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Bangladesh Garment Industry Undergoing Testing Times

by Deepak Mohindra

14-November-2019  |  4 mins read

AOB November 2019 editorail

Bangladesh garment industry is surely facing a challenging scenario. As per a recent statement by the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr. Rubana Huq, in the last seven months, around fifty-nine garment manufacturing units had to shut shops rendering around 25,900 workers jobless.

What concerns me the most is that a majority of these factories were small and medium enterprises, which failed to live up to and maintain the requisite compliance standards and pay their workers, keeping with the stipulated wage structure that underwent a substantial hike earlier this year.

What’s more, on the export front, the country witnessed a decline in overseas shipment while on the contrary, most of its competitors fared relatively well. In the first quarter of the current fiscal year, garment exports from Bangladesh dropped 1.64 per cent year-on-year to US $ 8.05 billion (when earnings from the sector fell 11.52 per cent short of the quarter’s target of US $ 9.10 billion), while on the other hand, garment shipment from Vietnam increased by 10.54 per cent (between July and September), Pakistan by 4.74 per cent and India by 2.2 per cent.

The poor show by Bangladesh on the back of faltering price points that have adversely impacted inflow of investment, complicated further by its inherent weakness on product diversification front, rise of online businesses, large scale closure of retail outlets and a 1.2 per cent fall in global apparel consumption. This has made the BGMEA Chief observe that the sector would continue showing negative growth in the coming months, which might very well lead it to lose the coveted tag of the second biggest garment exporter globally to Vietnam soon.

To tide over this grim situation, the apex garment makers and exporters’ body has submitted a set of proposals to the country’s central bank (the Bangladesh Bank) for the revival of the garment sector including devaluation of the local currency by Taka 2. It has also called upon the Government for one per cent incentive on exports with immediate effect, doubling the loan rescheduling period for the existing 133 sick garment factories, fund allocation for modernisation and tech upgradation of factories, and retrospective effect of 0.25 per cent source tax from July.

Backbone to the country’s economy and the world’s favourite sourcing hub, the current situation of the garment industry is undoubtedly a matter of grave concern not only for the Bangladesh Government but also for the entrepreneurs involved in apparel manufacturing and the massive workforce that depends on the sector for its bread and butter. It is an equally worrying development for all other stakeholders including the global buyers/labels and brands, for all of which, Bangladesh has long been catering to their requirements, competitively and efficiently.

It is now the responsibility of all to join hands and put up a combined front to counter the challenges that the industry has been braving successfully for long before it becomes a case of ‘too little, too late’.

After all, any adverse impact on the Bangladesh readymade garment sector is bound to affect the business of garment exports and retail globally, and I am sure nobody would like to see that happen, even if it is in their own interest.

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