Apparel Resources: Even as the industry continues to make rapid and all-round progress, what made BGMEA to decide on the innovation centre and how will it fulfil BGMEA’s short and the long-term goals?
Abdullah Hil Rakib: The clothing industry has reached an ‘evolve or die’ stage because disruptive technologies are frequently challenging the conventional ways of doing business. Besides, changing consumers’ appetite and increasing competition in the global retail supply chain made the pursuit for innovation all the more important.
Facilitating a transition towards higher level of competency requires adapting to changing product design, reducing lead time, increasing productivity, adopting latest technologies, minimizing production cost and making manufacturing plants more sustainable. But knowledge is the first and foremost requirement for all of our developmental efforts. With this in mind, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is going to launch the new Centre for Innovation, Efficiency and Occupational Safety and Health at the newly built head office of BGMEA in Uttara, which will work as a knowledge hub.
The preparation of the Center is underway which is expected to open in the early 2022.
Apart from training, the Innovation Center will also act as a ‘Knowledge Gateway’ which will be a network of the knowledge liaise/partners to flow and bridge the latest knowledge and developments pertinent to the industry and its sustainability, and that fits within the scope of the centre.
The centre will also serve as an extended display centre of the collections developed by the centre and by participants from individual factories.
Apparel Resources: The timing of the innovation centre is very interesting… Has the pandemic pushed the initiative or was it in the making for some time?
Abdullah Hil Rakib: Like all the other sectors, global apparel industry has been severely affected by the COVID-19 pandemic. After experiencing a momentous growth from 2016 to 2019, in the preceding year of 2020, global fashion industry faced as high as 93% industry-wide fall in profits. Analysis of the full FY 2020-21 shows that, Bangladesh RMG export has declined to almost all its destinations, i.e. 8.06% for EU countries, 3.05% for USA, and 4.76% for Non-traditional markets in comparison to the last fiscal.
However, the industry seems to have bounced back. The recent retail sales in USA and EU market are encouraging and showing a ray of hope. The global apparel market is expected to reach US $ 842.73 billion in 2025 at a CAGR of 7%. With only 6.8% share of this huge market, Bangladesh has immense potential ahead of her. If we dig deeper into the market share of Bangladesh RMG export, we will see that over the years, the market has been concentrated in few countries. With around 62% share, EU market has always been dominating. But, focusing our shift towards exploring potential markets should be our strategic priority now. The competition will also intensify since we have graduated from LDC and our competitors are getting involved in bilateral and regional trade arrangements, and also improving their efficiency, scale and value-added capabilities. Bangladesh has, so far, been able to secure and maintain its position in the world market following a ‘volume-driven’ business model. While for Bangladesh the opportunity in diversified products and fibre remain largely untapped, the country has significant room to improve in productivity and efficiency compared to its competitor countries.
On the other hand, though the scope, application and adaptability of the fourth industrial still remains at primitive stage, these will be the keys to future sustainable growth of Bangladesh apparel industry. Occupational health and safety, and environmental sustainability will also continue to be the areas of excellence for the industry. Moreover, in Bangladesh there is a missing link between our industry and academia. So BGMEA envisioned this innovation Center to connect these dots for taking Bangladesh apparel industry to the next level.
Apparel Resources: Who are the major stakeholders in this endeavour and what would be their contributions towards achieving the goals that the centre is being established with?
Abdullah Hil Rakib: The structural and interior investments for the Innovation Center would be around US$ 2,50,000. In addition to bearing this cost, the BGMEA will also bear the operational expenses of the centre, including the salaries of its staff. Apart from that BGMEA will also arrange/subsidise fund for the individual programmes of the centre when necessary.
But the major technological and knowledge showcasing at the centre will happen through partnership with technology providing companies, embassies and development partners.
BGMEA is thankful to the WTO cell of the Ministry of Commerce (Mock), Aare Resources Ltd., Danish International Development Agency, University of Southern Denmark and Ahsanullah University of Science and Technology who have already extended their collaboration to the centre.
