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ITMF and IAF Joint Conference in Uzbekistan

POST BY
RMG Bangladesh
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ITMF and IAF Joint Conference in Uzbekistan

A joint report by Uztextileprom and The Apparel Digest

Uzbekistan Maps & Facts - World Atlas

Uzbekistan, a country with 447,400 square kilometers area and around 37 million population, is located in the centre of Central Asia. With a rich culture and heritage, the country also renowned for its trading history since it was one of the most important business hubs of the great silk route which connected China with Europe and the Middle East. The region also has a long track record of producing world class cotton.

President Shavkat Mirziyoyev, the visionary leader of Uzbekistan after assuming power in December 14, 2016 has initiated various transformation for the growth of country’s economy. He emphasizes the importance of value addition and thus stopped raw cotton export from Uzbekistan. President Mirziyoyev signed a decree to extend reforms in the textile industry to fully reprocess raw cotton domestically and increase the export potential of the country. His bold decision effectively has transformed Uzbek economy – converting it from a cotton exporter to a textile and garment producing country with great export potentials.

For many years, Uzbekistan Textile Industry had suffered for the embargo on its products due to alleged forced labor. Many international brands have stopped using Uzbek cotton. Thanks to a successful dialogue between Uzbek government and the International Labor Organization as well as other stakeholders, the issue has been resolved and Uzbekistan has started to get its benefits. Foreign Direct Investment (FDI) has been growing in the country due to policy reforms and government initiatives.

The Uzbekistan Textile and Garment Industry Association (Uztextileprom: https://uzts.uz/en/) is the country’s apex government body that is entrusted to work closely with Uzbek enterprises and foreign parties for the growth and development of textile and garment business. The mission and goals revolve around elevating Uzbekistan’s textile sector by bridging governmental support with private enterprise, while advancing the industry’s presence on the international stage. Uztextileprom Association serves as a steadfast partner to the private sector, acting as a bridge between the Government and textile companies. The Association actively advocates for industry interests, promotes the sector globally, and fortifies its international market standing. With a history steeped in cotton cultivation dating back to the Silk Road era, Uztextileprom is committed to transform Uzbekistan in to a prominent textile and apparel resource hub of Central Asia.

The International Textile Manufacturers Federation (ITMF: www.itmf.org), established in 1904, is one of the  oldest international body that represents textile industries of the world. ITMF has been dedicated to keep its world-wide members constantly informed through surveys, studies and publications, participating in the evolution of the industry’s value chain and through the organization of annual conferences as well as publishing considered opinions on future trends and international developments. Through ITMF the textile industries cooperate at the international level with organizations representing other sectors allied to their industry. ITMF represents the textile industry towards governments, intergovernmental as well as non-governmental organizations by actively participating in discussions about the evolution of the industry.

The International Apparel Federation (IAF: www.iafnet.com) is the world’s leading federation for apparel manufacturers, brands, their associations, and the supporting industry. IAF’s membership includes apparel associations and companies from more than 40 countries, a membership that directly and indirectly represents over a hundred thousand companies and over 20 million employees. IAF brings its members together to jointly create stronger, smarter and more sustainable supply chains, it provides its members with valuable information and guidance and it represents its members on several international platforms working incessantly on more industry standardisation and harmonisation, industry collaboration and inclusiveness of solutions.

From September 8th-10, 2024 both ITMF and IAF for the first time in their histories are going to organize their annual convention jointly. This year’s venue is the ancient Silk Road city of Samarkand, Uzbekistan.  Joint convention of ITMF and IAF joint convention in Uzbekistan is poised to expand the view of the country’s booming textile and garment industry.

The theme of the convention is “Innovation, Cooperation & Regulation – Drivers of the Textile & Apparel Industry”. At the Samarkand convention, IAF and ITMF will bring together the entire supply chain, including raw material suppliers, spinners, weavers, machine suppliers, garment and home textile manufacturers, brands, retailers, solution providers and educators. Industry experts and leaders will discuss the relevance of innovation, cooperation, and regulation for our industry and how they will influence and shape the future.

The convention plans to assemble stakeholders from across the supply chain, including raw material suppliers, spinners, weavers, machine suppliers, garment and home textile manufacturers, brands, retailers, solution providers, and educators.

