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by Deepak Mohindra

04-December-2019  |  4 mins read

AOB December 2019

We are almost through with more than half of December and it’s just a matter of weeks now before we step into a brand new year. The year 2020 is not merely a new year like any other, but it marks the dawn of a new decade, a decade that is bound to have implications on the bearing of the industry and how it manages to tackle the challenges that are emerging thick and fast lately.

2019, in particular, I feel has been a rollercoaster ride in every aspect. After a tumultuous last couple of months of 2018 that marked widespread workers’ protest, the beginning of 2019 witnessed the industry facing the herculean task of how to manage the increased minimum wages for workers, which was hiked by more than 50 per cent at a go.

Reeling under the incredible pressure of falling profit margins and rising overheads that had made business not a very sustainable proposition for many, the minimum wage hike was nothing short of a bolt from the blue. Having spent crores of Taka towards remediation and achieving sustainability even in these trying times, the combined effect of all these factors had a telling effect on the industry, especially on the small and marginal players, as well as the overall exports.

As per the BGMEA President, in the last 7 months or so, 59 garment factories have gone out of business while around 25,900 workers have lost their jobs. It goes without saying that sooner or later exports would fall a victim, and it did. Bangladesh’s overall apparel exports to some of its major export hubs as well as some non-traditional markets in the first quarter of FY 2019-20 registered negative/sluggish growth. The country’s RMG export plunged in major destinations including EU, Canada and some other non-traditional markets in this period.

The export woes continued further with exports falling by 17.2 per cent Y-o-Y in October, and this after the country missed the export target by 11 per cent in the first quarter of 2019-20 fiscal year.

Even the so-called trade war between USA and China, which was expected to benefit Bangladesh, in contrast seems to have helped the competitors more. As per reports, garment shipments from Vietnam increased by around 10.54 per cent between July and September.

Even as the industry was going through such trying times, emerged a report which highlighted that as many as 39 per cent of garment exporters accepted prices below their production costs for the sake of business relations with international retailers. The continuing trend of falling exports and export earnings seen in light of the report led Commerce Minister Tipu Munshi to maintain that undercutting and unfair competitors amongst the garment makers (in an effort to rope in the buyers) are the major reasons behind the export debacle.

But, now as we step into 2020, I am more than hopeful that the industry would be able to put behind the bad days to write a new chapter, which is more becoming of Bangladesh, the second biggest garment exporter globally. And the new beginning is here already it seems. As per OTEXA data, RMG exports to the USA in January-September of this year grew by 9.96 per cent while the export growth to the market was 14.49 per cent in the first half ( January-June) and 16.12 per cent in the first quarter ( January-March).

Hoping, Bangladesh would be able to replicate the same in all other export destinations in 2020 to mark a new beginning.

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