Investment in Bangladesh textiles drops 26 pct

DHAKA (Reuters) - Investment in Bangladesh's textiles and ready-made garments -- which contribute more than 75 percent of total export earnings -- dropped by 26 percent in the year to June 2008, a senior official of the Board of Investment said on Sunday.

Investment in the industry fell to $146 million during the year compared with $184 million in the same period the previous year, he said.

"We have experienced a declining trend in all the sectors during the period, but we are concerned especially for the textile sector as it revamped the whole economy by contributing more than 75 percent in total export earnings," the official told Reuters.

A top business leader said the decline would affect export earnings for the year to June 2009 and asked government to address the problems they face.

"Due to shortages of electricity and natural gas, lack of adequate financial resources and political uncertainty, the entrepreneurs are shy to invest," said Mohammad Fazlul Huq, president of Bangladesh Knitwear Manufacturers and Exporters Association.

Bangladesh at present faces up to 250 million cubic feet of gas shortages and up to 2,000 megawatts of electricity shortages every day forcing hundreds of manufacturing firms to close down.

"...also due to abnormal price hikes the savings of common people are minimal and for that the banks are not in a comfortable position to finance the businessmen," Fazlul told Reuters.

Commodity prices including of rice, wheat, fuel and edible oil have nearly doubled in Bangladesh since last year, which officials blame mainly on soaring prices in international markets.

"The fall in investment in textile and garment sector will dampen the export growth, and the sector will face stagnation," Fazlul said.