Investment in spinning sector slowed down

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May 7, 2024

The investment in the spinning sector has slowed down because of gas shortage and for volatile dollar markets over the last two years.

Last year, no new spinning unit was established in the primary textile sector of Bangladesh although the demand for local fabrics of both knit and woven has been increasing to shorten the lead time on export of garment items.

The garment exporters started preferring the locally spun knit and woven fabrics to imported fabrics as the use of local fabrics can reduce the lead time significantly.

For instance, if the fabrics is imported from China to be used for garment making in Bangladesh it takes nearly 40 days which is too long time considering the stiff competition by the suppliers worldwide.

But if the local fabrics and materials are used it takes only a few days or one or two days for processing as the local spinners supply easily from his or her factory.

The international clothing retailers and brands do not want to spare more lead time as they also have to compete with their peers in their respective countries.

However, the investment in such a vital sector has slowed down because of gas crisis and for volatile dollar exchange over the last two years mainly stemmed from covid 19 and Russia Ukraine war fallouts.

Current status of the spinning sector

Currently there are 550 big spinning mills in the country with an investment of nearly $15billion. The total investment in the country’s primary textile sector (PTS) that includes, spinning, weaving, dyeing, washing, finishing and printing, is nearly $25 billion. Of them, only 200 are export-oriented.

The installed spinning capacity is 4,500 million kilogrammes, but they are manufacturing 2,400 million kgs of yarn currently as their full capacity can’t be utilized because of the gas and power shortage. The local spinners have been expanding their capacity to a bit for meeting the demand.

More than 60 weaving mills produce fabrics for the export-oriented garment sector. Local denim millers produce more than 700 million yards of fabrics per year, according to data from the Bangladesh Textile Mills Association (BTMA).

Setting up a new factory is time-consuming and it takes at least three years and costs Tk 700 crore to set up a medium-sized factory.

Most of the spinning mills are producing the cotton yarn and for knitwear sector where the local spinners can supply nearly 90 percent raw materials as more investment took place in the knit spinning sector.

From the very beginning the local spinners have mainly invested money in the cotton spinning sector as it was easy for them due to lack of knowhow in non-cotton yarn. As a result, of the total exported garment items from the country, some 71 percent is cotton made yarn and 29 percent is non-cotton yarn.

However, recently, the spinners have been investing money on non-cotton units aiming to grab more market of value-added garment items as the prices of non-cotton fabre made garment items are better than cotton made fibre garment.

The spinners can supply nearly 90 percent raw materials to knitwear sector and 45 percent to the woven sector while the remaining demand is met through import mainly from India, China and Pakistan.

Impact of slow investment in spinning sector

The impact of the slowdown in investment in spinning sector is dangerous. Because, the country’s $46.99 billion worth of garment items is largely dependent on the PTS integration.

The local garment exporters will have to import the yarn and fabrics with spending billions of dollars from other countries like from India, Pakistan and China.

For instance, in the fiscal 2022-23, Bangladesh imported woven fabrics worth Tk36,527crore to meet the demand of the local garment exporters, the BTMA data also said.

This is a segment of the total import of raw materials. If the amount of other sectors like yarn, knit fabrics and yarn are also added, the amount will be even higher.

Slowdown in investment will also impact on the technology knowhow and the garment sector will be dependent on the imported fabrics and yarn which will also impact the lead time.

As a result, the international retailers and brands may not choose Bangladesh as a preferred destination for souring the garment items.

Moreover, the local markets which is also billions of dollar worth will face a lot of smuggled in from other countries which might be a threat for the country’s industry.

Reasons for slow investment

Mainly for three reasons the investment in the spinning sector declined in the country over the last two years including gas crisis, volatile dollar exchange rate and for lower demand from the garment exporters.

For instance, many of the spinning mills have been running their production at 50 percent capacity because of the gas crisis in the industrial sector. As a result, the cost of production has gone high and the production has lowered for which the industry owners cannot make profit from the sales of the yarn.

Investment in spinning sector slowed down

Although the production fell in the spinning sector, but the government doubled the gas price in February in 2023 to Tk30 per unit from Tk16 per unit. But the gas supply situation did not improve to the expected level.

