Bangladesh needs to undertake immediate massive plans to develop skilled manpower in Ready-Made Garments (RMG) in order to invite foreign investments.
It is time for Bangladesh to prepare and organise the RMG sector in order to lead in the global competition. Bangladesh is currently second, next to China in RMG exports in the world. Experts said that Bangladesh could seize the opportunities of the US-China trade war and prepare skilled workers in further expanding its RMG sector.
The government has been developing new policies in a bid to invite more foreign investment, particularly focusing on capacity building of the factories overall. Bangladesh is now looking into potentials of exploring how to benefit from the trade battle between the two giant economies and hence increase its capacities accordingly to expand manufacturing goods and export them.
Bangladesh RMG exports to the US market has been gradually increasing as the latest figures clearly indicate. During January –March 2019 RMG exports rose to US$ 1.57 billion which is an increase of 16.12 percent again the same period (US$ 1.35b) last year. On the other hand, RMG exports to US from China during the same period has declined to US$ 5.73 billion from US$ 5.77 billion.
Bangladesh exports RMG worth about US$ 30 billion annually mainly to US which has been gradually increasing. However, due to the trade war lion’s share of RMG exports from China to the US now would be diverted to Bangladesh and other potential RMG manufacturing countries like India, Vietnam, Cambodia, Thailand, Chile and Mexico. Experts are very optimistic on this as Bangladesh offers the cheapest labour while maintaining the same quality. Bangladesh could seize the opportunity competing even among the countries mentioned above.
One such expert said, “We may be not inviting bulk orders from the top brands in RMG like Gucci, Marks and Spencer’s, Polo Ralph Lauren, Levi Strauss & Co, Calvin Klein and Tommy Hilfiger but a substantial amount of the volume of manufactured clothes can be exported if we can offer ‘appropriate’ climate for the brands.” The ‘appropriate climate’ refers to conducive policies that allows trouble-free application, making modern technology available, developing infrastructures and finally creating more skilled labour and maintaining international quality.
Tipu Munshi, Commerce Minister, said recently at a seminar, “China is the largest exporter but I can assure that Bangladesh will be benefited from the trade conflicts. Despite having negative impact on the global trade, Bangladesh's exports especially readymade garment products will grow further.” Bangladesh has about 5000 registered garment factories where some 4 million workers, mostly female workers, contribute to the annual earnings which is the largest foreign exchange earning sector or 84 percent of the total earning from foreign exports.
If we can tap the potentials of further developing the sector and making it conducive for bulk foreign investments the export earnings could surpass US$ 100 billion from RMG alone in the near future,” said eminent economist who preferred to remain anonymous. President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Rubana Huq told Bangladesh Post, “We need to focus on certain areas to expand the RMG sector which is obviously aimed at more earnings. To achieve these we need to concentrate on developing policies suitable for the buyers, offering skilled workers exposed to advanced technology and modern infrastructure and most importantly, need cash incentives from the government.”
She said, “We need to be aware of the current market trend and carefully study all the possible options of value addition and product diversification to attract more orders from foreign buyers.” Huq said, “Our RMG sector is dependent on age old machines and skills. Not much has improved in terms of use of technology which is now a major challenge in the global competition for RMG.”
“If we wish to survive, we need to adapt to new technologies and infrastructure and ensure quality. Otherwise, buyers would gradually shift to countries where they offer quality and use modern technology, she added.” The US –China trade war is at its height with 25 percent duty imposed by US on all goods imported from China. However, the country’s earnings from RMG exports witnessed a healthy growth to hit $31.73 billion during the July-May period of the current fiscal year (FY) 2018-19.
The earnings from this sector during the said period increased by 12.82 percent from $28.12 billion during the corresponding period in the previous fiscal, Export Promotion Bureau (EPB) data reveales. The earnings also exceeded the $29.67 billion target set for the period by 6.95 percent during the same time.
Meanwhile, the knitwear export stood at $15.68 billion during July-May period in FY 2018-19, posting a 12.50 percent growth from $13.94 billion over the same period of the previous fiscal year.
Export earnings from the woven fabric rose by 13.13 percent to $16.05 billion in the period from $14.19 billion in the same period of the previous fiscal.
Knitwear and woven export earnings crossed the target by 6.98 percent and 6.92 percent respectively. The figures were $14.66 billion (knitwear) and $15.01 billion (woven) correspondingly.
Abul Kasem Khan President of Dhaka Chamber of Commerce and Industry (DCCI), told Bangladesh Post, “The trade war between US and China has put a positive impact on the country’s export earnings.” “Many 'sunset industries' in China will need to move out and Bangladesh can emerge as an ideal destination for those”, he said, adding, “Therefore, Bangladesh has to create a smooth transition process, enabling situation focusing on ease of doing business for the factories to be relocated and should have a planned marketing and branding mechanism.”
Abdus Salam Murshedy, President of Exporters Association of Bangladesh (EAB), told Bangladesh Post that export earnings from the US have gradually increased, which is good news for Bangladesh.He noted that the country is now capable of making the best quality products at low prices, which will help enhance exports to the US market. “Popular clothing retailers and brands in the US are already trying to shift from China to other destinations like Bangladesh, as cost of production in China is too high,” he observed.
