Think of Bangladesh and chances are that you will think of a garment manufacturing hub, with a goal to dominate the world in the textiles sector. That’s precisely what the South Asian nation has done since the turn of this century. From being a little-known entity in the business, it has spun an amazing yarn of success to become the world’s second-largest exporter of readymade garments, just behind mighty China.
The textile sector contributes around 20 percent of the country’s GDP now. The RMG (readymade garments) sector currently accounts for 80 percent of Bangladesh’s net exports. Just before the coronavirus pandemic hit, industry circles were abuzz with achieving the target of $50 bn in RMG exports by 2021 and doubling it to $100 bn by 2025.
A casual scan of the textile sector would suggest that cheap labour was an advantage, with minimum wages still lower than China, India, Vietnam and others. But that would be an over simplistic explanation of a success story. Bangladesh has been using different factors to its advantage to become a garmenting powerhouse. While supportive government policies continue to play a part in encouraging foreign direct investment in the textile sector, Bangladesh has also used preferential access to the European Union market to its advantage. With its Least Developed Country status, Bangladesh enjoyed duty-free access to markets in over 50 countries.
In particular, the EU’s duty-free, quota-free exports policy under its ‘Everything But Arms’ mandate helped Bangladesh increase its apparel exports from $7 bn in 2007 to over $21 bn in 2017. But what makes Bangladesh an enduring success story is the willingness of the industry to adapt to the changing environment.
While 37 universities in the country now produce textile graduates every year, FDI in setting up spinning and weaving factories is being encouraged to meet the raw material demand internally, cutting dependency on countries like China and India. Learning from Vietnam, Bangladesh remains acutely aware that its labour cost advantage will fritter away in the years to come.
The CEO of Bangladesh Apparel Exchange, Mostafiz Uddin, recently pointed out that the country will lose its labour advantage to automation sooner than later. It must, therefore, be ready with adequate investment in research and development and well-educated professionals to provide tech solutions for the industry to adapt and grow, he said.
It is with this keen eye on the future that in 2019, Bangladesh decided to create the RMG Sustainability Council to ensure workplace safety in the garment sector. If done and delivered right, the safety and sustainability monitoring system could be the country’s calling card in a highly competitive market in the years to come.
