Maf Shoes to invest Tk 1,118cr to set up new factory

Maf Shoes, a sister concern of TK Group, is set to invest Tk 1,118 crore to establish an export-oriented footwear manufacturing unit alongside other backward linkage industries at the Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN) in Chattogram.

"We want to increase our exports and provide backward linkage products to local footwear manufacturers," said Mohammad Shahadat Ullah, executive director of Maf Shoes.

"For this reason, we have decided to invest in export-oriented factories for synthetic sports shoes, sports-gears and other associated backward linkage facilities at BSMSN," he added.

Maf Shoes will set up a total of 10 manufacturing units related to footwear and its backward linkage industries, he said.

The proposed project will create 5,500 job opportunities, Ullah said.

Of the Tk 1,118 crore investment, 30 per cent will come through equity while the remaining 70 per cent will be funded by banks.

 Two private banks have already assured that they would finance the new labour-intensive footwear factory.

Maf Shoes has already submitted an investment proposal to the Bangladesh Economic Zones Authority (Beza), seeking a 50-acre plot for the new facility, which will be the company's third footwear manufacturing unit.

"We will give them the land they wanted as the company will produce both export-oriented and import substitute products at the same time," Paban Chowdhury, executive chairman of Beza, told The Daily Star.

Renowned footwear retailers want to explore sources other than China for their products, leading to increased competition in the global footwear market, which has encouraged Maf Shoes to go ahead with its plans, he added.

The global market size for synthetic footwear is about $150 billion but there is still huge potential for growth in the sector, which could turn into the second largest export earning sector for Bangladesh with proper and timely policy support from government.

Ullah also said the government has brought the sports and synthetic footwear sector into focus, making it the most preferred sector under the latest export policy.

The authorities concerned have even proposed special facilities like tax rebates for the sector.

Moreover, a 4 per cent export cash subsidy was recently introduced for this highly labour-intensive sector to make it suitably incentivised to attract more export orders.

Maf Shoes, a pioneer in synthetic or non-leather sports footwear products in Bangladesh, is a 100 per cent export-oriented company with the highest solo investment, Ullah said.

Bangladesh annually earns about $300 million from sports shoe exports, of which Maf Shoes accounts for 20 per cent.

On average, the company has grown by 20 per cent annually for the last five years, he added.

The company exported 1.14 crore pairs of sport shoes in 2019 while the figure was 91 lakh in 2018.

However, Ullah expects to export 1.25 crore pairs this year and 2 crore pairs next year.

"We began commercial export in 2011 with only $0.17 million. Last year, we exported $57 million and despite pandemic affect, we are projecting $70 million in export receipts for this year," he said.

Maf Shoes is already in the process of establishing their second unit at the Nasirabad industrial zone at cost of Tk 137 crore. The facility is set to go into commercial production in March next year.

The company produces a wide range of footwear for all age groups and provides complete manufacturing solutions under one umbrella, engaging 8,500 workers in the process.

Maf Shoes is one of the most reliable and dedicated sourcing partners of Decathlon, a leading sportswear retailer based in France.

Maf Shoes covers a good percentage of Decathlon's global market demands and has also started making shoes for another global footwear giant, Deichmann from Germany.

Currently, most raw materials Maf Shoes uses in its products are sourced from China, Vietnam, South Korea etc.

But due to the ongoing Covid-19 pandemic, the company loses at least eight weeks on each shipment, allowing its global competitors to reach an advantageous position, Ullah said.

To create ample production facilities that will be suitable for the next 15 years equipped with proper backward linked facilities like circular knitting, warp knitting, rubber outsole, etc, Maf Shoes will manufacture these products at its new units.

The company will also step into other sports-gear segments like swimming goggles, swimming caps, kickboards and the like.

In October 2019, Prime Minister Sheikh Hasina announced the continuation of financial incentives in the leather sector for at least the next five years to help the country achieve its targeted export earnings from the leather goods and footwear industry.

She made the announcement while inaugurating the Bangladesh Leather Footwear and Leather Goods International Sourcing Show.

The PM said that as part of export diversification, the leather goods industry has been identified as a priority sector for Bangladesh's economy and national industrial development strategy.

"For this, various initiatives have been taken to develop the leather and leather footwear industries," she said, adding that barely a decade ago, most of the country's export earnings from this sector mainly came from shipments of leather as a raw material.