Balancing Business, Global Trends, and Diplomacy in Bangladesh: Mostafa Quamrus Sobhan

The Volatile Economy

Since 2019, Bangladesh has seen some evolving trends in its economy. From COVID to the Russia-Ukraine War, each world event has proven to be a roadblock for the country’s success. Tensions in Europe have impacted energy prices, and Bangladesh has had to buy expensive fuel to run the production processes in the country. Remittances have come down, considering the global recession, and with all the payments that have to be made for the infrastructural development of the country, foreign reserves have seen a definite drop.

In the garments sector, the Dragon sweater spinning project imports most of their raw materials through what is called the back-to-back LC mechanism. This affords them some months between acceptance of goods and payment. “Within these months, we produce the orders, ship them, and collect export proceeds from customers. So, we complete the supplier payment cycle using our own export proceeds. Therefore, with this advantage of the deferred payments facility of B2B LC the imports of raw materials are not facing any delays in our RMG sector,” he states.

However, Dragon Group Textiles, along with a number of others in the industry, are feeling the pinch of the raw material price hike. As they are users of synthetic acrylic yarn and fiber, a by-product of petroleum that needs to be imported from various countries, the price of petroleum has a direct impact on the price of yarn and sweaters. 

Mostafa remains optimistic through it all. “I am hopeful that the war tensions in Europe and the Middle East will ease down next year, which will directly impact the prices of commodities and energies.” Additionally, in terms of our economy, the post-election period will also bring the economy back to its usual growth trends,” he shares. “Recessionary pressures on the economy should also ease up once commodity prices go down.”

Utilities and Rising Production Costs

Having to run factories through the undesirable period of extreme load shedding that happened in the country in the period of 2003–2009, when the country was producing only half the electricity it needed, Mostafa optimistically compares that period of time and says that we are now in a much better state in terms of electricity generation as current output is equally matched to the required demand. However, the current gas crunch is undesirable for the growth of the industry. “As our textile industry is in the Comilla Belt under Bakhrabad Gas Distribution Company, we are not facing extreme levels of gas disruptions as this utility service provider is more efficient in our Comilla Industrial Belt.” We have gas generators installed, and additionally, we have a backup diesel-based boiler that helps us whenever there is low gas pressure in the area,” Mr. Sobhan states. 

The labor crunch in the industry is another challenge, unfortunately. With such high levels of development, the RMG sector has seen rapid expansion in the past. While growth is never bad, the new machines entering the country need more manpower to run them. This is increasing the cost of labor for manufacturers. “We have on-the-job training facilities for the newly recruited employees, and we also have a sophisticated ERP system that gives the employees performance-related benefits as per the labor laws, and additionally, specific production bonuses are given to the best performers. To keep them engaged and motivated, we arrange regular motivational and skill development training. We also provide provident funds to our employees as a strategy to build long-term bonding and employee satisfaction,“ the entrepreneur shares.

Changing Trends in Global Consumption

Mostafa, an astute businessman, has recognized certain shifts and trends in the global consumption of garments. First, people around the world have lower disposable incomes. As prices for daily necessities rise, they have less and less to spend on clothing. Additionally, with the shift from brick-and-mortar to online, people have started to look for more variety. “Big volume table orders from buyers are reducing drastically these days,” he reminisces. “Years ago, there would be a handful of designs displayed on a table, and each of those would have a couple hundred thousand pieces to sell. But now, large quantity orders are going down, and a mix of large variety and low quantity orders is becoming the dominant trend.”

Traditionally, garment businesses have been based on volume models, and factories have expanded keeping in mind volume production. “Now we have to be smarter. We have to set up our lines in such a way that we can swiftly switch between smaller orders and volume orders. In the future, smaller quantity models will dominate the market,” the visionary shares. 

Another trend that Mostafa notices is one towards ethically sourced and produced clothing. This also means that the clothing must be softer on the environment. In our acrylic spinning plant, we collect all the waste coming out of sweater production—jute. “We cut the waste into small segments of fiber and mix it with 90% virgin fiber, producing a yarn that has 10% recycled fiber content. Recently, I have also submitted this product to a fair in Germany, and it has been selected for an award. It is the first locally produced recycled acrylic in BD, and we will call it “Recycled Acrylico,” he shares. 

Further, the Aditya Birla Group has started production of a new mixed acrylic tow and fibre with a content of up to 50% or more recycled acrylic materials. Those who use it are awarded a Global Recycled Standard Certificate. Mostafa intends to work with it in the future. He has also invested in a cotton spinning plant equipped with German machines, where he intends to produce 100% organic cotton yarn and supply it to all the knit dye and sweater dye houses and manufacturers. “We also want to make a new type of yarn with 50% organic cotton and 50% recycled acrylic. This will be a very sustainable product, which we will market to all the top retailers worldwide,” the entrepreneur deems. 

Entrepreneur’s Organization, Bangladesh

A proud member of EO Bangladesh, Mostafa feels that the network has been crucial in connecting like-minded people. “There is a community of around 18000 business owners with a combined sale of almost half a trillion dollars, employing a few billion people,” he shares. Arranging discussion panels and educational events in addition to networking, EO is playing a part in developing local entities such as the Global Student Entrepreneur Awards program, which awards students with bright entrepreneurial ideas. He feels that such networks are pivotal in helping the economy and contributing to its collective welfare. “I have also benefitted directly with the diverse members of different backgrounds of industries and businesses, For instance, EO has helped me to get connected with a supplier in India who is producing organic cotton, and we are planning to collaborate in the future,” he adds. 

Honorary Consul for Uruguay in Bangladesh

Mostafa Sobhan was recently given the honor of a diplomatic position—the well-deserved post of the first-ever Honorary Consul of Uruguay in Bangladesh. In the business for decades, Mostafa has worked out of his skin since 2016, facing inquiries and background checks by DGFI and NSI special branches.

“I am the only representative of Uruguay in Bangladesh, and through my position, I want to facilitate business and commerce and encourage bilateral relations between Uruguay and Bangladesh.”

Mostafa mentions that he can facilitate visas so that Bangladeshi business owners can travel there to bring back commodities such as wool, wheat, barley, and sunflower seeds for the domestic market. Uruguay is also a major meat-producing country; therefore, the potential to introduce meat exporters to export halal meat and bring that supply to the local market is possible.

Considering that Uruguay has a free trade agreement called Mercosur with South American countries such as Argentina, Brazil, Paraguay, Uruguay, Venezuela, and others, His agreement facilitates billions of dollars of free trade between these countries. Mercasor agreements are being rectified and expanded to facilitate trade between other trade blocs and countries such as the EU, China, India, Mexico, Singapore, and many others.

Entrepreneurs from China and India are taking maximum advantage of such trade agreements and exporting huge volumes of textiles, leather, electronics, vehicles, chemicals, and other products. I would like to see Bangladeshi business people more vividly participate in this growing trade bloc, which will highly facilitate our business entrepreneurs.

In the near future the entrepreneur plans to take a business delegation of textile, engineering, leather goods, and pharmaceutical exporters to Uruguay. Mr. Sobhan wants to introduce them to the Uruguayan Chamber of Commerce and the Foreign and Commerce Ministry including the President’s office so that they can develop two-way communication between us and explore bilateral trade between our countries.