Recognizing that manufacturers play a key role in shaping the future of fashion, the ITMF, IAF joint convention aims to foster dialogue and cooperation among stakeholders. Key topics range from environmental sustainability to digital transformation, and supply chain transparency.

ITMF and IAF conferences in Samarkand will also introduce the Uzbek textile and garment industry to the rest of the world, providing a good view of this industry, both during the conference program and during the planned factory visits.

IAF and ITMF are organizing their annual conventions together out of a strong conviction that the apparel industry and textile industry need to jointly discuss collective solutions for our common industry challenges. Textile and garment manufacturers together hold keys to the solutions that the entire fashion industry relies upon. Reduction of the environmental footprint of textile and apparel products happens at the level of fiber producers, spinners, weavers, knitters, finishers, printers, and sewing operations. Information needed to fill a Digital Product Passport or to run a 3D digital design and development operation requires an effective flow of information between all segments of the textile and apparel value chain.

Recently Chairman of Uztextileprom Mr. Mirmukhsin Sultanov had a meeting with ITMF’s Director General Dr. Christian Schindler where both have discussed elaborately on the preparations of September 8-10 conference.  They have expressed their firm conviction on the success of the global meeting of textile entrepreneurs, professionals and other stakeholders.

Very recently at the Tashkent office of Uztextileprome, Chairman Sultanov met Mr Mehdi Mahbub, Founder and Editor of The Apparel Digest. Both are convinced that not only Uzbekistan Textile and Garment sector but also global companies, brands and customers would be benefitted immensely from Samarkand Conference of ITMF and IAF.  It is expected that a new era of Uzbek Textile and Garment Industry would start its journey soon.

Bangladesh’s Garment Exports Hit US$ 5 Billion For The Fourth Month In A Row

POST BY
RMG Bangladesh
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The export sector of Bangladesh continues to be robust, as evidenced by the fact that the country’s goods shipments surpassed US$ 5 billion for the fourth consecutive month in March 2024. As a result of the ongoing crisis in the foreign currency market, this achievement comes at a time when the economy is experiencing a terrible moment.

Despite regional and worldwide challenges, such as the COVID-19 pandemic, the war between Russia and Ukraine, and the tensions in the Middle East, the nation’s exports have continued to be robust. It is noteworthy that there has been a steady increase in the number of shipments of apparel, which constitute a sizeable share of the country’s revenues from exports. Please allow me to provide a more in-depth analysis of Bangladesh’s export record, as well as the factors that are contributing to this consistent growth.

In March, Bangladesh’s merchandise exports hit $5.10 billion, as reported by the Export Promotion Bureau (EPB). This is a 9.88 percent increase over the previous year and marks the fourth consecutive month in which Bangladesh’s exports have remained over the barrier of $5 billion. The milestone of $5 billion was reached in January of the previous year, which marked the beginning of this growing trend.

This tendency culminated in the statistics from December, which was $5.30 billion, January, which was $5.72 billion, and February, which was $5.18 billion. The most important factor that has contributed to the recent surge in exports is the steady recovery of garment shipments, which currently account for more than 85 percent of the country’s total exports. Despite the challenges that have arisen because of global events, such as the conflict between Russia and Ukraine and the ongoing consequences of the pandemic, Bangladesh’s export sector continues to be an essential component of the country’s economy.

Even though this hopeful attitude is held, there are still challenges to experience. Despite this, exporters are confronted with challenges such as the restricted supply of gas and energy utilized by the industrial sector, as well as the increasing loan rates charged by banks. The sector has also been badly influenced by concerns over the results of the general election and higher production costs because of an increase in the minimum wage for garment workers. Both factors have contributed to the industry’s negative effect.

Despite this, Faruque Hassan, who served as the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), observed that international buyers had been pouring money into Bangladesh with massive purchases, which is a response to the fact that Western shops’ inventory of apparel is running out. It is also becoming a significant supplier of garments with added value, increasing Bangladesh’s position in the worldwide market. Bangladesh is becoming a major provider of clothes.

