Sharjah-based Kreol Trading Est. is venturing into garment manufacture through a venture in Ajman.

The company acquired the licence from a firm which had ceased operations.

The plant - with an installed capacity of 5,000 pieces a day and named 'Butterfly llc' - will produce knitted and woven garments, primarily for the European and U.S. markets.

The promoter is budgeting Dh3 million initially, which includes working capital requirements.

"The decision to get into garment manufacture was prompted by the availability of good infrastructure and skilled personnel," said A.S. Lal, chief executive of Kreoll.

"The original plant had no outstandings and we are starting with a clean slate. The plant has already bagged orders from Europe, and in the latter half of the year, we plan to get orders from the U.S. as well."

UAE's garment manufacturing sector - valued at $250 million by way of export income annually - has not seen too many new entrants in the last three years or so. On the contrary, many plants, particularly those in the northern emirates, have been forced to shut down. Also, local authorities have been chary of issuing new permits.

The primary reason is the strong competition from some neighbouring markets and some countries in Africa, which enjoy the benefit of quota free status in garment exports to the U.S.