Over the last 35 years our garments industry – both woven and knit – has become a sector that we can be proud of. It has instilled in us confidence, commitment towards excellence and has also been the biggest provider of job opportunities for millions of workers. The other exceptional aspect is that the vast majority of the nearly four and a half million persons in its workforce are women. This has in its own way helped empowerment of women. It has given them not only additional dignity within their families but a higher niche in decision making. This has in turn impacted on more girl children being able to pursue education instead of staying at home. It has, besides, made family planning more effective.
Last year, 2015, witnessed the garment sector achieving the highest-ever export earnings. This was partially facilitated through the regrouping initiated in the industry as a result of the twin disasters of the Tazreen Fashions fire and the collapse of the Rana Plaza. It led to a crisis and re-examination of how the industry was being run, the safety and security of the workers and how the production process could be made more efficient in a growing competitive world. The challenges were faced and are slowly being overcome. This has become evident through our performance in 2015. The RMG export growth of 2015 stood 8.21 per cent with export value of $26.60 billion. The final quarter posted a welcome 15.63 per cent growth. In fact, the last month of the year 2015 marked the highest export value in a single month, i.e. US$2.67 billion. The knitwear export in 2015 reached US$12.78 billion with 5.22 per cent growth and woven garment export stood at US$13.81 billion with 11.14 per cent growth compared to the year before. It may be recalled that in 2014, this sector managed to earn US$24.53 billion in exports. According to available data, exports grew phenomenally in the months of October and November, 2015 – by 18.4 per cent and 14.74 per cent respectively. The overseas sales of apparel was, however, mainly limited to four major destinations – the countries of the European Union (where we gained from the provisions of duty-free and quota-free access due to the Everything but Arms principle), the United States, Canada and Japan. The total export earnings stood at US $31.198 billion during the last fiscal year and that the garment sector accounted for 81.71 per cent of the total. The World Trade Organisation (WTO) has recently released the apparel export statistics of all apparel-exporting countries in the world. They have noted that despite all the challenges in the global market paradigm, the world apparel export has grown by 7.33 per cent at compound annual growth rate (CAGR). It is being estimated that the world market in this sector might reach US$650 billion. It now stands at US$483 billion. If this proves to be true, Bangladesh will have a reasonable chance to increase its export in this sector.
GLOBAL COMPETITION: Bangladesh has today become the second largest apparel exporting country in the world with 5.09 per cent share of the global apparel export. The basis of this claim lies in the fact that the other group claiming to be the second largest apparel exporter – the European Union with 26.19 per cent of the share of export – is in reality a combination of 28 countries. China in 2014 had climbed to the top spot with 38.61 per cent share of the world’s apparel export, which is worth US$186.61 billion. However, based on global forecast it is now presumed that China might not be able to maintain their current trend of growth in this sector. That suggests that their share might consequently shrink. It would be pertinent at this point to mention that between 2012 and 2014, Bangladesh’s exports in the apparel sector have climbed from US$ 19.78 billion to US$24.58 billion. Compared to this, the data for the same period for Vietnam indicates that they have moved from US$ 14.44 billion to US$ 19.54 billion, India has moved from US$ 13.92 billion to US$ 17.74 billion and Pakistan has moved from US$ 4.2 billion to 4.9 billion. It is being forecast that Vietnam might in fact continue to increase its share and come close to Bangladesh by the end of 2016. Such a situation might emerge because of Vietnam becoming a signatory member of the recently concluded Trans Pacific Partnership Agreement (entered into by 12 countries in October, 2015) and thereby increasing their competiveness. The garment manufacturers in our country are now looking forward to 2016 with optimism. Their confidence has been boosted by three main factors: possibility of shifting of garment business from China to Bangladesh (principally because China is trying to intensify its presence in the more profitable high-tech digital sector and also because the cost of production of garments, especially salary for the Chinese workers has increased), the all-time low price of cotton (it is anticipated that in 2015-2016, Bangladesh may import a record 5.75 million bales, a rise of 6.5 per cent from the year before) and the restoration of the confidence of international retailers in the structural soundness of the apparel factories in Bangladesh. This belief has been boosted as the engineers of Accord and Alliance, the two international factory inspection agencies, have found less than 2.0 per cent of the apparel factories in Bangladesh to be risky. As a result of the inspections carried out with the inter-active cooperation of the BGMEA (Bangladesh Garment Manufacturers and Exporters association) and the BKMEA (Bangladesh Knitwear Manufacturers and Exporters Association), the factory owners are now more cautious, and the media has reported that many on their own volition have shifted their units from Dhaka for safety reasons. The apparel makers have been encouraged by the demand of our products from new destinations this year. It accounted for an additional export figure of about US $5.5 billion. The better functioning new export destinations include Australia, Japan, South Korea, Russia, Brazil, Chile, China, India, Turkey, Mexico and South Africa.