The centre, however, is still in the nascent stage and we believe that further collaboration from development partners and stakeholders will strengthen the cause further.
Apparel Resources: You have earlier spoken about knowledge gap. Can you explain the major concern areas, and how would CIEOSH help to address those?
Abdullah Hil Rakib: The key features of the Innovation Center will be to act as a ‘Knowledge Gateway’, which will be a network of the knowledge liaise/partners to flow and bridge the latest knowledge and developments pertinent to the industry; managing training programmes including knowledge content, intra-extra-intra liaison and selection for participants and resource persons, developing and maintaining training calendars; undertaking and facilitating special projects to promote innovation, sustainability and transparency in the Bangladesh apparel industry; building the capacity of the industry to achieve excellence in the area of product development; serving as an extended display centre of the collections developed by the centre and by participants from individual factories; and acting as a catalyst to make the bridge between the industry and the academia.
Apparel Resources: Talking of connecting the stakeholders as critical partners, there seems to be some paradox in terms of interest, approach and objectives, especially when it comes to the buyer and supplier. How can these two be brought on same page on the major issues?
Abdullah Hil Rakib: Buyers demand higher value at lower price. Therefore, maintaining optimum productivity level is an imperative now for the manufacturers.
Despite being the world’s second-largest apparel exporter and increasing minimum wages for workers by 381% since 2010, Bangladesh’s low labour productivity compared to competing countries is a cause for serious concern. To increase productivity, what factories need are trained staff and advanced technology. The innovation centre will arrange regular showcase of latest industry technologies by inviting fashion technology providers of home and abroad at the centre as well as progressive factories having best practices and best uses of technologies, which will enable the participating factories and their staff to remain updated about the latest technologies and their knowhow.
Lack of efficiency has a direct bearing on the industry’s low level of product development capacity too. As a matter of fact, still a good number of our factories tend to replicate the designs provided by their buyers. It’s high time we paid more attention to our own product development capacity.
By bringing the industry experts the Innovation Centre will arrange regular training sessions on product development for the mid-level as well as top-level managements of the factories with the aim of ensuring the supremacy of the industry in product development.
Having the supreme product development capacity up in the sleeves Bangladesh apparel industry will be indeed beneficial to fetch more orders and more importantly to remain in a better position in price negotiations with the buyers.
Apparel Resources: One of the main aims of CIEOSH is to elevate the industry to next level by making a paradigm shift in product offerings-from the basics to high-end. What will be the thrust areas in this regard?
Abdullah Hil Rakib: The apparel export of Bangladesh is still concentrated in major five products. Trousers, T-shirts, men’s shirt, women’s shirt and sweater, mostly produced from cotton, accounts for about 73 per cent of Bangladesh’s total apparel export. Though the global market scenario has changed, Bangladesh’s concentration in manufacturing cotton-based clothing still remained the same. Previously in the global scenario, the market share of cotton fibre products was 75% and the market share for manmade fibre products was 25%. But, the global market share for cotton fibre products is at present only 25%, whereas the market share for manmade fibre products is 75%. So, a paradigm shift in our product basket from the basics to high end means innovating and adding values exploring Bangladesh’s growth potentials in manmade fibre products.
The innovation will also enable the factories to diversify their product offerings, shifting into man-made fibre products as well as newer products such as jackets, outwear, lingerie, suit, etc., which are still not so common in our production floors.
Apparel Resources: Talking of value addition, the industry is challenged, in terms of availability of MMF. Are there any plans to promote production of MMF locally; bring in foreign investments to bolster capacities?
Abdullah Hil Rakib: Value addition and moving up the value chain is undoubtedly the key for our growth. Over the decade, the world has seen a spectacular growth of the MMF sector in apparel trade. The global share of the synthetic fibres is 63 per cent, and according to an international survey by Lenzing the MMF market will see a steady growth at a rate of 3-4 per cent up to 2024.
