International trade. Shahadat

The garment industry has played a pioneering role in the development of industrial sector of Bangladesh. Though it took a rather late start i.e., in 1976 but it soon established its reputation in the world market within a short span of time. Resultantly garment is now one of the main export items of the country.

Besides, enriching the country’s economy it has played a very important role in alleviating unemployment. At present there are more than two thousand one hundred garment factories in the country employing more than 12 lack labors. 85 percent of the labor force is women.

With 5,000 factories employing about 3.6 million workers (of a total workforce of 74 million), Bangladesh is clearly ahead of other Southeast Asian suppliers in terms of capacity of the ready-made-garment industry. It also offers satisfactory levels of quality, especially in value and entry-level midmarket products.

Ready-made garments manufactured in Bangladesh are divided mainly into two broad categories: woven and knit products. Shirts, T-shirts and trousers are the main woven products and undergarments, socks, stockings, T-shirts, sweaters and other casual and soft garments are the main knit products. Woven garment products still dominate the garment export earnings of the country.

The share of knit garment products has been increasing since the early 1990s; such products currently account for more than 40 per cent of the country’s total RMG export earnings (BGMEA website). Although various types of garments are manufactured in the country, only a few categories, such as shirts, T-shirts, trousers, jackets and sweaters, constitute the major production-share (BGMEA website; and Nath, 2001). Economies of scale for large-scale production and export-quota holdings in the corresponding categories are the principal reasons for such a narrow product concentration.

With about $15 billion in exports in 2010, ready-made garments are the country’s most important industrial sector; they represent 13% of GDP and more than 75% of total exports. Recent surveys carried out by the consulting firm McKinsey and the accounting firm KPMG identified attractive prices as the most important reason for purchasing in Bangladesh. Price levels will remain highly competitive in the future, since significant efficiency increases will offset rising wage costs.

Diagram of Garment Export from Bangladesh|Besides labour cost and duty advantage, raw materials and real estate costs are also cheaper in Bangladesh. There is also no doubt that Bangladesh is benefitting from various preferential trade agreements providing tax free entry into several dozen countries.

But Bangladesh has its own challenges to overcome. Impediments to investment include unreliable power supply, high real interest rates, corruption, and weaknesses in law and order. So what can Bangladesh do to overcome these challenges and utilise its huge potential?

First, inefficient infrastructure, including transportation and energy supply, is the single largest bottleneck hampering our garments industry. This issue will become even more important in the future, since buyers want to source more fashionable products with shorter lead times. The government needs to prioritise improvement in this area and start to upgrade power systems. Fortunately, a number of steps have been taken in this regard.

Second, although labour and social-compliance standards have improved over the past few years, suppliers vary greatly in their degree of compliance. Environmental compliance is just beginning to get attention.

Third, the suppliers’ productivity must improve not only to mitigate the impact of rising wages but also to close gaps with other sourcing countries, such as India and Cambodia, by satisfying new customer needs for more sophisticated products. Lack of investment in new machinery and technologies and the insufficient size of the skilled workforce, particularly in middle management, is also hampering growth in this industry.

Fourth, access to raw material is crucial for clothing exporters. Lack of backward linkages and Bangladesh’s dependence on imports create sourcing risks and lengthen lead times. Compounding the problem is the volatility of raw-material prices in recent years. The development of a local sector could improve lead times.

Fifth, political stability is a prerequisite for attracting foreign investors. Political unrest, strikes, and the absence of ease of doing business are major concerns of foreign investors.

The three main stakeholders the government, suppliers and buyers must work together to realise the potential of Bangladesh’s ready-made-garment market. The government’s top priorities for investment should be developing infrastructure, maintaining political stability, reducing corruption, and providing education and trade support.

Buyers should help to increase the supply chain’s efficiency and transparency and increase their support for lean operations and electronic data exchange. They should also build closer relationships with suppliers and improve their own operational execution. Their long response times, the complexity of internal procedures involving the merchandising and sourcing functions, and a large number of last-minute changes slow down the overall process.

While Bangladesh has some very promising advantages in certain dimensions in the garments industry, a number of challenges remain. Only if these challenges can be overcome will Bangladesh’s garments industry continue to prosper.

Author of This Article:Noor Ahmed RaazB.Sc. in Apparel ManufacturingNoakhali Textile Engineering CollegeFacebook:

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