Over the last 35 years our garments industry- both woven and knit- has become a sector that we can be proud of. It has instilled in us confidence, commitment towards excellence and has also been the biggest provider of job opportunity for millions of workers. The other exceptional aspect has been the fact that the vast majority of the nearly four and a half million persons in its work-force are women. This has in its own way helped in the empowerment of women and also given them not only additional dignity within their families but a higher niche in decision making. This has in turn impacted on more girl children being able to pursue education instead of staying at home. It has also helped in making family planning more effective.The pride of Bangladesh- the garment sector
The garment manufacturers in our country are looking forward to 2016 with optimism
Muhammad Zamir
Over the last 35 years our garments industry- both woven and knit- has become a sector that we can be proud of. It has instilled in us confidence, commitment towards excellence and has also been the biggest provider of job opportunity for millions of workers. The other exceptional aspect has been the fact that the vast majority of the nearly four and a half million persons in its work-force are women. This has in its own way helped in the empowerment of women and also given them not only additional dignity within their families but a higher niche in decision making. This has in turn impacted on more girl children being able to pursue education instead of staying at home. It has also helped in making family planning more effective.
Last year, 2015, witnessed the garment sector achieving its highest ever export earnings. Analysts have claimed that this was partially facilitated through the regrouping initiated within this industry as a result of the twin disasters of the Tazreen Fashion fire and the collapse of the Rana Plaza. It led to a crisis and re-examination of how the industry was being run, the safety and security of the workers and how the production process could be made more efficient within a growing competitive world.
The challenges were faced and are slowly being overcome. This has become evident through our performance in 2015. The RMG export growth of 2015 stood 8.21 per cent with export value of $26.60 billion. The final quarter posted a welcome 15.63 per cent growth. In fact, the last month of the year 2015 marked the highest export value in a single month, i.e. US$2.67 billion. The knitwear export in 2015 reached US$12.78 billion with 5.22 per cent growth and woven garment export stood at US$13.81 billion with 11.14 per cent growth compared to the year before. It may be recalled that in 2014, this sector managed to earn US$24.53 billion in exports. According to available data, exports grew phenomenally in the months of October and November, 2015- by 18.4 per cent and 14.74 per cent respectively.
The overseas sales of apparel was however mainly limited to four major destinations- the countries of the European Union (where we gained from the provisions of duty-free and quota free access due to the Everything but Arms principle), the United States, Canada and Japan.
It may be mentioned here that the total export earnings stood at US $31.198 billion during the last fiscal year and that the garment sector accounted for 81.71 per cent of the total.
The World Trade Organization (WTO) has recently released the apparel export statistics of all apparel exporting countries in the world. They have noted that despite all the challenges within the global market paradigm, the world apparel export has grown by 7.33 per cent at Compound Annual Growth Rate (CAGR). It is also being estimated that the world market in this sector might reach US$650 billion. It is now stands at US$483 billion. If this proves to be true, Bangladesh will have a reasonable chance to increase its export in this sector.
Bangladesh has today become the second largest apparel exporting country in the world with 5.09 per cent share of the global apparel export. The basis of this claim lies in the fact that the other group claiming to be the second largest apparel exporter- the European Union with 26.19 per cent of the share of export- is in reality a combination of 28 countries. China in 2014 had climbed to the top spot with 38.61 per cent share of the worlds apparel export, which is worth US$186.61 billion. However, based on global forecast it is being presumed that China might not be able to maintain their current trend of growth in this sector. That suggests that their share might consequently shrink.
It would be pertinent at this point to mention that between 2012 and 2014, Bangladeshs exports in the apparel sector have climbed from US$ 19.78 billion to US$24.58 billion. Compared to this, the data for the same period for Vietnam indicates that they have moved from US$ 14.44 billion to US$ 19.54 billion, India has moved from US$ 13.92 billion to US$ 17.74 billion and Pakistan has moved from US$ 4.2 billion to 4.9 billion. It is being forecast that Vietnam might in fact continue to increase its share and come close to Bangladesh by the end of 2016. Such a situation might emerge because of Vietnam becoming a signatory member of the recently concluded Trans Pacific Partnership Agreement (entered into by 12 countries in October, 2015) and thereby increasing their competitiveness.
