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Dhaka Tribune

An apparent leap in apparels

Our apparel industry has the potential to become even better

Update : 23 Oct 2018, 11:02 PM

The apparel industry is the solid testimony of the resilience of Bangladesh as a nation. Since the beginning of our journey in apparel manufacturing almost 40 years ago, the industry has faced many crossroads and overcome those quite successfully. Particularly the tragic building collapse at Savar shook the whole nation, and brought the country under the global spot light. After this unfortunate disaster, it was predicted that the future of the RMG industry would end there. 

But the darkest clouds also have silver linings. The journey of transformation toward sustainability has been phenomenal, and the industry has once again proven its resilience, thanks to the brands, retailers, ILO, and other development partners for the tremendous support. 

The recent export performance of the industry also reveals the silver lining. If we look at the export data of the last five fiscal years (July to June) we see that in FY 2012-13, RMG export was $21.51 billion, while in FY2017-18 export reached $30.61bn. 

The compound average growth rate during this period was 7.31%. In FY 2012-13, our export growth was 12.71% but in the next fiscal year the growth increased to 13.83%, followed by 4.08% in FY 2014-15 and 10.21% in FY 2015-16. The export growth in FY 2016-17 was the lowest export growth in 15 years which was as low as 0.20%. 2017-18 fiscal year saw a come back as the sector registered 8.76% growth. The export growth in the first quarter of the current FY 2018-19 is 14.66%. Altogether, it was a challenging period, yet one of huge turnaround. 

Looking at the statistics of WTO shows a picture of faltering global apparel trade, especially since the year 2015. The trend in global apparel trading was steadily growing till the year 2014, followed by a sharp depression in 2015. In 2014 the global apparel export was $483.28bn which declined to $445bn in 2015 and a further fall was recorded at $443.71bn in 2016. 

So it was not at all a usual time to retain the market share given the uphill struggle our industry was facing. However, the global apparel export had a slight recovery in 2017 as the amount reached $454.47bn, but still shows a significant downward trend in apparel demand in the world. Being the second largest apparel exporting country, this slowdown has certain impact on our industry, and in its competitiveness due to less demand.

After the Rana Plaza incident, the RMG sector faced numerous challenges in the area of workplace safety. Already a good number of factories had closed down. Initially, it looked like the global buyers were not too confident due to safety concerns and our capacity to deal with the occupational safety and workers’ rights issues. 

However the progress the industry has made in last few years, and the way Bangladesh government has responded to the situation is unprecedented. Through the collective efforts of all stakeholders, Bangladesh has emerged among the safest industries in the world, with most factories inspected, and the safety reports made available in the public domain. Even the global apparel brands and retailers mention Bangladesh as one of the most sustainable places for sourcing apparel at the moment. According to a survey by McKinsey, Bangladesh was the most preferred apparel sourcing destination after China. 

The rights and dignity of workers are priorities for the government, and for the industry at large, because there is no industry without the workers. The government recently increased the minimum wage to $96, which is more than many other developing countries exporting apparel. In addition to the government, industry and worker organizations are working hand in hand to ensure a harmonious relationship.

In addition to safety, Bangladesh RMG industry is also leading environmental sustainability in the apparel supply chain, as we have the most number of LEED certified green factory buildings in the world. We have 73 LEED certified green factory, of which 20 are Platinum rated. More importantly, another 300 factories are preparing for the same.

Moreover, Bangladesh government has taken an initiative to establish 100 Economic Zones by the year 2030. The next generation factories will be housed there, so the industrialization in Bangladesh is now taking a turn towards a more planned, organized, and clean direction.

Looking at what the sector has achieved so far, and the prospects we have in the global market, it clearly indicates that the industry is ready to take a big leap forward. The RMG industry has a huge opportunity to grow further, and continue to contribute to the overall economic growth of the country. While our share in the global apparel market was 4.5%in 2012, in 2017 it has reached 6.46%. 

But now is the time to rethink the business model. The fourth industrial revolution is changing the landscape of the global economy, and Bangladesh cannot afford to be complacent. The use of modern technologies is vital to enhance our competitiveness. Innovation and diversification are of equal priorities if we are to enhance our share in the global market. And the positive sign is that our factories are preparing for it and increasingly adapting themselves. 

We only have 6.46% share in the global market of apparels, and the sector has huge potential to contribute further to the vision of the government set for 2021, 2030, and 2041. With the help of all stakeholders, the sector can continue to play its enormous role to our economy, and hopefully will be the most reliable apparel sourcing destination in the world. 

Faruque Hassan is Senior Vice President, BGMEA and Managing Director of Giant Group.

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