According to a report carried in this newspaper, knit apparels now contribute some 47 per cent of total apparels (RMG) export from Bangladesh (2023 data). In the last fiscal, Bangladesh exported RMG worth US$55.78 billion, of which $26.55 billion came from knitwear products. This is a jump from $24.71 billion in 2022, which means Bangladesh earned an extra $1.84 billion from this subsector. Interestingly, in FY22, knitwear's share of export was 54 per cent and in FY23 it had come down to 47 per cent, and yet, the net value of export had actually risen - not fallen.
There are several things going for knitwear manufacturers in the country. Supportive government policy like cash incentive has helped entrepreneurs to invest more in the sub-sector with greater confidence. The backward linkage to make this particular RMG segment has also assisted in its growth. Reportedly, "changing patterns in fashion and buyers' preference for quick delivery of products also pushed buyers to source knit items from the country", which is good news during bad times when news of global economic downturn is not going away. The major items that are being exported to various destinations in the European Union (EU) include amongst others, T-shirt, jersey, pullover, and trousers (men, women, boys).
Of course, the sub-sector is not without its problems. Knitwear manufacturers contend that they require easier banking procedures in order to get loans for the expansions they have envisaged. Then there is the question of import of raw materials (fabric). Given the current situation with the foreign exchange, it is creating problems for every industry to open requisite letters of credit (LCs). The situation is not going to get solved anytime soon and this RMG subsector will have to make do like other sectors of the economy. That is easier said than done of course. As per data furnished by the Bangladesh Textile Mills Association (BTMA), domestic producers (spinners) can meet up to 90 per cent demand for knitwear manufacturers. There is a gap between demand and supply and that is met through imports.
This is a situation that cannot be addressed in the short-term and the sector will have to do with what it has. But the promise of the knitwear sub-sector is not lost upon anyone. Industry insiders attribute the flexibility of knit manufacturers to adapt to fast-paced changes in the global fashion industry as a major strong point which has allowed these RMG producers to reduce lead times to export destinations. This is being reflected in getting more orders for items like sportswear and technical wear as manufacturers can use existing facilities to churn out orders received in record time.
The ability of Bangladesh RMG sector to adapt to changed circumstances is a testament to the industry's ability to weather increasingly difficult circumstances. Had the geopolitical situation been more in the country's favour and the economy been better managed, then things could have been much better for the apparel sector as a whole. There is no shortage of challenges. The latest wage board has been declared (and at various stages of implementation) has increased salaries by as much as 50 per cent. It is time for the industry to gear up in other areas for cost savings, particularly energy. Since the cost of energy will only be going up (and down) in the years to come, the sector will have to invest (out of past profits) to become less resource-hungry. In that area too, the RMG sector has been making waves. Literally hundreds of "green" factories are now established with more on the way.
While it is easy to cry wolf about what doesn't work in this country, there are some things that are positive. Yes, labour rights have not been the best in Bangladesh but things are improving slowly. Questions about the rights to unionise are sticking points between workers and industry, and here too things are beginning to change. Any change is painful, but there is no way to simply wish that external pressures on these issues will blow away. These demands are here to stay. The demand to a "living wage" will always remain.
One major RMG producer has recently shared privately his worry about whether a portion of his manufacturing base would have to be closed down because of the rise in wages. The cost of power apparently has become difficult to bear. There are solutions to the power situation. Some companies (like Ananta) have invested heavily in rooftop solar power which is not only saving a lot on utility bills, but the excess power is being sold to the grid through net metering arrangements. So, to state that everything is lost is the wrong mindset. Solutions are there if available technologies are made best use of. What is missing is perhaps the desire to take decisive steps to find ways to cut costs by investing own resources.
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