OPEC Fund supports textile factory in Bangladesh with US$2 million loan



November 15, 2002
Vienna, Austria

A private sector loan agreement for US$2 million has been signed between the OPEC Fund for International Development and Hamid Fabrics Ltd. of Bangladesh to help expand facilities and enable the factory to diversify its operations. 

The export of ready-made garments in Bangladesh has expanded rapidly over the last two decades and represents the main source of foreign exchange for the country, comprising around 70% of export revenues and providing employment for some 1.4 million people. However, Bangladesh is heavily reliant on the import of finished fabrics, with only 20% of exported garments originating from domestically produced cloth. The Fund loan will help finance the installation of a modern dying and finishing unit at Hamid Fabrics Ltd., which is located on the outskirts of the capital city Dhaka. This will enable the company to produce export-quality fabric from unfinished cloth for local garment industries, which will not only reduce production costs, but also enable the country to remain competitive in this rapidly-growing sector. 

This loan represents the OPEC Fund's fourth private sector intervention in Bangladesh. Development assistance totaling US$290.5 million has been directed to the public sector in the form of project loans in the sectors of transportation, energy, education and health, for balance of payments support, and loans that helped finance commodity imports programs. The country has also benefited from direct Fund grants, such as one to cover its subscription to the capital of the Common Fund for Commodities, several that supported regional programs in the areas of health and agriculture, emergency aid for cyclone and flood victims, as well as research grants. In May 2000, an agreement for the encouragement and protection of investment was entered into between the Fund and the Government of Bangladesh.

The agreement was signed on behalf of Hamid Fabrics Ltd. by Mr. Mbdullah Al-Mahmud, Managing Director, and by H.E. Dr. Saleh A. Al-Omair, Chairman of the Governing Board of the OPEC Fund.