The volatile dollar exchange rate has also a negative role in inflow of investment in the spinning mills.

Many entrepreneurs have opened Letters of Credit (LCs) for importing the machinery when the dollar rate was lower and hovering around Tk86 and Tk87 per US dollar before the outbreak of the Russia Ukraine in February in 2022.

However, the war impacted the dollar exchange rate severely and the rate reached to Tk111 and Tk112 per dollar in officials which made the import expensive for the entrepreneurs.

Moreover, the dollar is not even available at the official rate for which the entrepreneurs have to buy the dollar at Tk123 from the unofficial channels and even from the banks to import capital machinery.

The western clothing retailers and brands experienced a dull sale seasons because of historic inflationary pressure stemmed from the severe fallouts from the Covid-19 pandemic and Russia Ukraine war.

As a result, the inventory of unsold stock of garment items was high in the stores of them for which the export of garment items was also low from Bangladesh.

As a result, the garment makers bought lower quantity of fabrics and yarn from the PTS in Bangladesh which also badly impacted in investment in the spinning sector.

Views of industry insiders

Khorshed Alam, chairman of Little Star Spinning Mills Ltd, also said the volatile dollar exchange rate, gas shortage and stockpiling of old unsold garment items in the stores in the western countries impacted badly in the inflow of investment in the spinning sector.

Moreover, the higher increase of gas price impacted badly in the investment as the profit declined. The spinning sector needs uninterrupted supply of gas for making profit and to run in full capacity, Alam said.

Monsoor Ahmed, chief executive officer of BTMA also echoed with the views of Alam. Even in the time of Covid-19 time few spinning mills were established but in 2023 no new unit was set up mainly because of gas shortage and volatile dollar exchange rate.

Available huge fund from the banking sector for establishing a spinning unit is also a challenge because setting up of even a small spinning mill requires more than Tk500crore which is difficult to available now at lower interest rate from the banking sector, he added.

In fine, spinning is the backbone for the local textile and garment industries and it needs good care of the sector. The uninterrupted gas supply to the spinning mills is very important for using its full capacity and for more investment.

The spinners are losing money as they have been running at 50 percent capacity due to gas shortage. The government should manage gas for the spinning sector at affordable prices so that they can make profit and expand their capacity and can go for new investment.

RMG Exports post negative growth of 1.01% in April

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RMG Bangladesh

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May 6, 2024

Exports of ready-made garments reached $3.29 billion in April 2024 which was $3.33 billion during the same period in the previous year. As a result, export earnings growth contracted to 1.01 percent in April.

*Figure: RMG exports are $2.48 billion short of the strategic target in 10 months.*

In the previous month at the end of March, the export of ready-made garments in the month of July-March was 5.53 percent. At the end of April, in the July-March, that growth has come down to 4.97 percent. The country’s total exports also fell from 4.39 percent to 3.93 percent.

As ready-made garments account for 85% of the total export earnings, a decrease in ready-made garments exports will cause a shock to the growth of total export earnings.

In this regard, the director of ready-made clothing manufacturers and exporters association (BGMEA). Mohiuddin Rubel said, due to the Eid holiday in April, working days were less. This is one of the reasons for the drop in exports in April.

According to him, the global economy has not been good for a long time. After the Corona epidemic, the Russia-Ukraine war, the unrest in the Red Sea has increased again. As a result, instability in the world economy continues.

The target of exports of ready-made garments in the current financial year is $52.27 billion. And the July-April 10 month strategic target is $42.97 billion.

During the period, exports were $40.49 billion i.e. $2.48 billion or 5.77 percent below the export target in the 10 months to April. An additional $2.50 billion worth of ready-made garments will have to be exported this year to meet the target.

Spinners are experiencing challenge to stay alive

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RMG Bangladesh

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May 5, 2024

The RMG export are increasing day by day in Bangladesh but the spinning industries still facing profitability crisis severely. In the last decades following the growth of the export oriented garments Industry Bangladesh spinning sector also made the expansion without analyzing the future market. Now, for the last 2 years the spinning sector is experiencing the real challenge to stay alive. In the recent months, export oriented garments order has gone up a little bit but the buyers are not offering good prices.

