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Dhaka Tribune

How RMG industry weathered the storm amidst global economic slowdown

According to BGMEA data, 1,168 RMG factory units have become members of the trade body since 2018

Update : 15 Jan 2024, 08:20 PM

Bangladesh's readymade garment (RMG) sector is expanding amid the global economic slowdown, said the country's apparel manufacturers.

They also said that they not only weathered the storm but also emerged stronger, reaffirming their position as a leader in sustainable and responsible fashion.

According to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), since 2018 1,168 RMG factory units have become members of the trade body, where 565 factories became permanent members and 603 factories obtained provisional membership.

Among those units, nearly half of these came in the past two years, as in 2022 and 2023, 596 factories became members of the BGMEA cumulatively, where 278 factories became permanent members and 316 factories received provisional membership.

In 2023 alone, 264 factories – 130 permanent and 134 provisional – received membership of the BGMEA, the data also said.

In the period of last six years, the sector earned export earnings of $32.92 billion in 2018, $33.07 billion in 2019, $27.47 billion in 2020, $35.81 billion in 2021, $45.7 billion in 2022, and $47.38 billion in 2023.

“This isn't just a statistic; it is a testament to the entrepreneurial spirit that fuels our industry,” said BGMEA President Faruque Hassan in a statement.

He also said that amid the slowdown in the global economy and the consumer fatigue in the global retail landscape, this accomplishment stands as a monument to the incredible adaptability of the entrepreneurs.

“As the export growth in the past few years suggests an upward trend in the industry’s expansion, new members are joining our BGMEA family,” Hassan also said.

He also said that they have seen the devastation caused by the COVID-19 pandemic when they lost orders worth $3.6 billion all of a sudden, non-payment, discounts, deferred payment, and shipment plagued the industry.

“Such an unprecedented time we all went through; there was no clear indication about how long it take for the world to recover from the pandemic, how worse the impact would be on the global economy and our trade, and how long we could hold our breath and stay afloat,” the BGMEA chief stated.

He said that their priority was to ensure the safety of the workforce.

The expedited vaccination program for the workers as per the instruction of the prime minister was a very timely initiative for the economy to turn around.

There were challenges and critics, but the indomitable spirit of the industry and resilience prevailed. While the pandemic initially took its toll on exports, the RMG export declined by a massive $6 billion in FY20, compared to FY19.

Challenges

However, he acknowledged that during the past few years, a good number of factories have also closed down due to various challenges.

“These were the impact of the pandemic, the post-pandemic impact on the global freight system and supply chain, the Russia-Ukraine war, and resulting global inflation,” he added.

However, the Israel-Hamas war, the Red Sea crisis, and the fight against inflation are the latest additions and still glaring.

As the advanced economies are taking measures to control inflation, which has pushed the mortgage rate up as well, affecting consumers spending power and retail sales, he added.

According to the industry insiders, during the time, new investors and some established large players joined the race to expand their business.

They also said that some prominent players like Badsha Group of Industries, Pacific Jeans Group, Ha-Meem Group, Sadma Group, and Beximco invested in 2023 to expand their factories.

Among them, Badsha Group has invested Tk800 crore in its Pioneer Denim at Madhabpur, Habiganj, to set up a state-of-the-art unit with a target of $700 million export earnings a year, Badsha Mia, founder of the group told Dhaka Tribune in December last year.

They are building 2 seven-story structures for production, two sheds for storage facilities, and three sheds for dyeing and washing plants while the construction of a five-story research and development building is almost completed.

Moreover, he said, the factory unit will create 15,000 new jobs, its present workforce is roughly 25,000 when it begins large-scale production this year.

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