Besides the garment industry, there are other businesses that are also making success. A discernible rise in the export of agricultural goods, plastic items, cotton waste, artificial filaments, and specialized textiles has been observed in recent years. On the other hand, several different businesses had financial difficulties, such as a decline in sales of live and frozen fish, leather goods, jute products, and home textiles alike. The overall rise of exports for the current fiscal year, which runs from July to March, is 4.39 percent, which is equivalent to $43.55 billion. This is despite the fluctuations that they have experienced. However, there are still challenges to overcome. Considering weaker growth expectations in the United States and the European Union, two significant export markets, the World Bank forecasts that Bangladesh’s exports will increase at a moderate rate in the next years. As Bangladesh works through these problems, stakeholders want to see customs processes simplified and facilities like bonded warehouses enhanced. This is done to better support the performance of the export industry.

Bangladesh’s export sector is resilient, as seen by its constant performance over the barrier of $5 billion, even though it faces challenges on both the national and international levels. The revitalization and diversification of the garment industry in Bangladesh has resulted in the country’s emergence as a prominent participant in the international apparel market. This has been the driving force behind Bangladesh’s economic expansion. Even though there are persistent challenges, such as power outages and rising loan rates, stakeholders have a favourable outlook on the future of the sector currently. It will be necessary to implement programs and provide continuing help to exporters to maintain this positive momentum. This is because the nation is working hard to navigate shifting global dynamics and to increase export development.

29 companies honoured with green factory awards

POST BY
RMG Bangladesh
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The government today honoured 29 companies from 12 sectors with the “Green Factory Award-2023” for their role in enhancing productivity through the use of skilled workforce and eco-friendly technology in safe environments.

The sectors are woven, knitwear, leather (finished goods and tannery), tea, cement, pharmaceuticals, tiles and ceramic, electric and electronics goods manufacturing, plastic, food processing and textile industries.

The awards were handed over to the representatives of the factories at a programme to observe the “National Occupational Health and Safety Day 2024”.

Shirin Sharmin Chaudhury, speaker of the parliament, handed over Tk 1 lakh, a medal, a memento and a certificate to each of the winners.

The Department of Inspection for Factories and Establishments under the labour ministry organised the event at Bangabandhu International Conference Centre in the capital.

The International Labour Organisation (ILO) observes the “World Day for Safety and Health at Work” on April 28 every year to promote the prevention of occupational accidents and diseases globally.

Following the ILO’s guideline, Bangladesh has also been observing the day by awarding factories in different sectors in recognition of their initiatives for protecting workers’ health and environmental protection.

Currently, Bangladesh has the highest number of green garment factories as per the certifications given by the United States Green Building Council (USGBC), according to data from the Bangladesh Garment Manufacturers and Exporters Association.

Of Bangladesh’s 215 green factories, 80 are platinum rated, 120 gold, 10 silver and four are green rated as per USGBC’s Leadership in Energy and Environmental Design (LEED) certification.

Moreover, 55 of the world’s 100 top-rated green buildings are located in Bangladesh.

A broader impact on purchasing parity; Analyzation of inflation in Bangladesh.

POST BY
RMG Bangladesh
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Every aspect of economics and the modular calculation of a sovereign economy revolves on the issue of inflation. Inflation is a crucial indicator that demonstrates the changes that occur in real time within the purchasing power of consumers. The topic of this article, on the other hand, is the more general influence on purchasing parity, with a special emphasis on the selective industry situations in Bangladesh. As prices continue to rise, industries are accelerating toward another economic downturn. As a result, foreign buyers are switching to alternative options. This is because the relative affordability of importing goods from Bangladesh has decreased day by day (International Monetary Fund. Asia and Pacific Dept 3–5).

The RMG sector was previously struggling to recover post-pandemic as they had to encounter a cancellation of orders worth $3 billion from almost every brand, except for H&M (Uddin, “RMG Orders Tumble 30% Amid Record Global Inflation”). Apart from the fall in demand, freight costs rose by almost four times, and the price of raw materials spiked by 15%–20%. However, being the most prominent industry within the economy, RMG soon rebounded as they registered a record high volume of exports worth $42.61 billion and kept the inflationary pressures under control. However, our focus is within the economy, and unlike RMG, there are other industries suffering from economic changes such as the rise in inflation, and we will be analysing those industries in depth (Uddin, “RMG Orders Tumble 30% Amid Record Global Inflation”).

