Bangladesh’s Political Turmoil Threatens RMG Industry and Economic Stability: Urgent Action Needed
Political stability and law and order are the bedrock of economic growth for any nation; any erosion in these areas will have profound negative impacts on the economy. Brands and retailers carefully consider these factors when crafting their sourcing strategies. Bangladesh, which has enjoyed 14 years of political stability and demonstrated exceptional management during the COVID-19 pandemic, has earned the trust of global brands as a reliable sourcing destination. However, this trust is now in jeopardy due to the current political turmoil, and unless the situation is promptly addressed, the consequences will be devastating—particularly for the Ready-Made Garment (RMG) industry, which accounts for 80% of the country’s export income.
The short-term and long-term ramifications of the ongoing political crisis in Bangladesh are as follows:
Short-Term Ramifications
Retailers plan their orders based on seasonal customer demand—Spring, Summer, Autumn, and Winter—and there is a critical “selling window” for products designated for these periods. If goods fail to reach stores within this window, brands face substantial financial losses. As a result, they may compel suppliers to either (a) bear the cost of air freighting the goods to ensure timely delivery, (b) accept discounts, or (c) face order cancellations. Each of these outcomes imposes significant financial burdens on suppliers and, by extension, the country as a whole.
Long-Term Ramifications
In response to the ongoing crisis, brands may drastically reduce their order placements with Bangladeshi suppliers for the upcoming Spring/Summer 2025 season, potentially halting orders for six months or more until the situation stabilizes. If conditions do not improve, brands might permanently shift their sourcing to other countries, such as India, Vietnam, or Sri Lanka. This shift would be particularly damaging because once orders are lost, it is exceedingly difficult to regain them. Moreover, competing countries will seize this opportunity to capture and retain the business that Bangladesh loses.
Action Points to Remedy the Situation
- Immediate formation of a stable interim government composed of qualified individuals to restore confidence among all stakeholders.
- Immediate restoration of law and order.
- Launch a public awareness campaign to educate citizens about the detrimental effects of vandalism and disorder on the nation’s economy.
- Communicate to global brands the resilience of the Bangladeshi people and industry by highlighting past instances where the sector has successfully overcome significant challenges, such as the Tazreen fire and the Rana Plaza collapse.
Author: Abdullah Al Mamun, Business Area Manager, M&S