Spinners are experiencing challenge to stay alive

As a result, yarn prices are also low. Spinning mills therefore have to calculate loss per unit despite increase in garment orders. Almost all types of yarns except some fancy yarn orders are facing losses.

On the other hand, Bangladesh spinning mills are facing problems due to India supplying yarn at low price. Spinning mills also suffer from fiber shortages. Due to this every spinning mill is not able to utilize its full capacity. Dollar crisis is one of the reasons. Spinning mills are not able to open L/C for fiber or purchase fibre despite working capital limit. As a result, a crisis is created in the fiber and this is the scenario for almost all the spinning mills.

Diversified products or fancy yarns may be getting good prices in the case of spinning mills. Mills are facing 20 cents loss at each unit for Cotton, CVC, PC and other regular yarn. Mills are getting competitive price for slub, cyro, inject, Cotton-Modal, Cotton-tencel etc . As a result it can be said that except for fancy yarn spinning mills are facing losses for all regular yarn.

If the order quantity goes up, there will still be a hope for the spinners that they will try to mitigate losses as the RMG sectors will need support from this backward linkage industry. RMG makers will go for Bangladeshi spinners despite of having a little bit less price from India. As the quality and service of the Bangladeshi spinning mills are much more convenient for them than the same from India. If the export oriented garments industry wants to ensure smooth production and business they must have to have a very strong and healthy spinning Industry.

On the other hand, gas prices increased a lot than it was a few years ago. Salary of the workers has also increased. For gas prices government can consider a little bit for them who are producing electricity by their own using gas. On the other hand, bank support is needed to utilize the full capacity by utilizing their full working capital limit.

Also, all the spinners must have to transform their product range from regular to diversified product at the soonest possible ways. This is the high time to take the decisions whether we will shut our floors one by one or we will rise again.

51pc industries yet to clear March wages

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RMG Bangladesh

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May 4, 2024

Workers will get monthly wages and bonuses before factories go on Eid holidays — industries previously agreed upon the decision taken by the government.

But the reality does not go with the promise as more than half, or 51 percent, garment and textile factories outside Dhaka metropolis across the industrial belts are yet to clear March salaries.

Only 49 percent of garment and textile factories outside Dhaka city paid March wages as of Monday, according to Industrial Police data. However, around 81 per cent of the factories have already paid Eid bonuses.

Industrial Police data shows that 1,766 industrial units out of a total of 9,469 had not paid the festival allowance by Monday evening.

The data covers 9,469 factories under the Industrial Police’s jurisdiction. By Monday evening, 4,620 factories had paid March wages, and 7,703 had paid the festival allowance.

These factories are located in six Industrial Police zones: Ashulia, Gazipur, Chattogram, Narayanganj, Mymensingh and Khulna.

Among registered members, some 920 factories with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), 435 knitwear factories with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and 170 textile mills with the Bangladesh Textile Mills Association (BTMA) are yet to pay March wages.

A total of 76 Bangladesh Export Processing Zones Authority (BEPZA) units and 18 jute mills also have not paid March wages. The Industrial Police data also lists 3,230 non-garment manufacturing units that have not paid March wages.

Regarding the festival allowance, 181 BGMEA members, 144 BKMEA members, 26 BTMA mills, nine BEPZA units, 10 jute mills and 1,396 non-garment manufacturing units listed with the Industrial Police did not pay the allowance.

An Industrial Police official told The Financial Express that many factories are expected to make payments today (Tuesday).

The official said some factories announced the Eid holiday after making partial wage payments, having discussions with their workers beforehand. Around 100 factories have a history of irregular wage and allowance payments.

According to Industrial Police data, some 1325 textile and garment factories out of 2957 under its jurisdiction announced the Eid holiday while 29 will remain open with an additional six remaining partially open.

Some 114 textile and garment factories remained shut for several reasons.

Some 3381 factories including jute mills and non-RMG announced the Eid holiday on Monday while 116 units would remain open and some 71 will remain partially open, according to police data.

