamza to work with new fabrics to meet increasing buyer requirements, widen its manufacturing base and highlight the effectiveness of advanced technologies to cut production costs and deliver climate benefits," says DBL Group managing director MA Jabbar.
"Bangladesh's ready-made garment industry is vital for the country's economy and delivering on its ambitions to transform into an upper middle-income country," said IFC regional director for South Asia Hector Gomez Ang.
"To remain competitive, the industry needs to evolve to higher value-added products and adopt modern technologies, which are even more critical given the impact of COVID-19."
"Even prior to the pandemic, the industry was beginning to stagnate in terms of innovation and value addition. We hope this investment will serve as a demonstration model for others to move upmarket and remain competitive," added Mr Gomez.
The IFC has been a strong financier of the critical RMG sector, which contributes to more than four-fifths of export earnings, and which alone has created more than four million jobs, mostly for women.
An estimated 85 per cent of exports in Bangladesh come from only low-value ready-made garment (RMG) products.
Investments in production and process technologies will allow the sector to enhance value addition and make progress in advanced manufacturing processes, which will help the sector withstand future shocks to the economy and protect export growth.
To date, the IFC has invested in five RMG manufacturers here and has provided more than $90 million, largely in the form of debt financing.
The latest investment marks its second engagement with DBL Group as it supplied $10.5 million to Color City Ltd, another of dyeing unit of the group, in 2013.
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