We need to actively pursue opportunities to further our textile manufacturing capabilities
Since its foundation, the Bangladesh ready-made garment sector has enjoyed rapid expansion, reaching an audience of international buyers and contributing to 83% of our nation’s GDP.
The sector has set itself ambitious growth targets for the 50th anniversary of the country’s independence in 2021, aiming to achieve $50 billion by that date.
It’s encouraging, therefore, to read a recent survey of international sourcing executives, carried out by McKinsey and Company, that identifies Bangladesh as the next “hot spot” for apparel sourcing -- which is definitely borne out by the sector’s growth since the report was written.
What is less encouraging and something that the RMG sector needs to consider, are the five challenges identified by the study, for apparel companies seeking to do business in Bangladesh.
Infrastructure and energy supply, with transportation problems creating delays in deliveries to customers and local suppliers suffering from poor energy supply
Compliance - an area where Bangladesh has taken great strides since the date of the report and in the aftermath of the Rana Plaza tragedy
Supplier performance and a skilled workforce, with the report highlighting the need for suppliers to improve productivity, develop more sophisticated products, invest in new machinery and technologies, and develop a more skilled workforce
Political and economic instability, with half of the respondents expressing concerns in this area, which may affect future decisions on sourcing from the region
The report highlighted Bangladesh’s “noteworthy” lack of natural or artificial fibres and its dependence on imported fabrics, creating sourcing risks and longer lead-times, compounded with the volatility of raw material prices in recent years
It is this last challenge for the sector that I would like to highlight and investigate possible ways that the RMG industry, government, and NGOs can contribute to the expansion in our own raw material supply capabilities.
If we look at the knitted apparel side of the RMG sector, we can see that Bangladesh is largely self-sufficient in the supply of locally produced raw materials for its production needs, but in the woven sector, approximately 60% of the raw materials used are imported, contributing significantly to the lead-time of product being produced and bringing pressure to bear on manufacturers who must bear the responsibility for the purchase and importing of the necessary goods.
Bangladesh currently has 796 woven fabric manufacturers, 31 of which are denim mills and 22 are producing home textiles, with an annual capacity of some 3,850 million metres of fabric. The country is also home to 240 dyeing, printing, and finishing mills, producing a further 3,170 million metres of fabric per annum.
Whilst these numbers are hardly insignificant, it is obvious that the demand from domestic manufacturers of woven apparel is currently far outstripping supply, and we need to be actively pursuing opportunities to further develop our textile manufacturing capabilities.
As a nation, we have a disadvantage in that we have a limited supply of domestic cotton fibres, producing some 128,000 bales of cotton domestically, but importing in excess of 7 million bales per year, and we are hugely reliant on the importation of man-made fibres (including polyester, viscose, and Tencel) which are now firmly established as essentials for all areas of the apparel sector as an alternative to cotton, and offering improved functionality and ease of use.
As a nation, we are restricted in the amount of cotton we can produce due to climate, quality, and acreage of suitable agricultural land for cotton growth, plus the all-important need to provide land for us to produce foodstuffs, but we are able to invest in the development of man-made fibres, which are more dependent on plant and factory facilities than Mother Nature herself.
Where will the energy come from?
Another challenge is that of infrastructure and energy supply. For Bangladesh to advance in the arena of producing its own raw-materials, the issue of energy supply is crucial.
Fabric mills rely on a constant supply of water, gas, and electricity to ensure the consistency of fabrics going through the mill. A power outage when fabric is passing through the dye-range, for example, can be catastrophic, and delays in production of fabric due to power shortages impact the flow of the whole supply chain.
Similarly, we need to ensure that if new fabric mills are to be developed, that there is the infrastructure in terms of efficient road systems to allow the transportation of woven goods to the necessary garment manufacturers.
All of the above assumes that we, as a nation, are able to produce fabrics that can compete with those items being imported for manufacture in our country. Here we need to make sure that the required training and development of the necessary skilled personnel is in place -- even if this involves investment from foreign companies or the hiring of foreign specialists to offer the correct guidance.
It is imperative that we are investing in the development of fabric companies that are market aware and have the necessary capabilities to both develop right fabrics, but also have the wherewithal to develop products that both inspire and attract customers - it is not enough for us to copy existing qualities form competitors to offer at a lower price.
What is obvious about the current situation is that the RMG industry needs to redress the balance between imported woven fabrics and those domestically produced.
With 60% of our woven fabric being imported, it means that approximately 45% of our woven apparel production is facing lead-time pressure, as imported goods will incur lead-times of anything between 28 and 42 days (plus delays in delivery or customs clearance and other issues) that manufacturers may face.
Of course, the situation will always arise whereby a customer nominates a fabric form a foreign vendor, but it would be of great benefit to the industry as a whole if these occasions became the exception rather than the norm.
The apparel industry in Bangladesh faces a challenging time over the next few years, but I feel with the correct levels of support and investment, especially in the development of a fully-fledged domestic woven fabric and raw material business, some of the potential problems will be alleviated, which can only be good news for all of us.
Mostafiz Uddin is the Founder and CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo. He is the Managing Director of Denim Expert Limited.