Crisis Moments For Ready-made Garment Industry

Securing the second largest exporter of RMG in the world, Bangladesh is now exporting apparel to 132 countries worldwide. The RMG –Journey was started in 1980 with only 30 factories, but now the number of factories has exceeded over 4,500, which has created jobs for over 4.4 million people, among whom 85 percent of the workers are women.

However, it is not a time for Bangladesh to rest on their laurels regarding RMG. I’m deeply concerned. Yes, based on some information, I’m worried.

Look at the real scenario:

[icon name=”hand-o-right” class=”” unprefixed_class=””] According to BGMEA statistics, 59 garment factories have been closed since last February 2019, at least 25,900 workers lost their jobs during the previous six months.

[icon name=”hand-o-right” class=”” unprefixed_class=””] According to the recent report of Bangladesh Bank, the number of garment factories in the BD was 5876, which has now fallen to 4621. In the last four years, a total of 1255 factories have closed.

[icon name=”hand-o-right” class=”” unprefixed_class=””] According to the International Corporate Association of Professionals (InCAP) survey, currently, more than 80 percent of the RMG factory is in the loss. This is the most alarming message for the RMG industry.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Dependence on others for raw materials, low productivity, limited knowledge in international marketing information, poor infrastructure, political instability, disruptive trade unionism, inefficiency in port management, and excessive dependence on the RMG sub-sector are the influential dizziness of the industry.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Experts believe that Bangladesh’s trade policy is not friendly enough for business.

[icon name=”hand-o-right” class=”” unprefixed_class=””] There are numerous demands for “under-the-table” payments that are reportedly required at every step of export processing, from the opening of letters of credit to the clearance of goods from Customs. According to a survey, the hidden costs paid by importers per consignment ranged from Tk.4, 700 to Tk.36, 800 (about US$100 to $735). These inefficiencies and corruption seriously hamper the competitiveness of Bangladeshi garments in the world market.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Recently, Bangladesh loses its position near Vietnam in the global market to lose its ability to compete in the garment industry. In contrast to the growth of about 8 percent in Vietnam, Bangladesh’s growth is only 1.7 percent.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Industry owners blame the lack of expertise of government bureaucrats. Also, they are not refusing the blame of their sketchy and short-sighted trade strategies. However, there is a blame game over yonder which is awful for the development of this industry.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Economists indicate a crucial point that one of the significant weaknesses of this sector is that there is no diversification in the production of garments.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Generalized System of Preference (GSP) facilities in the European Union countries will never be available and reschedule if it’s too late to take the needful steps.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Excessive labor unionism creates a defective impression (there are about 30 different agencies/groups including 22 workers unions).

[icon name=”hand-o-right” class=”” unprefixed_class=””] One of the most threatening factors is Pricing. Bangladesh is losing the power of negotiations with the buyers. No negotiation is taking place at all. It’s becoming a one-sided market. It’s a crucial concurrent scenario of the RMG sector. Regionalism is another threat to this industry.

[icon name=”hand-o-right” class=”” unprefixed_class=””] Some sociopolitical consequences have added fuel to the chronic go-slow and congestion problem at the port. Like, the politicization of Collective Bargaining Agents (CBA) and direct involvement of powerful local politicians, elite, and musclemen.

If necessary measures are not taken immediately, then the rapid growth rates that Bangladesh exhibited in world trade will be a thing of the past.

 About The Author

Mirza Rakib Hasan

Business & Creative Head

International Corporate Association of Professionals (InCAP)