Exports of readymade garments (RMG) from Bangladesh are booming despite growing terrorism fears following series of killings by Islamist militants and recurrence of factory accidents over the past years, traders said. The booming exports belied all the speculations that following the killings and the accidents might prompt Western brands to source their garments from suppliers in other locales. Concerns appear to be easing, as recent figures show the $26 billion garment export sector is growing faster than many had predicted. In a global survey of leading apparel producers last year, consultant McKinsey predicted 7-9 per cent annual growth for the sector over the next five years.Between October and January, Bangladeshi factories exported garments worth $9.3 billion, up about 14 per cent from a year ago, government data showed.Exports to the United States saw a 16 per cent annual jump in December. Atiqul Islam, one of Bangladesh’s biggest garment exporters, whose clients include H&M and Wal-Mart, told Reuters in Dhaka that his order book is up 15 per cent.Buoyed by strong demand, his firm – R-Pac – is investing $10 million to set up a new factory. The country’s resilience boils down to a combination of the world’s lowest wages after Myanmar and Sri Lanka, the right skills and the fact that China has become less competitive in recent years. The minimum monthly wage for garment workers in Bangladesh is $68, compared with about $280 in mainland China, which nevertheless remains the world’s biggest garment exporter, news agency Reuters said. Still, garment exporters worry about profit margins being squeezed due to increased compliance costs in the wake of the 2013 Rana Plaza factory collapse in which more than 1,100 people died, and a push from buyers to further reduce costs. Islam estimated that most of Bangladesh’s garment exporters were operating with a profit margin of just three percent. He added that firms like his are also spending an average of $700,000 on upgrading facilities to meet safety compliance standards, but buyers are not ready to bear the cost.Adding to the strain, garment exporters are under pressure to further reduce prices to retain customers. “Every year they ask for a 2-3 percent price cut,” Islam said. To protect margins, some manufacturers have invested in automation. At the factory of M. Shafiqul Azim, general manager at an apparel exporter, for example, machines are already doing the bulk of the work, while Islam has just spent $500,000 to import 70 new machines from Italy. While H&M declined to comment for this article, Walmart’s spokeswoman, Marilee McInnis, said the company was making investments through an inspection group led by the North American brands, the Alliance for Bangladesh Worker Safety. H&M is a signatory to the Accord on Fire and Building Safety in Bangladesh, a mainly European grouping. “Bangladesh is an important sourcing market for the industry,” said McInnis, director of international corporate affairs at Walmart. “It is important that investments in Bangladesh continue.”
