The Dhaka Chamber of Commerce & Industry (DCCI) recently arranged a seminar on the export readiness of the country in the post-LDC period. The main presentation made by Dr. Selim Raihan, executive director of SANEM, hit the nail on the head when he had stated that "Bangladesh fetched $823 million from the nine new products in 2021 while Vietnam earned $145billlion, Thailand $6.61 billion and India $6.12 billion respectively". It is time to face the reality, no matter how much we like to indulge in self-glorification about how the country is No.2 in the global apparel trade. The 15 years period in question (2006-2021) saw continuity of government and a lot of progress has been made in terms of infrastructure development and power generation. Equally important is that the focus had remained on readymade garments (RMG) and the production of basic apparels.
Only recently, has the industry started to diversify its product line. The competitors have not been sitting around idly, as one can see from Vietnam's experience. Three other nations have been highlighted i.e. Vietnam, Thailand and India along with Bangladesh in terms of how many items have been added to the export basket over this period. Vietnam leads the pack with 41 followed closely by Thailand 31 and although India trailed both with 16, its number was nearly double that of Bangladesh which had nine.
According to a report published in this newspaper earlier this month, RMG exports to the US market had fallen by as much as 25 per cent in the last fiscal. When there's a downturn where people are struggling to pay their mortgages, to eat, meet utility bills, fashion takes a backseat. The high inflation and rising interest rates are indeed, a global phenomenon, and this is reflected by overflowing inventories amongst United States' (US) retailers.
The US alone represents the single largest export market for Bangladeshi apparels. So, any downturn in demand over there will have serious consequences here. Official figures from the Office of Textiles and Apparel (OTEXA)'s latest released data of February 8 show RMG exports witnessed a 25.07 per cent drop on year-to year basis. The US market is unique in the sense that the RMG industry never enjoyed GSP facilities over there. The terms put forward by the US to the industry has at least been met halfway thanks to the upgrading of physical safety standards over many years. The labour issue is another matter and it is difficult to determine precisely when it will be addressed, particularly when the industry faces daunting challenges.
With more than 80 per cent of annual exports out of Bangladesh coming from this sector, policymakers and industry have wasted more than a decade on two fronts: First, there was no attempt to diversify the economy. All the incentives, or at least the bulk of those went to the RMG sector. Second, as is now amply clear, (and on which RMG leaders also concur) diversification of product portfolio hadn't happened as a matter of concerted marketing strategy. The RMG sector has shown itself to be a resilient one. Unfortunately, it is hamstrung by the policy regime and the overwhelming confidence in itself that it can withstand the downturn is misplaced. While it may be easy for some owners to keep factories shut, what the millions of workers will do to put food on the table? There are no easy answers to such troubling questions.
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