April exports see narrow negative growth of 1%

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RMG Bangladesh

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May 3, 2024

Bangladesh’s export earnings experienced a year-on-year (YoY) negative growth of 0.99% of $3.92 billion in April of FY24, slightly lower from $3.96 billion in the same month of FY23.

After positive growth for three straight months, exports experienced a very narrow negative growth in April, according to the Export Promotion Bureau (EPB) data published on Thursday.

The export earnings target for April this year was $4.7 billion, meaning the earnings were 16.78% lower than the target.

The RMG sector, the highest export earner of the country, bagged $3.29 billion in April of FY24.

This means it fetched a slight negative growth of 1% from $3.33 billion in April of FY23, EPB data stated.

According to EPB data, the earnings in the first 10 months (July-April) of the current FY24 experienced a narrow YoY growth of 3.93% to $47.47 billion, higher than $45.68 billion in the mentioned period of the last FY23.

However, the July-April export figure is 6.87% lower than the target of $50.97 billion, EPB data stated.

During the first ten months of FY24, the RMG sector bagged $40.49 billion, fetching a narrow YoY growth of 4.97% from $38.58 billion in the same period of FY23.

Export breakdown

Among apparel products, knitwear export reached $22.88 billion, while export from woven items was $17.61 billion with 9.11% and 0.03% positive growth respectively, compared to FY23.

Industry insiders said that the country enjoyed Eid-ul-Fitr in April, and the factories enjoyed about 10-12 days of holiday, which led the factories to produce less items, receive less orders, and shipped less goods considering the other months.

For this very reason, merchandise exports also lowered, and businesses said this is a normal issue for the country during every lengthy holiday like Eid.

After a depressive October-December quarter in FY24 in terms of export growth, the RMG sector bounced back to positive growth, and continued till January-March quarter.

But the sector again witnessed negative export earnings growth in April of this fiscal.

However, industry insiders said that although the RMG sector witnessed negative earnings for four individual single months of this FY, it will be able to retain positive growth at the end of FY24, as current order flow is good.

BGMEA Vice-President Khandoker Rafiqul Islam said that they are receiving a decent volume of orders in recent times, but price is still tight.

“Hopefully, overall year-on-year export growth in this FY will be positive,” he added.

Negative growth persists in non-RMG sectors

Except for a narrow positive growth of the RMG sector, the major export earners of the country experienced negative growths in the July-April period of FY24.

Among other notable sectors, leather and leather goods experienced a negative growth of 13.32% to $872.45 million, which was $1 billion in the first ten months of FY24.

A once-promising sector, home textile, marked an increasing negative growth of 25.32% to $702.56 million, down from $940.8 million in the mentioned period of last fiscal.

In the July-April period of FY24, the export earnings from agricultural products, however, saw a positive growth of 6.12% to $774.49 million, higher from $729.8 million in the same period of last fiscal.

Export receipts from jute and jute goods again experienced negative growth of 7.05% to $716.44 million, down from $770.82 million in July-April of FY23, EPB data stated.

Another potential export sector, engineering products, again fetched a negative growth of 0.4% to $436.35 million, down from $438.11 million in the same period of last FY.

Former Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Faruque Hassan said that in April, the month of Eid, factory productions generally went down as workers enjoyed a lengthy holiday.

“But overall RMG export order volume is not bad. I think the earnings will turn around this May,” he added.

Hassan, also a director of FBCCI, also said that export performance on non-RMG has been very poor from the last two fiscal years, and the government should focus on it.

“We have to understand that Bangladesh will graduate from LDC in 2026, and after this, the country will face many obstacles. To tackle this, we have to prepare from now on, and product diversification is one of the key solutions for this,” he added.

According to EPB data, Bangladesh bagged $55.56 billion in export earnings in FY23, posting a narrow 6.67% year-on-year growth.

Global apparel industry moving towards sustainability: Brands, experts

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RMG Bangladesh

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May 3, 2024

The global apparel industry is moving towards sustainability to make it more environmentally friendly through traceability and circularity, which is also guided by a number of legislative initiatives, said brand representatives and experts at a programme today.

