Despite recent tragedies and existing obstacles, Bangladesh is still regarded as a popular global apparel sourcing destination and have the potential to hit the top of buyers’ priority lists.
There are also predictions that at the 17% average annual growth rate achieved in the last 25 years, Bangladesh need only to elevate its current global market share to 7% from the existing 5% to reach the self-righteous target of $50bn yearly apparel export 2021.
But for that, some key obstacles including infrastructural and productive deficiencies, low worker productivity and safety compliance, need to be overcome.
Prime Minister Sheikh Hasina yesterday told a summit in Dhaka that local and international conspiracies are being hatched against Bangladesh’s apparel sector.
“Bangladesh is the world’s second largest apparel exporting country. Many people do not like this. Envied by the progress, local and international conspirators are trying to destroy the sector. I urge the owners, workers, global buyers and consumers to remain alert,” she said before opening the Dhaka Apparel Summit 2014.
For moving ahead, Bangladesh have to increase productivity, come up with new designs and explore new markets to remain globally competitive, she recommended.
In the HSBC Trade Confidence Index published in September, Bangladesh’s score rose sharply to 141 in 2014 from 103 a year back, marking the second highest in the sample of 23 countries.
The report said the hefty rise was underpinned by strong demand from the West for Bangladeshi garments and textiles. The HSBC index also appreciated the authorities’ efforts to introduce better safety regulations to the garments sector which appeared to have provided an additional boost to confidence.
According to a June-2014 forecast by the United States Fashion Industry Association (USFIA), one of the most respected voices of the US fashion industry, apparel retailing companies are not leaving Bangladesh and are committed to compliance there and elsewhere.
Despite the recent tragedies like those in Rana Plaza and Tazreen, Bangladesh was still regarded as a popular sourcing destination with growth potential.
A vast majority of nearly 77% of the respondents of what USFIA called its “Benchmarking Study” have been sourcing from Bangladesh. More than half of the respondents say they expect to “somewhat increase” sourcing from Bangladesh in the next two years, and 5% expect to “strongly increase” sourcing. Another 15% expect no change in their current scale of sourcing in Bangladesh.
In 2013, US-based global management consultancy firm McKinsey & Company, which has 105 offices around the world, surveyed 29 chief procurement officers (CPOs) at leading apparel companies responsible for a combined €28bn in purchasing volume.
They found that Bangladesh remained at the top of the list of apparel-sourcing markets expected to grow in importance in the next few years. A 2011 McKinsey forecast showed that Bangladesh was on the radar-screen of all European and US apparel buyers and likely to grow nearly three times its current size, that is $45bn, by 2020.
That forecast is well in concert with Bangladesh’s vision 2021 of reaching $50bn apparel export target.
Data from the Export Promotion Bureau (EPB) of Bangladesh shows that in FY1989-90, apparel export volume was only $624.16 million which increased a staggering eight times to reach $4.34 billion in FY1999-2000.
In FY2009-10, export volume increased to reach $12.5bn, marking a 300% growth in these 10 years.
In FY2013-14, the volume exceeded $24bn, marking another 200% growth in just four years.
Shahidullah Azim, vice-president of Bangladesh Garments Exporters and Manufacturers Association (BGMEA), told the Dhaka Tribune: “It is true that we have many obstacles now. But, there is no reason to think that we did not have any hurdles in the past. Still, we have achieved impressive growth in the last few decades.”
He also said with conviction: “I believe that things will only improve in the coming years. We have already taken a lot of measures to ensure workers’ safety and improve productivity. So, hurdles will be always there. But we are very much up to it.”
Hurdles and way out
Yesterday, stakeholders discussed in detail the hurdles facing Bangladesh’s clothing sector on the first day of the 3-day Dhaka Apparel Summit 2014 at the Bangabandhu International Conference Centre in the capital.
“To meet the export target [of $50bn], the RMG sector needs a lot of entrepreneurs, governance, education, workers efficiency, value added products and above all, branding Bangladesh,” said Francois de Maricourt, chief executive officer of HSBC Bangladesh, at the summit yesterday.
Wajedul Islam Khan, general secretary of Bangladesh Trade Union Kendra, said: “It is very unfortunate that when we discuss RMG, workers are kept outside. Workers and trade union are an integral part of the sector. Workers’ participation should be ensured so that they can raise their voice.”
Employers should not treat workers as enemies, said Islam. “If workers do not work properly and do not show their responsibility, then reaching the target will be impossible,” he added.
Regretting the high interest rate of bank loans, Mostafa Golam Quddus, former president of BGMEA, said: “We are in the belly of banks and they are eating us out...We cannot be competitive enough because we are paying more interests than our competitors.”
In reply, Commerce Minister Tofail Ahmed said the government is looking into the matter.
“A comprehensive action plan has been taken to provide all the facilities to the RMG sector,” the minister assured.
Prime Minister Sheikh Hasina yesterday unveiled the curtain of the “International Trade Expo for Building and Fire Safety 2014” and the Centre of Excellence for Bangladesh Apparel Industry aimed at boosting workers productivity through research and development and to chalk out roadmap for the country’s RMG sector.
BGMEA in association with Bangladesh Brand Forum have jointly organised the summit.