To begin with, we will be looking at the textile industry. The global economic downturn has led many major textile franchises to shut down and, in return, decreased the export rate in Bangladesh. It is the third tier according to consumer preference, and the rise in exports is uncertain with the current situation. EU market closures have added fuel to the fire, along with the gas price hike, as they increased the production cost from 5% to 8%, depending on the capacity of the firm (Uddin, “RMG Orders Tumble 30% Amid Record Global Inflation”). Industry professionals believe that due to the global price spike in the energy sector, Bangladesh will lose significant competitiveness in the market as there are other players, like Pakistan, thriving in the textile sector. 

Furthermore, jute products once witnessed a boom within the economy but have seen a 21% decline in earnings in the current fiscal year for Bangladesh from the first three quarters last year. Top industry professionals believe that the high price of raw materials has led to a drop in income. They believe stockists drove the price of raw jute, which was previously ranging from BDT 2000 to BDT 2500 per maund (US $18.18 to $22.73). As a result, Turkey, the largest importer of jute from Bangladesh, switched to another renewable alternative as they have started using recycled clothing yarn instead of jute yarn to produce the lower parts of a carpet Uddin (“Ukraine War, High Inflation Squeeze Bangladesh’s non-RMG Exports”).

Lastly, the leather industry has been in constant fluctuations, seeing ups and downs, but the export section of leather goods has observed a 20% fall with footwear, specifically, falling by 1% only. The President of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh has confirmed that the rising price and the Ukraine war situation were the dominant factors in the drop recorded in this sector. Similarly, the US market is no longer the highest importer of leather as sales have dropped due to the high inflation rate and we are currently clearing out the remaining inventories Uddin (“Ukraine War, High Inflation Squeeze Bangladesh’s non-RMG Exports”). With the rising uncertainties, industrialists feel that alternative countries like Australia and Canada can be the next best export destinations for Bangladesh Uddin (“Ukraine War, High Inflation Squeeze Bangladesh’s non-RMG Exports”).

Given the high inflationary pressures brought on by the war between Russia and Ukraine, Bangladesh had a genuine period of stable inflation, but the streak is now over (International Monetary Fund. Asia and Pacific Dept 3–5). Controlling inflation and enhancing macroeconomic stability require a balancing act between managing inflation and economic growth. The International Monetary Fund (IMF) has performed a semi-structural quarterly projection model to deduce four drivers of the rising inflation in Bangladesh (International Monetary Fund. Asia and Pacific Dept 3–5). The drivers are as follows:

  1. Bangladesh’s inflation situation was triggered by the cost-push factors.
  2. Passed-through exchange rate depreciation led to a constant surge in prices.
  3. Inflation got entrenched due to the second-round effect.
  4. Inflation expectations have remained constant.

The IMF has also proposed some active scenarios and policies that Bangladesh Bank can adopt to persevere through this situation. The scenarios and policies are given below:

  • Scenario 1: The “active policy” scenario assumes that Bangladesh Bank actively determines its policy rate in every quarter of the forecast horizon to minimize expected inflation deviation from the target, keep demand pressures checked, and ensure that the call money rate closely aligns with the policy rate.
  • Scenario 2: The “hawkish policy” scenario that expects Bangladesh Bank to bring inflation down to the target range by the end of FY24.
  • Scenario 3: The ‘’dovish policy’’ scenario expects Bangladesh Bank to continue with their current monetary policy until the end of FY24.

Glossary:

  1. Maund: “Maund” refers to a traditional unit of weight used in Asia and Africa, while “mound” refers to a pile of earth or stones. The word “maund” has its origins in the Arabic word “man”, which means a weight of 100 pounds.
  2. Call money rate: The call money rate is the benchmark interest rate that banks charge brokers who are borrowing the money to fund margin loans.
  3. Policy rate: Policy rates are a powerful tool to control the inflation level and economic activity within a country or geographical area.
  4. Purchasing power: Purchasing power is the amount of goods or services that a unit of currency can buy at a given point in time.
  5. Economic Downturn: An economic downturn, or a downturn, occurs when the value of stocks, property, and commodities fall, productivity either grows more slowly or declines, and GDP (gross domestic product) shrinks, stands still, or expands more slowly.

Rana Plaza tragedy: Justice remains elusive even after 11 years

POST BY
RMG Bangladesh
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Today marks the eleven-year anniversary of the Rana Plaza building collapse, a catastrophic event in Bangladesh’s garment industry history that claimed the lives of approximately 1,134 workers and left 2,500 others injured in 2013.