They, however, said there are some challenges to increasing awareness among consumers and expanding circularity initiatives – passing costs to customers, understanding and capabilities of implementing a circular model, and the price of recycled textile materials.

Most brands and importer countries have also set targets to make their supply chains traceable, the speakers said at the discussion organised by the Cotton Council International (CCI) at the International Convention City Bashundhara in Dhaka.

Addressing the discussion, Amit Gautam, chief executive officer and founder of Textile Genesis, said the fashion industry is undergoing a structural shift from unregulated to more than 30 regulations across the value chain, from sourcing to retail.

He mentioned three factors driving the move towards a sustainable and traceable fashion industry: increasing regulatory compliance, responsible sourcing targets, and authenticating product claims to mitigate supply chain and reputational risks.

He further stated that there are over 30 emerging legislations in the EU and the US focused on supply chain due diligence, consumer claims, and transparency, requiring brands to invest in traceability.

Gautam said responsible sourcing targets to achieve 80-100% sustainable materials by 2025, and the ability to authenticate product claims at scale, as well as identifying and mitigating supply chain risks (company or country) across the full value chain and addressing any reputational risks.

Melissa Bastos, director of Corporate Strategy and Insights at Cotton Incorporated, said Sourcing Journal and Cotton Incorporated’s 2023 Industry Circularity Survey found that 1 in 3 US consumers have heard the term circularity.

The survey also found that 69% of consumers are informed about the carbon-neutral term and 78% are informed about the zero-waste term. However, 62% of industry professionals say circularity describes company sustainability.

She also mentioned that the Cotton Incorporated survey found some challenges to expanding circularity initiatives – passing costs to customers, understanding and capabilities of implementing a circular model, and the price of recycled textile materials.

Ali Arsalan, CCI representative for Bangladesh, delivered the welcome remarks, while Stephanie Thiers-Ratcliffe, director of European Brands and Retailers at Cotton Council International, and Arif Razzaque, Country Leader at Kiabi International Supply Services Ltd, Bangladesh, spoke among others.

Exports fall in April

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RMG Bangladesh

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May 3, 2024

Bangladesh’s exports fell in April of 2024 because of slowing shipments of garments and a continuous downturn in the other major sectors.

The nation shipped $3.91 billion worth of items in April, down 0.99 percent from $3.95 billion a year ago, according to data released by the Export Promotion Bureau (EPB) today.

However, shipments rose 3.93 percent year-on-year to $47.47 billion in the July-April period of 2023-24 fiscal year.

Moreover, exports of readymade garments, which typically account for 85 percent of the total receipts, grew 4.97 percent year-on-year to $40.49 billion in the 10 months to April this year thanks to buoyancy in knitwear demand.

Growth of woven garment exports remained almost flat while other major exporting sectors — leather and leather products, jute and jute goods, home textile, frozen and live fish — registered fall in shipments, according to the EPB data.

May Day marks progress in Bangladeshi labor rights: calls for responsible sourcing from int’l retailers

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RMG Bangladesh

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May 2, 2024

May Day, a day to recognize the movement and struggle of working people worldwide. The day is celebrated around the world on May 1 every year to honor the workers’ demands. After the independence of Bangladesh, a lot of changes took place in the labor rights as the industries grew over the last 52 years.

Bangladesh has already ratified 36 Conventions including core ones and one protocol of the International Labor Organization (ILO) and still a lot of improvements are underway under the government’s commitment to the ILO’s roadmap for labor rights from 2021 and 2026.

May Day marks progress in Bangladeshi labor rights: calls for responsible sourcing from int’l retailers — Figure: The workers have also contributed a lot to the economy over the years with their labor and with their valuable contribution Bangladesh is all set to be graduated to a developing nation in 2026 from the Least Developed Country (LDC).

At the same time, the workers have also contributed a lot to the economy over the years with their labor and with their valuable contribution Bangladesh is all set to be graduated to a developing nation in 2026 from the Least Developed Country (LDC).

Bangladesh has already ratified the core convention of the ILO including the rights to freedom of association and collective bargaining at the factory level, whereas other countries like China, the largest apparel supplier globally, yet to ratify those two core conventions, according to ILO.

