The wonderful success of RMG exports

The success of readymade garment exports over the last three decades has changed scenarios of export earnings. Today the RMG export is a multi-billion-dollar export business. Now social and economic development of Bangladesh mostly depends on exports earning from RMG. Despite some gaps of coordination among the vital stakeholders, the Ministry of Labor and the ILO compliance and commitments, the Accord of EU and the Alliance of USA have supported immensely for improvement the status of acquiescence. Now the complaints of working conditions and irregular salary issues are being addressed by the prudent policy option of the government and the BGMEA.

The Generalized System of Preferences (GSP) enabled the country to become the second largest exporter to the European Union and United States market after China. Its role on the development of backward and forward linkage industries such as dyeing, printing, zippers etc have created jobs for about two million people in addition to 4 million people in main stream RMG industries. The insurance, shipping and transportation etc. have been receiving favorable contribution from this industry to a great extent even in Covid 19 pandemic situation.

The Accord and the Alliance are the two coalitions which have been fixing over 85 per cent of the issues they had originally identified. Buyers are now very much conscious of the status of compliance issues. The RMG sector has already made tangible progress in compliance issues like fire, electrical and structural safety etc.

The prudent policy option of present government led by hon’ble Prime Minister Sheikh Hasina has helped in improving the condition of compliance issues, facilities of the sea-port, custom duty adjustment, credit facilities, electricity supply, gas availability, improved highway communication, firefighting brigade, industrial policing for the RMG industry.

But the challenges remain in the productivity of the workers and the cost of capital and the coordination issues among the stakeholders of RMG export. Per worker productivity in Bangladesh is 8.6 whereas India has 16, Viet Nam 10.2 and China 24 and Cambodia 6.2 among the apparel exporting competing countries (per worker productivity among ‘000 of US$ as of 2016) Source: Asian Productivity Organization, 2018. The RMG exporters have been facing competition in the international market due to high interest on bank loan. The World Bank report in 2016 shows lending rate comparison among the RMG exporting countries except Myanmar the interest rate is higher in Bangladesh than China, India, Pakistan and Vietnam. Lack of coordination among the different offices of exports sometimes creates procrastination or huge challenges for the exporters.

Government’s active support for smooth and easy imports of cotton, artificial fabrics, hi-tech machineries, materials for knit, woven and dying factories may inspire RMG exports. Incentives might work well for inspiring domestic producers to produce cotton and other substitute fabrics as an alternative to import. Collaborative and coordinated approach among the various stakeholders of the business need to be established for sustainable infrastructure, labor productivity, product and market diversification. In the competitive business, RMG products need to be diversified from a few to more and more new RMG products and new destinations for export markets. Now Bangladesh exports a limited numbers of RMG products such as shirts, blouses, trousers, skirts, shorts, babies’ wears, sweaters, Caps etc. But China and Vietnam exports more than 55 items of RMG. The RMG products diversification is now need of the hour. Export destinations are also very limited in EU and USA markets. The Embassies or High Commissions may intensify comprehensive supports in finding markets in Meddle-East, Africa and Latin America by arranging trade fairs in those destinations.

Inside the country, all EPZs need to be connected with luggage or goods train of Railway to carry RMG products to the Chattagram, Mongla and Pyra Deep Sea-ports and back to industry with raw materials. Capacity of cargo facilities at the Shahjalal International Airport for faster delivery of sample goods needs to be expanded. One stop Service for the manufacturers, exporters and buyers to ease all kind of approval and clearances under one roof relating to export might reduce export processing time and cost. The Payra deep Seaport may be explored to function as early as possible.

The favorable fresh MOU for smooth and hassle-free import of cotton and other materials with importing countries like China, USA, India, Brazil, and Uzbekistan etc need to be signed so that among these countries all unwanted trade barrier can be abolished or minimized with low import duty.

The introduction of the PPP model in this sector can play a very vital role in setting up RMG Industrial Parks, modernization of EPZs, industrial firefighting team and Hi-tech solutions. Under the PPP guidelines, modernization and upgradation of ICT based Sea-ports, establishing Railway tracks from EPZs to Seaports, 8 lanes road communication form EPZs to Seaports may work well in reducing the export processing time and cost. This PPP model may surely minimize the cost of production and processing cost of export for its survival in the competitive export markets of the world. Shortening the lead-time, streamlining the ports and customs procedures and looking for further scope to reduce the costs of production and cost of export may make this export-oriented business as number one in the world market.

For Branding of RMG products, Export Promotion Bureau may continue supports with the help of Embassies in establishing retail outlets abroad or seasonal fair like Bangladesh Apparel and Textile Exposition (BATEXPO) in different big cities of the world to familiarize our RMG products before the international buyers and consumers.

Collaboration and co-operation among stakeholders of RMG sector is the key to take this industry ahead. It is not possible for RMG industry to work alone for its survival. Bangladesh may find on a number of fronts to indorse and defend its competitive advantage. As we all know that our RMG exporters have been under continuous pressure to comply with international standards, compliances and maintaining of quality of products as well as meeting the expectations of the importers and timely exports, all those can be easily supported by creation of “One Stop Shop” of “cluster offices of RMG”

comprising the Ministry of Labor, Ministry of Commerce, Ministry of Industries, NBR, Port Authorities, Financial Institution Division, Bangladesh Bank, Ministry of Home, Ministry of Foreign Affairs, Ministry of Communication, Ministry of Shipping, the Export

Promotion Bureau, BIDA, ILO and the Trade bodies.

The “One Stop Shop” of the “Cluster Offices of the RMG” under a lead ministry may bring a harmonization of long-term perspective plan by streamlining all work procedures and regulations of all relevant stakeholders including ministries and departments of the government to encourage smooth production and exports of RMG. The aim of the “One Stop Shop” might be supportive for its survival in the competitive world market and making this export business as number one of the world markets.

The writer is a former Senior Secretary to the Government

of Bangladesh.