As the worldwide demand for MMF is growing, and it is a high-value-added product, we need to take measures to strengthen this sector.
The growth of MMF results from rising demand for MMF-based apparel in fashion industry and MMF has versatile use in end-use categories such as sportswear, leisurewear, women’s dresses, home textiles, carpets and other industrial sectors.
In the spinning sector, around 430 mills are operating in Bangladesh out of which only 27 are producing manmade yarn, in particular, polyester. The production facilities for other manmade fibres like polypropylene, nylon, acrylic etc., have yet to be established in Bangladesh.
According to a report, in the year 2019, the global manmade-apparel trade stood at around US $ 179 billion with Bangladesh holding roughly 5 per cent market share, whereas its main competitor, Vietnam, had a 10 per cent share even as the 27 factories producing manmade yarns in Bangladesh meet only around 20 per cent of the national demand. Foreign investors are, however, eager to set up MMF factories in Bangladesh sensing a huge untapped demand.
Korean textile company Youngone has recently invested US $ 65 million in 3 factories and announced its plan to invest another US $ 120 million for another 2 MMF factories in the Korean EPZ in Bangladesh. I think incentives in producing MMF can lure more FDI into the country as Bangladesh has a strong forward linkage in the apparel sector.
Apparel Resources: With reference to CIEOSH, there are reportedly plans for a pilot programme under supervision of a renowned fashion designer to transform local heritage into high-end fashion pieces with global appeal. Can you throw more light on this?
Abdullah Hil Rakib: Bangladesh has a rich history of cultural heritage including Jamdani fabrics which is one of our GI products. Although the value addition capacity of our local heritage is very high, its potential remains untapped. The centre will facilitate transformation of local heritage into high-end fashion pieces which will help to develop an iconic brand image of Bangladesh.
In this regard, the centre will find opportunities to link local artisans to international retailers for creating business opportunities.
Apparel Resources: The endeavour also reportedly envisions creating a brand story to redefine what it means to purchase from Bangladesh. What are the major challenges towards an effective brand building exercise and how does CIEOSH plan to address the same successfully?
Abdullah Hil Rakib: It will not be an exaggeration to say Bangladesh apparel industry is now one of the safest in the world. The industry has undergone tremendous transformation in the last eight years. The safety transformation has been done through unprecedented collaboration of the global brands and retailers, manufacturers, government, ILO, development partners as well as local and global unions.
A recent survey report by Hong Kong-based supply chain compliance solutions provider, QIMA, has ranked Bangladesh’s apparel industry second in “Ethical Manufacturing” with a score of 7.7, only behind Taiwan. The ethical auditing report covered a wide range of compliance and ethical manufacturing issues, e.g., hygiene, health and safety, waste management, child and young labour, labour practices, including forced labour, worker representation, disciplinary practices and discrimination, working hours and wages etc.
After addressing the safety concerns, the apparel industry of Bangladesh is also making steady strides in sustainability. The highest number of green garment factories in the world is now in Bangladesh. Our country at present is the home of 150 apparel factories which are certified as LEED (Leadership in Energy and Environmental Design) by US Green Building Council (USGBC). Moreover, 500 more apparel factories are in the offing to get the LEED certifications.
The centre will also act as a platform of sharing best practices, inter alia, practicing sustainability and traceability, by the front-runner factories, among the industry peers; which will enable us to promote them in the global stage.
Apparel Resources: CIEOSH also reportedly plans to build capacity of the mid-level management as well as workforce. Can you elaborate more on this, especially with reference to the mid-level management?
Abdullah Hil Rakib: The Centre for Innovation, Efficiency and Occupational Safety and Health (OSH) will strive to extract knowledge about best business practices, most-advanced technology and latest trends of the global fashion industry and inject those ideas into our industry through trainings, workshops and stakeholders’ gatherings.
It will also focus on wider issues concerning the industry such as industrial relations, industrial engineering, productivity, efficiency, human resource development, business ethics and practices, financial reporting, occupational safety and health, and good governance.