Roles of manufacturers and global brands

Bangladesh government, private sector employers and the union leaders have been trying to develop the workers’ rights and to improve their lives. Even the labor law has been amending to make it time befitting.

But the international retailers and brands have been putting pressure on the local manufacturer and exporters for lowering the prices of garment items.

The prices are so low that as many as 39 percent of the Bangladeshi garment exporters accept prices below their production costs for the sake of business relations with international retailers, according to a study by the Fair Wear Foundation (FWF) in 2019.

The pressure described isn’t confined to Bangladesh alone. An investigation by Anner in India revealed a similar pattern, where numerous brands drive prices down or resist adjusting for increased labor expenses, thereby fostering resistance among suppliers to raise wages. A comparative analysis conducted by the International Labour Organization highlighted how international brands exert significant price pressures on manufacturers in the garment industry.

Suppliers interviewed across Asia by Human Rights Watch echoed these sentiments, expressing immense strain regarding pricing. One supplier from Pakistan disclosed that international brands set unreasonably low pricing targets. Another representative from Pakistan noted that brands rarely engage in negotiation, instead dictating prices outright.

Furthermore, it was revealed by a third supplier that many brands, despite being informed of the costs associated with raising workers’ wages, have steadfastly refused to adjust their prices. A particularly illustrative case cited by this supplier involved a brand initially expressing interest in ensuring suppliers paid a living wage but retracting this commitment upon realizing the financial implications.

So, the role played by the international retailers and brands for more welfare to the workers is not adequate. The international retailers and brands need to pay better prices to the local exporters so that they can pay more wages to the workers.

Bangladesh is the only country in the world which factory buildings are inspected and remediated by the Accord and Alliance and strengthened the workplace safety.

Moreover, currently, Bangladesh is the global champion in environment friendly green garment factories at 215 having 81 platinum and 120 gold standard, but still the retailers and brands are not paying better prices to the local exporters.

Despite all good efforts and positive changes for improved labor rights still, Bangladesh has to face challenges in international forums.

For instance, the USA and EU frequently have been criticizing the poor labor rights, full freedom of association and collective bargaining rights by the workers and sometimes they are also threatening for withdrawing the trade benefit because of poor labor rights.

The USA suspended the generalized system of preferences (GSP) status for Bangladesh in June 2013 citing the poor labor rights and poor workplace safety.

Bangladesh has already applied to the United States Trade Representative (USTR) twice for reinstatement of the GSP status but the USA government suggested for doing more to establish the labor rights and to make the labor law to the international standard.

The international communities like International Labor Organization (ILO) and the EU have been frequently putting pressure on the government for making the country’s labor law to the international standards although the government is committed to the ILO to implement the roadmap of labor law between 2021 and 2026.

But, the international communities are not putting pressure on the international retailers and brands for increasing the per unit price of the locally made garment items so that both the exporters and workers are benefited.

What the union leaders say

Amirul Haque Amin, President of the National Garment Workers Federation (NGWF) and who has been engaged in trade union over the last 40 years, said in terms of workplace safety Bangladesh improved a lot, but in some cases the implementation of the labor rights needs more focus.

The workplace safety has been strengthened in the garment sector at the cost of many workers in the Tazreen Fashion fire and Rana Plaza building collapse and from the pressure of the international communities, he said.

This union leader also said the wage that has been hiked after a movement last year at Tk12500 per month. The retailers and brands should also pay more as they also committed for increasing the prices for per unit garment with the wage hike of the workers in December last year.

The workers and their children cannot have a good education and good food with this amount and this is scenario also in other sectors. Regarding the labor law this unionist said the labor law has been amended thrice so far, it is underway another amendment for making it more workers friendly.

The labor law should have been win win situation for a healthy industrial relations, he added. The labor law should target three important factors including labor rights, wage for the labor and dignity of the workers.

The labor law should be amended in consultation with the representatives of the Tripartite Consultative Committee (TCC) so that all recommendations can be incorporated in the law.

Md. Towhidur Rahman, President of the National Apparels Workers Federation also echoed the views of Amin.

Rahman also said the labor law was amended under the pressure from the international communities, but many of the provisions of the law needs to be implemented for establishing the labor rights in the country.