Regarded as one of the largest industrial disasters in the global clothing sector, the quest for justice remains elusive even after over a decade.

Every year, as the day returns, families of the deceased workers and injured survivors, along with labour leaders and activists, gather at the site in Savar to honour the victims and renew their call for justice.

This year was no exception.

This morning, floral tributes were laid at the makeshift memorial while labour organisations held vigils and meetings to emphasise their longstanding appeals.

Photo: Noman Mahmud

Photo: Noman Mahmud

Their demands encompass various measures, including identifying all responsible parties, ensuring maximum punishment for those culpable, including building owner Sohail Rana, revising compensation laws and providing financial support to affected families, providing lifetime income compensation, comprehensive long-term treatment and rehabilitation for the injured workers, building a permanent monument at the site, establishing an emergency fund to support all workers and designating 24 April as a national day of mourning and safety day, with the closure of all factories.

Rafiqul Islam Sujan, president of the Bangladesh Garment and Industrial Workers Federation, lamented the lack of progress, noting the plight of injured workers who have not received adequate compensation or proper rehabilitation.

Photo Mehedi Hasan

Photo Mehedi Hasan

He said, “After eleven long years, our demands remain unaddressed. Many injured workers have passed away without receiving justice or proper compensation. It is disheartening that a permanent monument has yet to be erected at the site. We continue to stand here with the same demands, hoping for meaningful action,

Bulbuli Akhter, a worker injured in the Rana Plaza tragedy, lamented her ongoing plight, stating, “I am enduring an inhumane existence after being crippled by the collapse. Despite a mere token donation, I have yet to receive proper compensation or justice. None of our demands have been addressed.”

Photo Mehedi Hasan

Photo Mehedi Hasan

Similarly, Hawa Begum, who was on the 8th floor during the incident along with her daughter and sister-in-law, shared her struggles, saying, “Though I survived, my life has been far from normal. My daughter and I continue to suffer from serious injuries, making everyday life unbearable. We are still awaiting rightful compensation.”
Joining them were numerous other injured workers gathering at Rana Plaza, each echoing similar grievances. 

Photo Mehedi Hasan

Photo Mehedi Hasan

Every year, on this day, Abdul Mannan pays a visit to the site in Saval from Barishal to mourn his son Rafiqul, who perished while working on the 5th floor.

He said, “Rafiqul, my fourth child among seven, was laid to rest after being recovered 14 days post-collapse. Yet, justice still eludes us.”

On the occasion of the 11th anniversary of the Rana Plaza collapse, various labour organisations, including garment workers, pay tribute to the victims at Jurain Cemetery in the capital on Wednesday (24 April) and demanded maximum punishment for those responsible for the murder. Photo Mehedi Hasan

On the occasion of the 11th anniversary of the Rana Plaza collapse, various labour organisations, including garment workers, pay tribute to the victims at Jurain Cemetery in the capital on Wednesday (24 April) and demanded maximum punishment for those responsible for the murder. Photo Mehedi Hasan

Families of the victims and rights groups alike perceive the tragedy as premeditated murder and demand severe punishment for the perpetrators. 

Sarwar Hossain, General Secretary of the Garment Workers Union, asserted, “The Rana Plaza collapse was no accident but a calculated act of murder. It’s disheartening that justice remains elusive. We urge for maximum punishment for the guilty, echoing the collective demand of all.”

US retailer Express, which imports $100m Bangladeshi apparel annually, files for bankruptcy

POST BY
RMG Bangladesh
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Longtime American mall retailer Express Inc, which imports readymade garment (RMG) products worth around $100 million a year from Bangladeshi manufacturers, has filed for Chapter 11 bankruptcy.

The brand intends to close more than 100 stores, reports Reuters.

The retailer whose portfolio includes brands such as Express, Bonobos and UpWest Express, listed assets and liabilities in the range of $1 billion to $10 billion, according to a filing with the bankruptcy court in Delaware.

Eleven affiliated firms of the brand also filed their respective Chapter 11 petitions.

Express Inc also named Mark Still as its new CFO, effective immediately. The executive has served as interim CFO since November 2023.

As part of the bankruptcy process, the company will close approximately 95 Express retail stores and all of its UpWest stores, starting Tuesday, it said, without specifying the locations.

The company operates about 530 Express retail and Express Factory Outlet stores in the United States and Puerto Rico and around 12 UpWest retail stores, according to its website.