Overall, the centre will analyze the current situation, challenges, skills and innovation landscape in the world of clothing industry and recommend ways to address those challenges. To address the sector’s productivity lag, the innovation centre will implement both top-down and bottom-up approaches to enhance efficiency and skills of the mid-level managers of the factories.
This Centre will facilitate certificate courses for facility mid-level management which would help them to ensure efficiency in the facility production process. It will also provide trainings to concerned personnel of the factories regarding some basics but rather important issues i.e. financial reporting, VAT/ Tax management system, customs related issues, etc.
Apparel Resources: In terms of manpower, where do you think the next talent pool, which will help propel the growth of the sector in future, would come from?
Abdullah Hil Rakib: The 4th industrial revolution is building on the digital revolution that revolves around automation, artificial intelligence, internet of things, etc., which is changing the industries and businesses.
While deploying cutting-edge technology, the factories must also enhance the knowledge and skills of workers so that they can handle the latest technologies. To prepare Bangladesh apparel industry for the 4th industrial revolution, within the premises of the Innovation Centre, a one-stop resource centre will be set up in collaboration with Textile Technology Business Center (TTBC) which will regularly organise trainings and workshops under a specialised ‘Knowledge Series’ on cutting-edge technologies and resource efficiency solutions.
The workers will be also up skilled to operate in the era of forth industrial revolution. Workers’ skills development is already underway by the BGMEA under the Skills for Employment Investment Program (SEIP).
The SEIP is now going to be integrated with the Innovation Center to up skill the workers.
Apparel Resources: How do you think the country’s existing education system could be aligned to aptly support CIEOSH as well as the industry’s objectives towards skill development?
Abdullah Hil Rakib: Despite the growing success of the apparel and textile industry, there is a lack of education offered regarding the subject and this gap needs to be bridged if we are to truly become the leading garments superpower.
There is a strong need for greater collaboration between the textile industry and the education sector; examples of such collaborations are many in western countries where we see ideas developed in colleges and universities being shared with the industry.
Strong links have been forged between academia and industry there, with spin-off companies formed in universities often going on to achieve international commercial success. Many of the companies that have now become global leaders such as Google and Facebook were conceived in universities. Bangladesh needs to learn from such examples. The centre is planned to play the role of a catalyst to make the bridge between the industry and the academia.
Apparel Resources: The CIEOSH also aims to build industry’s capacity to achieve the level of excellence particularly through use of disruptive technologies. How would you rate Bangladesh in terms of technology absorption and what major steps needs to be taken in this direction?
Abdullah Hil Rakib: The technological transformation, albeit slow, has already begun in Bangladesh’s textile and RMG sector as well. Roughly 8 per cent of the jobs are automated in the RMG sector, and by 2025 it is expected to reach 25 per cent.
Garment factories here in Bangladesh are increasingly using modern and sustainable technologies. Use of modern technologies, tools, and software are very important when it comes to enhancing productivity and quality.
If we can improve efficiency and cost competitiveness, and reduce lead time through the use of technologies, we will certainly have more business. Currently efficiency and lead time are two major challenges to our industry. We believe that the Center could play a crucial role by turning the challenges into opportunity through re-skilling and up-skilling of our workforce in competent use of technologies.
With about 40 years of experience Bangladesh apparel industry now stands on a strong foothold. We have experienced workforce, strong backward linkage and resilient entrepreneurs who have contributed to grow this about USD 31 billion industry, many a times swimming against the tides and overcoming many challenges.
However, with the nation preparing for elevation from the Least Developed Country (LDC) status, it’s not a time for us to rest on our laurels. Now is the time for us to consider what steps need to be taken to ensure sustainable growth and continued success of our beloved RMG industry through innovation.
In next 5 years we hope to elevate Bangladesh apparel industry to the next level and start the shift of the country’s apparel industry from ‘volume’ driven to ‘value’ driven. We envision the Innovation Center will play the role of catalyst in this journey