Bangladesh needs a time befitting labor law for establishing a warm industrial relation so the country can achieve the goal of industrialization, he said.

Nazma Akter, President of Sammilito Garment Sramik Federation also said the building safety improved and also to some extent the stopping of harassment of workers improved, but still need more to be improved in these areas.

Bangladesh should amend the labor law through Tripartite Consultative Council (TCC) and make it as an international standard by 2026 as committed to the ILO, she added.

In conclusion, Bangladesh has already ratified all the important conventions of the ILO committing a better labor proactive. Workers’ rights to proper wage and dignity should be ensured by the state by establishing the proper labor rights in the country.

Recycled fashion is the future of Bangladesh’s RMG business

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RMG Bangladesh

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May 1, 2024

Bangladesh should get ready for recycled fashion as the major international clothing retailers and brands are focusing more on the circular fashion to save the environment and for the mother earth from pollution.

Globally the circular fashion has been getting popularity as the end consumers in the western world are leaving the fast fashion mainly to reduce the consumption.

Recycled fashion is the future of Bangladesh’s RMG business — *Figure 1: Globally the circular fashion has been getting popularity as the end consumers in the western world are leaving the fast fashion mainly to reduce the consumption.*

In fast fashion it needs more fabrics, more cultivation of cotton and more transportation of goods and so many factors all of which are related to more consumption of water, more carbon emission and more pollution of environment.

But the recycled fashion means less carbon emission, less water consumption and less environmental pollution because of reuse, reduce of waste materials and recycle of the waste of clothing.

In the recycled fashion, the old clothes are collected and those are washed and reused by making them renewed.

Moreover, the wastages of garment fabrics are also recycled and made yarn from these items to make new garment items.

Why the recycled fashion is growing

The recycled fashion is growing worldwide mainly to reduce the environmental pollution and for saving the Mother Earth.

So almost all the international clothing retailers and brands have also started rethinking about the global fashion and business.

The European Union (EU) the largest exporting bloc for Bangladesh, has already adopted a policy for shifting their fashion consumption to recycled fashion from fast fashion.

The EU has announced that by 2030, all of its garment items would have to be sourced from recycled yarn.

Accordingly, the Swedish retail giant H&M has already asked the local garment suppliers to shift production to recycled materials from fast fashion.

The H&M has a target to have 24 percent of its apparel sourced from recycled or sustainable materials by 2025.

So, the company has already suggested the local suppliers to go for recycled fashion.

The German government has also made a policy as German due diligence for recycled fashion so that the world can be made pollution free by reusing reducing and refusing of materials.

A big number of end consumers have already started leaving the fast fashion and adopting their purchasing behavior to recycled fashion.

Status of global recycled fashion

The BGMEA, Global Fashion Agenda (GFA), Reverse Resources, and P4G have partnered in an initiative “Circular Fashion Partnership” that aims to achieve a long-term, scalable transition to a circular fashion system.

Over 30 renowned fashion brands, manufacturers and recyclers are collaborating in the new initiative to capture and reuse textile waste in Bangladesh, according to a statement from the BGMEA.

Global Fashion Agenda announced the participants of the Circular Fashion Partnership, including the global brands Bershka, Bestseller, C&A, Gina Tricot, Grey State, H&M Group, Kmart Australia, Marks & Spencer, OVS, Pull & Bear, Peak Performance and Target Australia, the BGMEA said in the statement.

The partnership facilitates circular commercial collaborations between major fashion brands, textile and garment manufacturers, and recyclers to develop and implement new systems to capture and direct post-production fashion waste back into the production of new fashion products.

It plans to facilitate a decrease in textile waste and increase the use of recycled fibres, distributing value throughout the fashion value cycle and generating economic benefits in Bangladesh by accelerating the fiber recycling market.

The initiative is focusing on Bangladesh as it arguably possesses the most in-demand and recyclable waste of any garment producing country, but the majority of its waste is currently being exported and/or downcycled.

Globally, annual sales of recycled yarn are projected to grow from $4,553.4 million in 2023 to $5,500.7 million by 2029 at a compound annual growth rate of 3.2 percent, according to QY, a California-based global research organization.