Launched in 1980, Express has been battling with soft consumer demand due to slowing spending patterns and increased price sensitivity in discretionary categories.

The bankruptcy filing was expected earlier this year.

Credit monitoring firm Creditsafe said at the time that late payments have been a consistent problem at Express, an indication of ongoing liquidity problems report, sourcing journal.

According to industry insiders, about 12-14 top Bangladeshi RMG manufacturers have business with this iconic brand. Their annual import value is about $100 million.

They also said some of them have some outstanding payments from this brand.

Shovon Islam, managing director of Sparrow Group, one of the manufacturers that exports RMG goods to Express, said the brand informed us they are going to file chapter 11 for restructuring their business.

“I believe that Express is an iconic brand in the USA and they have a huge loyal customer base. After restructuring and some changes and new investments, Express will emerge again strongly. Given Bangladesh is a very strategic sourcing destination for Express, they will treat Bangladesh vendor’s pending payments and future orders in a favourable way” he hoped.

 The American retailer said it has received a nonbinding letter of intent from a consortium led by brand management firm WHP Global. Other members of the consortium include mall landlords Simon Property Group and Brookfield Properties.

The offer is for the sale of a majority of the chain’s retail stores and operations. But given that it is a nonbinding offer, others could come in and kick the tyres.

Sources said Sycamore has already been snooping around and pondering a possible offer. Sycamore had its eye on Express back in June 2014, when word surfaced that it was interested in acquiring the retailer.

At the time Sycamore held a 9.9% interest in Express. The two were working on deal terms when the transaction collapsed in January 2025 due to certain financing issues.

However, WHP could be seen as having the upper hand since it has held a 7.4% investment stake in the company since January 2023. As part of that investment, WHP holds a 60% interest in a joint venture licensing agreement valued at $400 million, to which the brand management firm contributed $235 million.

Garment industry seeks alternative dispute resolution

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RMG Bangladesh
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Garment industry stakeholders are exploring alternative dispute resolution (ADR) for resolving labour disputes in the sector, avoiding the lengthy and costly nature of the traditional legal system.

A recent study by the Solidarity Center, conducted by Jagannath University Professor Mostafiz Ahmed, highlighted the potential of ADR for the RMG sector.

The research was presented at an event in Dhaka that brought together legal professionals, worker representatives, and garment industry leaders.

The traditional system for resolving labour disputes is slow and expensive, panellists said. As an alternative, experts are exploring ADR. ADR uses a neutral third party to help workers and employers negotiate a quicker, more affordable settlement.

However, regarding the formulation of ADR, the labour leaders and the sector concerned said that they emphasised fixing a specific time for dispute resolution to prevent the prolongation of judicial work. 

MA Awal, district and session judge of Dhaka’s Labour Appellate Tribunal discuss the significance of ADR in expediting dispute resolution processes.

Ruhul Amin, president of the Bangladesh Federation of Workers Solidarity, stressed the need for continuous dialogue and engagement to address systemic issues and promote sustainable practices within the apparel sector. He urged stakeholders to prioritise the well-being of workers and uphold their rights as integral components of a thriving industry.

The discussion explored the specific types of ADR mechanisms that could be most beneficial for labour disputes in Bangladesh, as well as the potential challenges in implementing and utilising these alternative methods.

A distinguished panel, including legal professionals, worker representatives, and a representative from the Bangladesh Garment Manufacturers and Exporters Association, discussed the current challenges and potential solutions for resolving labour disputes.

Industry insiders shared their perspectives on the effectiveness of the traditional legal system and the potential benefits of implementing ADR mechanisms.

Apparel exports to EU jump 8.5% in Feb

POST BY
RMG Bangladesh
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Bangladesh’s apparel exports to the European Union market surged by 8.5% month-on-month to around €1.3 billion in February this year – the highest in the last four months.

However, shipments to the 27-nation economic bloc remained 18.6% lower compared to the corresponding month a year ago, according to Eurostat.

Bangladesh has witnessed the most significant decline in apparel exports among its competitors in the EU countries during the first two months of 2024. This trend mirrors a similar decline observed in the United States market during the same period.

SM Mannan Kochi, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said apparel exports are facing a challenging time as most buyers are not paying proper prices.

He explained that exporters are losing competitiveness despite increased production costs caused by utility price and wage hikes.

