Youngone to invest $500m in textiles and IT

Youngone Corporation is planning to invest up to $500m at the Korean Export Processing Zone (KEPZ) in the textiles and information technology sectors in the next few years, said its Chairman Kihak Sung.

The state of the art 100 acres hi-tech park would employ 20,000 to 30,000 people, said Kihak Sung. Five buildings are already under construction while a few more will be built in the near future.

The KEPZ, owned by the Youngone Corporation, is also developing another 50 acres of land that would host twenty 22-storey IT buildings. The park/complex will have a number of software development facilities, including high-rise IT buildings, universities, schools, and a community complex with service apartments.

Aiming at the growth of the country's IT sector, the hi-tech park will provide support in the form of education, technical training and human resource development.

"Maybe we will provide IT solutions to all our factories around the world from Bangladesh," Kihak Sung said.

The KEPZ now hosts 40 state of the art green factories. It plans to build another 35 factories.

In its textile zone, three out of five planned factories have been completed. Once all five are completed, KEPZ expects this to function as the country's "textiles hub" to produce and supply high-quality man-made fibre (MMF). This would help Bangladeshi apparel makers to locally source the fibre and make more value-added and high-end apparel.

The man-made fibres include polyester, rayon or synthetic wool. This business now generates $100 million dollars for Youngone. Sung expects this would become a half a billion-dollar business in the next five years.

Youngone has been investing in backward linkage heavily and adds more value to its production than average garment makers of the country. If all units are combined, Youngone adds 55% value. Some of its MMF-based products add even more value. For instance, the world-famous jacket Nuptse of North Face is entirely made in Bangladesh. The value addition for this is 85%.

Located in Anwara, the KEPZ is the biggest private EPZ in the country that was given the go-ahead in 1996 and its land acquisition was completed in 1999. However, due to infrastructure problems, bureaucratic tangles and a lack of policy support, its progress remained very slow for years.

"But for the last two years, with the help of the government we are making major breakthroughs," said Kihak Sung in an interview late last month. "Not all the problems that we have faced are over. But there have been some major expansions here.

"More companies are expected to join the KEPZ."

He said, "We are rebuilding our businesses. We have 10 design and development centres. Three of them have been completed while seven others are under construction.

"I want to market and develop smaller units where designs are developed, tested and checked through small productions before taking them to big production factories. I want to develop 10 smaller business units, which would rely on their own products, as well as large scale productions."

Looking at the future growth of Bangladesh's export market, Kihak Sung said, "The growth should not be based on cheap cost, but with quick delivery, high quality, good image and good service value. It depends on how the business community and the government work together. It also depends on how we can improve the image of Bangladeshi products in many different ways – in terms of environmental, social and governance (ESG), quality and delivery. We will have to achieve a lot within a short time. Also, we need to develop man-made fibre products along with this cotton supremacy that we have."

"Bangladesh has the human resources and a tradition of success – you should be able to become one of the three – Vietnam, China and Bangladesh. The amount is not the most important factor to achieve; rather making a sustained profit to reinvest is most important.

"The garment business should not be abandoned. This is already a low hanging fruit for Bangladesh. On the basis of the success of this one, you should build other businesses like electronics," he added.

Youngone's annual turnover is $3 billion, including its $500 million North Face Korea business (Youngone holds the rights to run North Face in Korea). One-third of this revenue comes from Bangladesh while the rest from its operations in Vietnam and other countries.