CHALLENGES TO BE FACED AND OVERCOME: One should, however, keep in mind that our apparel industry still has some challenges that will have to be faced and overcome. Though Bangladesh exports more than 30 types of products, nearly 78 per cent of this sector’s earnings, at this point of time, originate from our shipment of only five basic items – shirt, trouser, jacket, T-shirt and sweater. This scenario nererds to be changed. We have to move upwards not only through value addition but also try to enter the niche up-market mid- and high-end value-added designer apparel sector items (lingerie, suit and sportswear). It is consequently encouraging to see that some of our sweater makers are now installing Jacquard machines for more value added items. More effective efforts should be made to diversify products and discover new markets. We need to focus on removing the shortage of specialised skilled workforce. We also have to improve our infrastructure, facilitate greater energy availability and encourage our entrepreneurs to be willing to take risks. We need not only to diversify our exports but also try to emerge from this confinement of being dependent on just five export items. In case something goes wrong it can spell national disaster. We have to address these issues with great seriousness if we are to achieve the US $50 billion export target of this sector by 2021. The decision in the latest WTO meeting to relax the Rules of Origin for the least developed countries (LDCs) should help us in this regard. In this emerging context, it is encouraging that the BGMEA has taken a mega-plan to build the ‘Chittagong Apparel Zone’ in the port city’s Kalurghat area. It is expected to house garment factories with modern facilities. The BGMEA will try to achieve this goal with the cooperation of the Chittagong City Corporation (CCC). The BGMEA is also trying to create for its members a planned mega economic zone in Mirsarai within a demarcated 15,000 acres of land. These are indeed laudable initiatives. This, it is expected, will help to re-locate some of the apparel industries who have had to cease their function because of lack of security and safety clauses as expected under the Accord and Alliance inspection regulatory regime. The government should assist this process and extend all necessary support to make it a viable, functioning exercise. The media has recently highlighted another important issue – that about the foreigners who are working in our apparel industry. It appears that these foreign nationals are employed in senior management positions as production managers, merchandisers, senior sewing operators, cutting masters, designers and washing experts. Most of them come from India, Sri Lanka, Pakistan, China, South Korea, Taiwan and the Philippines. Apparently, the Board of Investment, the Bangladesh Export Processing Zones Authority and the Department of Passport and Immigration are responsible for issuing their work permits. It is reported that, they repatriated nearly US $5 billion for their technical contribution in the apparel and some other associated sectors. We do not seem to have the correct figures of how many foreign nationals are involved in the apparel sector. That is something which needs to be addressed urgently. That will enable us to ensure their security. One does not also know if they are paying tax on their income. That should be corrected. In addition, the apparel industry should take necessary steps whereby our younger generation can have hands-on experience from such specialists. We have to grow our pool of technical people and the presence of these experts will and can help us. They can also be catalysts for more foreign direct investment in this sector and other associated areas. They are our precious asset and must be treated as such. However, we need to maximise the return from their presence. The writer, a former Ambassador, is an analyst specialised in foreign affairs, right to information and good governance.