He also expressed concern that the escalation between Iran and Israel may significantly affect exporters in the coming months.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, echoed the sentiments of the BGMEA president.

He mentioned that inquiries from western buyers had increased in recent months, but many manufacturers have been unable to entertain their orders as buyers are offering low prices.

Hatem also noted that buyers are now looking for shorter lead times, but Bangladesh’s shipment time has increased to 89-90 days from 50-60 days due to the gas crisis. Consequently, many western buyers are placing their orders in Vietnam and China instead, he said.

In January-February 2024, the South Asian nation experienced a significant decline in its apparel exports to the EU market, amounting to a decrease of 26.74%.

According to Eurostat, the statistical office of the European Union, Bangladesh’s exports totalled €2.48 billion during this period, down from €3.39 billion in the corresponding period of 2023.

Exporters highlighted that despite a surge in global demand for apparel, Bangladesh’s benefits were minimal due to prolonged lead times and escalating production costs.

Specifically, the country saw a decline in its knitwear exports to the EU in January-February 2024, amounting to €1.42 billion compared to €2 billion in the same period a year ago.

Similarly, the country’s woven garment exports to the 27-nation economic bloc during the first two months of 2024 decreased to €1.06 billion from €1.38 billion in the corresponding period of last year, according to Eurostat data.

Recent data from the US Department of Commerce’s Office of Textiles and Apparel indicates that Bangladesh has fallen behind its competitors in apparel exports to the American market during the January-February period of 2024.

According to OTEXA data, Bangladesh experienced a notable decline of 19.24% in its apparel exports to the US during the first two months of this year. This contrasts with China, which saw export growth of 0.48%, and Vietnam, which recorded an increase of 0.14% during the same period.

According to Eurostat, clothing imports by the EU from various countries witnessed a decrease of 15.31% to €12.53 billion in the first two months of 2024, down from €14.80 billion in the same period last year.

Specifically, apparel imports from China to the EU in the January-February period dropped by 13.12% to €3.33 billion, compared to €3.83 billion in the same period of 2023.

The EU’s apparel imports from Turkey decreased by 10.69% to €1.54 billion, down from €1.72 billion in the same period of the previous year.

20 hurt as RMG workers clash with police in Narayanganj

POST BY
RMG Bangladesh
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At least 20 people were injured in a clash between police and garment workers at BSCIC industrial area in Fatullah of Narayanganj today (21 April).

Quoting witnesses, police said that a group of workers of Abanti Colour Tex Limited blocked Dhaka-Munshiganj road at about 9:30am after placing bamboo, sticks, electric poles and logs demanding payment of their dues.

A 2-kilometre tailback was created on the road due to the blockade. Vehicular movements in the area came to normal around 4 pm.

On information, police rushed to the spot and the clash started at about 12:30pm when police tried to disperse the workers.

A chase and counter-chase took place in the area. 

Police lobbed tear gas shells and fired rubber bullets and used water cannons to bring the situation under control.

Workers said that the factory was declared closed on 8 April without clearing the dues for the month of March.

The owner of the factory earlier assured that they will pay their dues through mobile banking before Eid-ul-Fitr but the workers did not get their salary.

Vehicular movements in the area came to normal around 4:00pm.

Bangladesh widens gap with Vietnam in global apparel export markets

POST BY
RMG Bangladesh
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It needs to adopt technology and invest in skill development and innovation for high valued product manufacturing

Bangladesh has widened the gap with its close competitor Vietnam in the global apparel export market to retain the second position as supplier of clothing items after China.

According to Export Promotion Bureau (EPB) and General Statistics Office of Vietnam data, in 2023 Bangladesh earned $47.38 billion, which is $14 billion higher than Vietnam’s $33.33 billion in the same period.

In 2022 the gap was $8.14 billion as Bangladesh earned $45.70 billion against Vietnam’s $37.57 billion.

Though the widening gap gives exporters confidence, but experts as well as the sector people warned not to be complacent as Vietnam is competing with Bangladesh with almost half of the workforce. It is a threatening factor for Bangladesh to retain second position in the global market.

Bangladesh’s apparel industry employs over 4 million people, while Vietnam’s labor force in the sector is over 2.5 million.

Bangladesh lost its second position to Vietnam in 2021, when it earned $27.47 billion against the latter’s $29.8 billion.