The garment manufacturers in our country are now looking forward to 2016 with optimism. Their confidence, according to analysts, has been boosted by three main factors- possibility of shifting of garment business from China to Bangladesh (principally because China is trying to intensify its presence in the more profitable high-tech digital sector and also because the cost of production of garments, especially salary for the Chinese workers has increased), the historically low price of cotton (it is anticipated that in 2015-2016, Bangladesh may import a record 5.75 million bales, a rise of 6.5 per cent from the year before) and the restoration of the confidence of international retailers in the structural soundness of the apparel factories in Bangladesh.
This belief has been boosted by the fact that the engineers of Accord and Alliance, the two international factory inspection agencies have found less than 2 per cent of the apparel factories in Bangladesh to be risky. As a result of the inspections carried out with the inter-active cooperation of the BGMEA and the BKMEA, the factory owners are now more cautious, and the media has reported that many have shifted their units from Dhaka for safety reasons out of their own volition. The factory owners have also spent millions of US Dollars in this regard.
The apparel makers have also been heartened by the demand of our products from new destinations this year. It accounted for an additional export figure of about US $5.5 billion. The better functioning new export destinations included Australia, Japan, South Korea, Russia, Brazil, Chile, China, India, Turkey, Mexico and South Africa.
One has to however remember that our apparel industry still has some challenges that will have to be faced and overcome. Analysts have drawn attention to the fact that though Bangladesh exports more than 30 types of products, nearly 78 per cent of this sectors earnings, at this point of time, originate from our shipment of only five basic items- shirt, trouser, jacket, T-shirt and sweater.
It is this scenario that has to be overcome. We have to move upwards not only through value addition but also try to enter the niche up-market mid and high-end value-added designer apparel sector items (lingerie, suit and sportswear). It is consequently encouraging to see that some of our sweater makers are now installing Jacquard machines for more value added items.
We also have to make more effective efforts towards product diversification and discover new markets. We also need to focus on removing the shortage of specialized skilled workforce. We also have to improve our infrastructure, facilitate greater energy availability and encourage our entrepreneurs to be willing to take risks.
We need to not only diversify our exports but also try to emerge from this confinement of being dependent on just five export items. In case something goes wrong it can spell national disaster. We have to address these issues with great seriousness if we are to achieve the US $50 billion export target of this sector by 2021. The decision in the latest WTO meeting to relax the Rules of Origin expectations for Least Developed countries should help us in this regard.
Within this emerging context, it has therefore been encouraging to know that the BGMEA has taken a mega-plan to build the Chittagong Apparel Zone in that Port citys Kalurghat area. It is expected to house garment factories with modern facilities. The BGMEA will try to achieve this goal with the cooperation of the Chittagong City Corporation (CCC). The BGMEA is also trying to create for its members a planned mega economic zone in Mirsarai within a demarcated 15,000 acres of land. These are indeed laudable initiatives. This, it is expected, will help to re-locate some of the apparel industries who have had to cease their function because of lack of security and safety clauses as expected under the Accord and Alliance inspection regulatory regime. Our government should assist this process and extend all necessary support to make the it a viable, functioning exercise.
Recent information released in our media has also highlighted another important issue- that of foreigners working in our apparel industry. It appears that these foreign nationals are employed in senior management positions as production managers, merchandisers, senior sewing operators, cutting masters, designers and washing experts. Most of them come from India, Sri Lanka, Pakistan, China, South Korea, Taiwan and the Philippines. Apparently, the Board of Investment, the Bangladesh Export Processing Zones Authority and the Department of Passport and Immigration are responsible for issuing their work permits. Last year, according to a report published in the Daily Star on 31 December, 2015, they repatriated nearly US $5 billion for their technical contribution in the apparel and some other associated sectors.
We do not seem to have the correct figures of how many foreign nationals are involved in the apparel sector. That is something which needs to be addressed urgently. That will enable us to ensure their security. One does not also know if they are paying tax on their income. That should be corrected. In addition, the apparel industry should take necessary steps whereby our younger generation can have hands-on experience from such specialists. We have to grow our pool of technical people and the presence of these experts will and can help us. They can also be catalysts for more foreign direct investment in this sector and other associated areas. They are our precious asset and must be treated as such. However, we need to maximize the return from their presence.
The writer, a former Ambassador, is an analyst specialized in foreign affairs, right to information and good governance.He can be reached at
