Sustaining RMG export growth

In the last four decades or so the RMG sector has emerged as the lifeblood of the Bangladesh economy. More than 81 per cent of the country’s export earnings come from this sector. Starting with the export of only 12000 dollars in the early 1980’s, the industry crossed 42 billion dollars’ worth of export in the last fiscal year 2021-22.

However to achieve the sector’s avowed goal to reach the $ 100 billion export mark Bangladeshi apparel exporters have to ensure a sustained export growth of 11.45 per cent. We believe that the development of the country’s infrastructure, exploration of new markets, production of high-end products and contracts with good buyers are vital in this regard.

A study report, carried out by Research and Policy Integration for Development (RAPID), titled “Bangladesh’s Export Prospects in Europe” mentions that the $100 billion goal can only be achieved by doubling exports, and it is possible to export apparel products worth $90 billion in the US, EU and UK markets. 

One factor in Bangladesh’s favour is that China is phasing out of the apparel industry and due to the trade war, Western buyers are showing reluctance to place orders there. Since China is the first and Bangladesh is the second, Bangladesh is the first choice for buyers as an alternative to China. However, Bangladesh cannot take all the orders except those they can take.

Bangladesh must seriously think about market expansion. The country has to emphasise increasing exports to Asia, South America, Oceania and other new markets. Some of the markets are very close to Bangladesh, which will help to reduce lead time and freight costs will be less and the price will be good enough. There is a growing demand for manmade fibre in the global market with a market of $200 billion. The sector needs increasing investment there.

According to industry insiders, the sector is facing a serious shortage of skilled workforce which is likely to slow down the up-gradation and transformation of the garment industry necessary to meet the demand from the global clothing industry. Such a shortage has emerged as a major constraint to the realisation of the sector’s true growth potential, in terms of productivity and production of high-end apparel.

According to the Directorate of Textiles, at present, the country’s apparel sector is facing a shortage of about 0.11 million skilled manpower, from floor to executive level. The problem will turn more complex if the exporters fail to fill up the positions of highly skilled middle management officials and skilled workers needed in the sector.

Reduction of lead time, lead time reduction can be ensured through improving services and improvement of seaport facilities, increased railway capacity, improving the efficiency of Dhaka airport by dedicating a special channel for fast clearing of RMG exports, and increasing airfreight capacity in ensuring the fastest delivery of sample goods and other accessories and also developing strong backward linkages. While most importantly, a trade facilitation idea should be introduced, for example, a single window system to reduce lead time. Since single window system will allow manufacturers and exporters to deal with multiple government agencies that are situated in multiple locations under one roof to obtain the necessary papers, permits, and clearances to complete their import or export processes in one go.

Despite many difficulties faced by the RMG sector over the years, it has successfully carved out a niche in the world market and kept continuing to show robust performance. It is the resilience of the RMG sector which has enabled it to achieve the second highest RMG exporter’s status in the world and the Made in Bangladesh is now uttered with pride as the worldwide famous logo. It is not the race with other manufacturers that Bangladesh only has to be concerned about. Rather Bangladesh should emphasize value addition to its export basket.