“If we consider Bangladesh’s gap with China, it is very large. But in the last two years, we have done better than Vietnam. However, it does not guarantee that we will remain second as Vietnam’s apparel export performance was better in the last couple of years,” said Professor Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue (CPD).

Bangladesh widens gap with Vietnam in global apparel export markets

To sustain the growth and remain the second largest exporter title, we have to identify our shortcomings and ways to grow further, said the economist. 

Rahman also urged to be prepared to face the post LDC challenges as it may lessen our competitiveness in the export markets due to tax benefits erosion.

Problems and ways forward

In terms of comparative benefits, Vietnam is in a strategic location with the European Union and the US, while it has competitive labor costs. The country has focused on technology and innovation as well as invested more in skill development.

“We have a good number of factories but the lion share of RMG export earnings are contributed by a few large groups,” said SM Khaled, Managing Director of Snowtex Group.

Figure: SM Khaled, Managing Director of Snowtex Group.

Our capacity is larger than Vitamin but we produce mostly basic items except a few. In contrast, Vietnam makes high valued goods and earns better prices, said Khaled.

On the other hand, despite having a big workforce, we are manufacturing less quantity and basic items as their skill and productivity is comparatively lower than Vietnam, he said.

“They have a closer supply source of raw materials from China and a strong backward linkage industry.”

To cash the opportunity of capacity and large volume workers, we have to invest in skill development and move towards product diversification of most non-cotton and high valued goods, said Khaled.

“Bangladesh manufacturers are weak in product marketing. As a result, they take basic orders. For example, from a buyer an exporter can grab 50,000 basic work orders but similarly he/she has to negotiate at least five brands or buyers to grab 50,000 orders, said Abrar Hossain Sayem, a director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Bangladesh has to set a strategy on how to take a $2-$3 order to $5-$6 one. Buyers pay $15 for a woolen sweater, while an acrylic sweater pays $5-$6 on an average, said Sayem.

“We have to address this challenge to reap the most benefits of our capacity.”

For high valued products manufacturing, supply of raw materials is crucial and no alternative to establish a strong backward linkage. We have to develop fabrics for high end products to compete with Vietnam, said the CEO of Merchant Bay Limited.

Low workers’ wages were an advantage for Bangladesh but in recent years it has been over as the cost of production increased due to the hiked prices of utility services, explained sector people.

In addition, the minimum workers’ wage rose to Tk12,500 for entry level workers, which reduces competitiveness, they said. 

On top of that, workers productivity is less than Vietnam and the use of technology is much better than Bangladesh.

Foreign investments matter

In moving towards the high-end products manufacturing, foreign direct investment plays a key role. But Foreign Direct Investment (FDI) in the textile and garment sector here in Bangladesh is relatively low.

This is because of a lack of well-developed infrastructure and good governance. In addition, doing business is harder than in Vietnam in case of getting license and utility services. 

Higher corporate tax and complexity in the tax system are other barriers in attracting overseas investment.

Bangladesh is not even receiving enough Chinese investment, which is shifting to South Asian nations. Chinese investors are choosing Vietnam for investment in the RMG sector.

Technology adoption crucial

The Vietnam apparel and textile sector is undergoing a digital transformation, optimizing processes and boosting efficiency. They have embraced the latest technology such as WFX PLM, ERP and MES. Manufacturers are using robotics and automation solutions as well as supply chain management.

 “If we look at the present situation of the industry in terms of technology use, sustainability practice and safety, it is far better than any time. We have upgraded technology, established an innovation centre and developed a training programme for skill development,” said immediate past BGMEA president Faruque Hassan.

Exporters are now exporting high valued items such as denim, jackets, suits, which contributed to widening the gap with Vietnam. Through research we have identified challenges and opportunities of non-cotton exports, said the business leader.

Contribution of non-cotton products to garment exports increased to 29% from 25% over the last three years and Bangladesh’s export earnings from non-cotton items rose to rise $42bn by 2032 with proper investment, said Hassan.   

So, Bangladesh will continue to grab market share and decrease the gap with number one exporter China as well as widen the gap with Vietnam, said Hassan.

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Ready Made Garments sector is the key source of foreign currency and GDP for Bangladesh. Approximately 4.2 million people are dependent on the RMG sector for their bread and butter.
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