Diversifying RMG products

FE Team | Published: January 05, 2024 21:00:53

The latest import data suggest that manufacturers of readymade garment (RMG) here are increasingly switching over to production of non-cotton apparels in an effort to grab a larger share of the global market for man-made fibres (MMF) garments. That the local companies are making a more determined effort for such a shift becomes clear by the fact that MMF import increased by over 13 per cent in the past calendar year, according to a report published in this newspaper on Friday. It is the right time for the Bangladesh RMG industry to join the MMF bandwagon because the synthetic garment has of late become trendy in the destination countries in the West. The fact that RMG factories here have responded to the shift in demand for apparels augurs well for future of the single largest contributor to the country's foreign exchange coffer. But is it moving fast enough?
This segment of global apparel business has been growing in double digits. In fact, in 2021, the total size of the apparel market globally was US$440 billion, with a $222 billion share for MMF products. Although cotton-based apparels are still dominating with 51 per cent share, MMF is fast closing the gap with its 42 per cent market share. Now the question is, if RMG factories in Bangladesh can move ahead to procure a reasonable share of this growing market. The country remains a net importing nation when it comes to sourcing raw materials to make fabrics and clothes. The country imported 0.21 million tonnes of polyester and viscose fibres over the January - November period of 2023. According to the Bangladesh Textile Mills Association (BTMA) DATA, the volume of import was nearly 14 per cent higher than what had been imported over the same period in the previous year.
It is at this point the role of the government proves crucial. Without the right government policy support, this transition will come in bits and pieces and Bangladesh risks losing out on big orders to competitors. This involves simplifying import procedures at customs so that more entrepreneurs start focusing on the MMF segment. The idea is to generate around $100 billion in sales by 2030 because MMF-related products generally constitute the value-added segments of apparels including, denim, suits, fancy dresses, formal wear, etc. One of the prime demands from the RMG manufacturers has been introduction of 10-per cent cash incentive for MMF-based garment manufacture. Policymakers can introduce such incentives provided manufacturers achieve a certain level of sales. At the end of the day, the private sector will do what is deemed necessary to reach its MMF sales target.
Why the RMG industry should opt for the transition is clear. The MMF shift is not a threat to Bangladesh RMG, rather it would help diversify its product base. The country has both the economies of scale to produce vast quantities of apparels and it has shown enough potential for survival in adverse conditions. For instance, Bangladesh RMG companies pay a 15 per cent duty to gain access to the US market and yet it has a strong foothold in that market. At a time when global economic downturn has sapped the demand for cotton-based products, the uptick in MMF-based products comes as a boon.