The readymade garments sector's share in global markets (RMG) has reportedly tripled in size over the last seventeen years. As per data from the World Trade Statistical Review 2023 shows, the country's share has increased from 2.5 per cent in 2005 to 7.9 per cent in 2022. While there are many reasons to rejoice, one should not forget that Bangladesh had lost its 2nd position in the world of apparels to Vietnam a few years ago. And although Bangladesh has retaken its 2nd position, this is hardly the time to sit on past laurels and face certain realities in the world of fast-paced geopolitical challenges that affect all large RMG players, including Bangladesh.
For the past few decades, the country has stuck to fulfilling global orders of RMG in the lower rung of clothing. Also, Bangladesh remains heavily invested in the traditional markets of the United States (US), European Union (EU) and the UK. The fact that a latecomer like Vietnam may not possess the manufacturing prowess Bangladeshi manufacturers have, that country chose to go for higher value clothing and hence have been able to outmaneuver Bangladesh in terms of RMG value exports.
Yes, Bangladesh has reached US$45 billion in export value. But world's preferences for manmade fibers (MMF) is an area which needs to become the focus for Bangladeshi RMG manufacturers to invest in should it wish to retain this position. Although pundits keep harping on about international tug of war between China and the US as something that will work in Bangladesh's favour, this is not a given. The Russo-Ukrainian war has been the largest upset in international relations in many, many decades. It has caused severe rise in cost of living in the very markets where Bangladeshi apparels are exported. And although industry experts keep stating that the country supplies low-end (predominantly cotton) wearables, the fact is that the market for MMF is increasing at double digits as opposed to cotton-based RMG.
While the RMG sector's representative bodies have been doing international trade fairs in new markets in an effort to introduce Bangladeshi products, the country is not moving fast enough on other fronts, like concluding free trade agreements (FTA), which will become immensely important as Bangladesh moves towards middle-income graduation in a few years' time. Worker productivity is an issue but that can be managed with the introduction of new technology. Reducing lead time from factory production to shipping is another area where Bangladesh needs to work on if the country wishes to remain competitive.
But as pointed out by industry insiders, it is necessary for Bangladeshi RMG producers to take cognizance of the move towards MMF and customers' preference towards synthetic materials over natural ones. These trends in international markets need to be taken seriously and it brings one back to the question of diversification of the RMG sector's product portfolio. Just because the knitwear segment can reportedly avail 90 per cent of fabrics and yarn from domestic markets, does not automatically translate into bigger orders if the taste preference of foreign customers shift away from what the RMG sector has to offer.
Beyond these, the RMG sector has seen its energy costs double and also face intermittent supply of power to its factories. This does not bode well for the majority of producers who cannot produce at optimum level, leading to production delays, which often result in manufacturers having to resort to costly airfreight to meet delivery deadlines. Making available affordable and reliable energy is also another area that must be dealt with for the RMG sector to remain competitive in the world of apparels.
