The readymade garment (RMG) industry in Bangladesh has grown over a few decades to become the second largest in the world. The sector is now the key driver of the economy and the country’s development. By 2013, there were approximately five thousand factories in the country. The RMG exports earned $24.5 billion in fiscal year 2013-14 accounting for over 80 per cent of the country’s export earnings. Thirty years of experience and reputation in garment manufacturing has led to the present status of Bangladesh in RMG. The factories have ensured international standard quality and are now adopting environment-friendly and green concepts. There have been rapidly developing backward linkage industries such as washing, dyeing, finishing, embroidery etc. The factories have been versatile in producing different types of apparel products. The country’s vision is now to increase the RMG industry’s global market share from the current 5.0 per cent to 8.0 per cent by 2021. This requires increasing our exports to about US$ 50 billion. Now let’s see the worldwide forecast about competitiveness of Bangladesh’s RMG. As per McKinsey & Co.’s forecast in 2011, Bangladesh is on the radar-screen of all European and US apparel buyers and likely to fetch nearly $45 billion by 2020. In April 2012, the world’s leading strategy consulting firm released a study titled ‘Bangladesh’s Ready Made Garments Landscape: The Challenge of Growth.’ The report forecast that the Bangladesh apparel sector could reach $30 billion by 2015 and $50 billion by 2021. In the Apparel CPO Survey 2013, McKinsey repeated that in the aftermath of Rana Plaza collapse, the RMG sector still holds a competitive position. Thus, the reports suggest that Bangladesh is likely to be the best destination that has the ability to grab the lion’s share of the global RMG market presently held by China. The ‘Benchmarking Study’ published by the US Fashion Industry Associations in June 2014 shows that apparel retailing companies are not leaving Bangladesh, and are committed to compliance there and elsewhere. Among the respondents of the survey, 76.9 per cent currently source from Bangladesh. Despite the recent tragedies (Tazreen Fashions fire and Rana Plaza collapse), Bangladesh is still regarded as a popular sourcing destination with growth potential. About 60 per cent of respondents says they expect to somewhat increase sourcing from Bangladesh in the next two years, and 5.0 per cent says they expect to strongly increase sourcing from the country in the next two years. Another 15 per cent expects no change in their current scale of sourcing. According to HSBC Trade Confidence Index (September 2014), the index rose sharply from 103 in H2 2013 to 141 in H1 2014 – the second highest in the sample of 23 countries – underpinned by strong demand from the West for Bangladeshi garments and textiles. The authorities are introducing more safety regulations in the garment sector and this appears to have provided an additional boost to confidence. According to ITC Trade Map, 18.02 per cent was growth rate of RMG in 2013-2014. It is to be noted that while China is starting to lose its attractiveness in this realm, the sourcing caravan is moving on to the next hotspot. On the other hand ‘China Plus’ issue has once again led a fresh restructure of clothing sourcing countries and, Bangladesh has got a strong footing. The rising production costs, socio-economic and livelihoods uplift, and shift to high-tech industries are some of the reasons why apparel buyers have become increasingly concerned to shifting their sourcing from China to other countries like Bangladesh, Vietnam, Sri Lanka and Cambodia. Chinese apparel-makers and leading global retailers have started shifting their orders to Bangladesh due to the rising labour cost in the country. Bangladesh is considered as the next hot spot for RMG as the country’s ready-made garments industry has identified solid apparel- sourcing opportunities there. Last year’s China raised its minimum labour cost by 23 per cent putting local and foreign garment manufacturers under pressure and forcing them to focus on the countries where labour cost is low like Bangladesh. Japan is now actively seeking to diversify its garment import base away from a focus on China to China Plus whereas Chinese investors themselves are seeking to source from Bangladesh. We are optimistic that the new wave of opportunities and the growth momentum will energise the apparel industry to add new success stories in the coming years. Already new markets have been identified due to better initiatives for raising export growth. To explore and exploit the non-traditional markets, market diversification will not only help Bangladeshi manufacturers reduce dependency on the selected markets, but will also increase their bargaining power in setting product prices. Countries like China, India, Australia, South Korea, South Africa and Russia can be attractive export destinations provided we can properly study their procurement patterns, consumer markets, lifestyles and other relevant economic indicators. In addition, Bangladesh should start working on value addition with fabric designs which take away a substantial portion of its competitive advantage. Institutions on collection of fashion apparels and fabrics from various sources should be set up to participate in setting fashion trends across the world. This can easily enhance returns by 5-10 per cent in the immediate future. Bangladesh’s apparel industry is strongly committed to ethical manufacturing and sustainable development assuring the industry’s commitment to ethical working conditions, free of child labour, free of forced labour, free of discrimination and free of sweatshop practices. The Bangladesh Institute of Development Studies (BIDS) estimates 13 per cent plus growth in RMG even after Rana Plaza tragedy. The Institute argues that the disaster has focused global attention on issues of workplace safety and labour rights in the country with the government, buyers, international organizations and workers coming together in an unprecedented effort to improve the conditions in the industry. Accord is monitoring working conditions in 1,619 factories and the Alliance is doing the same in another 700. These factories produce 86 per cent of the country’s ready-made garments, which are exported to European and US markets. Both the buyer associations are optimistic Bangladesh’s RMG industry is moving towards a stable position. In the aftermath of the collapse of Rana Plaza, the ILO collaborated with GIZ and Action Aid Bangladesh to carry out an assessment of the needs of the victims. As a result, it was possible to develop a reintegration and rehabilitation programme that met the needs of victims and to identify active partners able to provide such services. The ILO has supported 300 injured workers who received counselling and livelihoods training in collaboration with NGOs Action Aid and BRAC. The RMG sector has responded positively to the various initiatives taken by the government, buyers’ associations, BGMEA (Bangladesh Garment Manufacturers and Exporters Association) and the BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association). Better days are ahead of the garment sector.
Source: https://www.thefinancialexpress-bd.com/2015/04/20/89436