China accounts for about 60 percent of the trade followed by the US with a share of about 16 percent, it said.

Status of recycled fashion in Bangladesh

Bangladesh is still lagging behind competitors in the production of recycled yarn and transit to recycled fashion although the international retailers and brands are putting pressure on them for recycled fashion.

Currently, there are five to six local mills in Bangladesh manufacturing recycled yarn for export because it costs a lot of money to set up a recycled unit and in some cases it may take an investment of $10 million, to produce nearly 15 tonnes of recycled yarn per day.

Nearly 60 tonnes of recycled yarn are produced by some mills meant for the domestic market, such as mattresses and curtains, according to industry insiders.

The recycled yarn prices are also lower than the cotton yarn. For instance, while cotton yarn cost is $3 to $3.5 per kilogramme in the international market, recycled yarn can fetch as much as $1.5 to $2.5.

Industry insiders said four more projects are under construction with an investment of $40 million and are set to come into production within the next one year. They are expected to take the daily output of exportable recycled yarn to 100 tonnes, they said.

Md. Abdur Rouf, Executive Director of Bhaluka based Simco Spinning and Textile Ltd said his mill can produce 16 tonnes of yarn from waste of fabrics in a day although the capacity is 20 tonnes in a day. He cannot use his full capacity because of export of waste from the county.

Barriers to recycled fashion in Bangladesh

Several barriers are impending the growth of recycled fashion in the country. Primarily, the availability of raw materials is the main barriers.

The country does not produce so big amount of clothing and fabrics waste from where the required quantity of recycled garment can be produced.

Different studies shows that Bangladesh can export $6 billion worth of garment items if it can locally process the 400,000 tonnes of recycled yarn and fabrics the local garment makers produce every year.

But in many cases, a lot of waste is used for landfill and many are engaged in export of the clothing waste. As a result, many millers are not getting adequate amount of clothing waste for producing recycled garment.

Gas crisis is another major challenge for the industry as a whole. Many entrepreneurs are not neither investing afresh nor expanding their capacity because of shortage of gas in the industrial belts.

Higher tariff on import of fabrics waste is a major challenge for the growth of recycled fashion. Also the high tariff like VAT on sales of yarn made from clothing waste is another challenge.

Zahid Hossain Khan, controller – Finance and Operations of RBD Fibers Limited said that a 7.5 percent VAT on procurement and 15 percent VAT on sale of such yarn has been hindering investment in this sector.

The VAT is too high for making profit in this difficult time of business when the profit is too low as the international retailers and brands are paying low prices, Khan said.

The waste of clothes is expired from the country and the local millers are not getting adequate amount for recycling the materials for making the garment, he also said.

The government should discourage the export of this valuable materials of recycled fashion industry, he added.

What leaders say

Faruque Hassan, ex-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said the future of Bangladesh’s garment business is recycled fashion products as the international retailers and brands are moving towards this direction.

The BGMEA has been working on this issue so the local suppliers can follow the instruction of the buyers to catch the global business of recycled fashion.

Morten Lehmann, CSO, Global Fashion Agenda in a BGMEA statement says, “To establish a circular fashion system we need to reimagine the production process so that it appreciates the value of textile waste. It is encouraging to see so many prestigious companies sign up to the Circular Fashion Partnership and, with their help, I am confident that we can demonstrate a strong business model for circularity that can be mirrored by others in the future.”

Miran Ali, former Vice President of the BGMEA, in the BGMEA statement says; “Circular economy is not merely just a concept, it is the future! Fashion industry is historically following the linear model of business “take-make-dispose” but now we stand at such a critical juncture where we cannot afford to continue this linear model.

Concluding remarks

Bangladesh has a target to export garment items worth $100billion by 2030 and the recycled fashion products are major items for fulfilling the target. The government should facilitate this target with giving some tariff benefit on import of raw materials and reducing the VAT to some extent.

The buyers are also moving their purchasing trend to circular fashion from the traditional fashion business. The businessmen have taken such move to reduce carbon emission and for making the business pollution free. We should respond to these initiatives.