Bangladesh eyes $20bn in garment exports
Bangladesh enters 2013 with a firm footing as the world’s second largest garment exporter, raising hopes for a new wave of business despite turbulent times in parts of the globe.
The World Trade Organisation declared Bangladesh as the second largest RMG exporter after China in 2010-11 when the country’s export grew 43.36 per cent year-on-year to $15.66 billion in spite of global recession in 2007-2008.
Bangladesh retained its position in the following fiscal 2011-12 by exporting garments worth $19.09 billion. And the outlook for the fiscal 2012-13 is set to exceed $20 billion.Bangladesh now claims 4.8 per cent of the global RMG trade of $412 billion.
According to McKinsey & Company, an international management consulting firm, Bangladesh’s apparel exports will reach $36 billion by 2020.
Some key market players believe that the country’s potentials are even greater.
But these prospects appear to have been shaken by one fire tragedy in late November at Tazreen Fashions Ltd, where 112 workers were killed. This single incident exposed inadequate fire safety and poor working conditions that still exist in many factories.
The incident was widely covered worldwide mainly because of Bangladesh’s position as the number two apparel exporter. The buyers are now pressing factory owners to improve working conditions, hike wages of workers, and ensure labour rights and other compliance issues.
Following the event, many international non-governmental organisations campaigned for restricting purchase of Bangladeshi garments until the garment makers here ensure workers’ safety and labour rights.
The apparel sector may face some hurdles this year unless the issues of proper working environment, better wages and labour rights are resolved.
Exporters here still remain hostage to large-scale buyers, who always try to pay the lowest possible rate for apparel items. The garment makers need to persuade these buyers to pay more so that they can address the compliance issues at home.
In order to retain its position, Bangladesh has to ensure adequate supply of gas and power, make available industrial lands, combat corruption, improve infrastructure and port efficiency, ease traffic congestion and develop skilled manpower.
Several factors such as availability of cheap labour, quota facility, cash incentives against export and entrepreneurial skills have helped the RMG sector grow since the country’s entry into the global market. Bangladesh enjoyed quota-free status till 1985.
Following the imposition of quota restriction by the US and the EU, Bangladesh with enough manpower utilised its allocated quota to the full compared to neighbouring India, Pakistan, Sri Lanka and Nepal.
Bangladesh managed to supply garment items to international buyers at competitive prices without having two important basic requirements — cotton and machinery.
Now, Bangladesh is not only a supplier of basic garment, but also a major destination for high-end apparel items.
The strength of the country’s apparel sector is well understood through its ability to supply high-end items to famous global brands such as Hugo Boss, Adidas, Puma, Tommy Hilfiger, G-Star, Diesel, Ralph Lauren, Calvin Klein, DKNY, Nike, Benetton and Mango. Currently, more than 30 per cent of the total RMG export is high-end products.
The primary textile sector also saw a wave of investments for increasing demands for fabrics.
The sector with a total investment of billions of dollars is now capable of supplying 90 per cent of fabrics for the knitwear sub-sector and 40 per cent of fabrics for the woven sub-sector.
It took three decades of hard work for the country’s garment sector to achieve its position today.
The journey started in 1978, with a shipment of 10,000 pieces of men’s shirts worth 13 million Franc to a French company by Reaz Garments Ltd.
Desh Garment Ltd, the first fully export-oriented garment factory of the country, entered the global market the following year.
In 1980, South Korean Youngone Corporation formed the first joint-venture garment factory with a Bangladeshi firm, Trexim Ltd.
The number of garment factories in the country rose to 587 in 1984-85. With the arrival of many international buyers, the figure jumped to around 2,900 in 1999.
In 2005, Bangladesh with an increased number of production units became one of the 12 largest apparel exporters in the world.
Now, the country has more than 5,500 woven garment factories, 1,700 knitwear factories and 1,300 spinning, finishing and dyeing factories.
At present, the sector employs 3.5 million workers, 80 per cent of whom are women.
The country’s 60 per cent RMG products enter the EU, 23 per cent goes to the US, 4.8 per cent to Canada and 12.1 per cent to other destinations worldwide.
According to data of Export Promotion Bureau, the RMG sector’s contribution to the country’s export was 3.9 per cent in fiscal 1983-84, which now stands at nearly 80 per cent.
The country’s banking and financial institutions, and insurance and services sectors are largely dependent on the RMG sector for their businesses.
Workers for Malaysia: The year 2012 ended on a high note for the Bangladeshi overseas labour market. The country received a formal request from the Malaysian government for 10,000 workers. This major labour destination had been closed to Bangladeshi workers for four long years.
The signing of a formal Memorandum of Understanding between Bangladesh and Malaysia in 2012 paved the way for a state-to-state recruitment process, and this is the first lot of 10,000 being taken with the remainder to follow in due course. It could be a test-case to see whether the recruitment process has been streamlined as per requirements of the Malaysian counterpart.
The plan is to register 35,000 workers from Dhaka, Barisal, Rajshahi, and Rangpur divisions and through lottery select 10,000 successful candidates. Selected candidates would naturally have to qualify for work on the basis of health check-up before receiving confirmation through cell phone messaging. The declared cost per worker stands at 40,000 taka ($500).
The selection of workers will be done under a quota system based on the demographic map and a government official would monitor registration and selection process at each registration centre.
Undoubtedly, this is a whole new method of recruitment the government is embarking on. This is an area in which it has no prior experience to count on. It involves a lot of logistical challenges such as computerised online registration, physical monitoring, and so on. If successful, it could pave the way for other such agreements in new international labour markets.—Asia News Network/The Daily Star