The textile and apparel revolution in the last century has changed the course of the economic wheel of many countries. Bangladesh has emerged as the top apparel export zone amongst these nations.
Despite facing many challenges internationally and domestically, Bangladesh has been able to achieve the status of the 2nd largest apparel exporting destination as a single country, with a global market share amounting to 7.9% more than India and Turkey combined.
Bangladesh has crossed the milestone of $50 billion in export earnings from the RMG sector alone for two consecutive years -- $52.08bn in FY2022 and $55.55bn in the outgoing fiscal FY23. The outstanding performance disenchants the critics who have doubted the sustainability of the RMG sector.
Conquering post-MFA challenges
It’s not the first time that the RMG sector has faced challenges. The Multi-Fibre Arrangements, or more popularly, MFA, was drawn out by the USA and Europe to impose export restrictions on large Asian textile and clothing exporters. The MFA’s objective was to support underdeveloped countries by giving their products a favoured position in the markets of the developed countries and allowing the developed countries to negotiate with suppliers to protect domestic interests bilaterally.
Agreement on Textiles and Clothing (ATC) of the World Trade Organization (WTO) phased out the MFA on January 1, 1995, which came into completion on December 31, 2005, ushering a new era in global textile and clothing trade.
The post-MFA era was thought to be challenging, given the country was now exposed to global competition. Many experts doubted Bangladesh’s ability to achieve a sought-after export destination given its poor infrastructure and the poor state of backward linkage industry. Bangladesh rose like a phoenix, clapping back at the critics and doubters.
Despite fierce competition from China, Vietnam, Cambodia, and India, Bangladesh became the top gainer in the post-MFA era. Bangladesh experienced exponential growth both during the MFA and post-MFA period, whereby, from 1990 to 2008, Bangladesh became the 7th largest apparel supplier. Bangladesh went on to achieve even higher growth than China and Vietnam -- countries that were the top achievers in apparel export.
Several factors contribute to the mammoth success of Bangladesh. The RMG industry has successfully maintained price competitiveness in the global market. In addition, Bangladesh enjoys duty-free and quota-free access to markets like Australia and Japan, in addition to the US and Europe. The government of Bangladesh invested heavily in building and improving infrastructure and devised various policy supports such as bonded warehouse facilities, duty drawback incentives, cash compensation schemes, and the facility for procuring raw materials. The government also provides industry subsidies to protect and expand the sector. Thus, with lower international prices and cheap labour, combined with adequate policy measures, the garment industry has stayed afloat despite international economic turmoil.
Adapting new technologies
With the 5th industrial evolution looming large, the apparel sector can’t escape from the clutches of technology. The RMG sector has adopted technology to achieve higher productivity. The sector has incorporated business intelligence tools, 3D designs, automation, blockchain technology, etc.
One of the vital reasons behind adopting new technology is to reduce lead time and environmental denigration. As the apparel industry is the second-largest consumer of water worldwide and is responsible for generating around 20% of the world’s water waste, Bangladesh has incorporated nanobubble technology in dyeing to reduce water waste significantly. Chemical, water, and energy usage has been reduced significantly along with ozone and enzyme finishing.
The country has also invested sufficiently into creating a solid backward linkage industry by employing blockchain technology to improve the traceability of supply chains and thus lead an example of responsible sourcing. To ensure a healthy and safe workplace for the fusion of newer technologies, they have discarded old practices. For instance, laser technology is now used in denim finishing to prevent workers from hazardous exposure to previously used potassium permanganate (PP).
Road to sustainability
For Bangladesh, sustainability has borne significance in both practice and outlook. After the tragic Rana Plaza incident of 2013, the garment owners have joined hands to foster a green revolution in the country. In just a span of one decade, the country has become the home to some of the best factories in the world. Currently, 200 factories are LEED certified by the United States Green Building Council (USGBC), and 13 out of 15 top LEED green factories are located in the country.
As the RMG sector accounts for 83% of total export revenue, it has a huge opportunity to contribute to the Sustainable Development Goals (SDG). The country has recently entered into the era of green bonds. A green bond is a type of bond which is issued for environmental projects or a part of the fund will go into environmental or green projects. Since Bangladesh has 73 platinum-graded LEED certified factories, the highest in the world, the RMG sector has immense potential to carve a sustainable industry whereby others will take the lead.
Resilient and competitive
Bangladesh has proved herself to be a formidable champion in the apparel sector. The country has stood the test of time and continues adapting according to the global textile regime. The birth of the RMG sector was due to an internationally “managed trade” regime in apparel. In the 70s, Koreans took advantage of Bangladesh’s reserved status to enter restricted markets, and in the years to follow, Bangladeshi entrepreneurs took up the mantle and marched forward. Eventually, Bangladesh found its footing in the global apparel market.
Bangladesh finished as the highest gainer during the MFA and post-MFA era. The sheer competitiveness of Bangladesh’s apparel industry cannot be ignored. The RMG sector has showcased resilience during the pandemic and was able to avoid the blow and not only emerge unharmed but also contribute significantly to the country’s economy and keep it afloat. The sheer size and resilience of the Bangladeshi RMG sector cannot be vanquished by meagre rumours or labour politics.
Syeda Noshin Sharmily is a freelance contributor.