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RMG sector needs government help

  • Published at 06:06 pm December 13th, 2013

The finance minister has assured leaders of the BGMEA, BKMEA and BTMA that the government is looking at measures to support apparel makers affected by the political crisis.

Many of the measures being sought by the industry bodies relate to short to medium-term financing needs. With the supply chain enduring massive disruption, cash flow is tight so interest waivers and financial support are the most urgent priorities for many factory owners.

It is still important however to keep developing a long-term strategy. The industry associations have rightly asked for financial incentives to explore new markets and for measures such as reducing tax at source. These need to be considered as well, because even without short-term disruption, Bangladesh’s RMG industry faces increasing challenges from competitors as well.

For instance, the combined value of apparel exports from India and Vietnam is expected to be over $30bn this year. As established competitors to Bangladesh’s apparel sector, they have been in a good position to attract new orders as buyers have been deterred from visiting the country this year. And this is without considering the challenge posed by countries such as Myanmar which have been rapidly attracting investment.

RMG entrepreneurs need help to ensure that they can keep growing exports, while also managing to invest in commitments to improve factories and working conditions.

A long-term strategy is needed to further develop the sector. The government should work with industry owners and buyers to identify and to try and fill investment gaps.