Meeting the challenges of RMG Industry

Bangladesh is known across the world for its ready made garments (RMG).The country does produce other products but nothing is comparable to garments. The RMG industry has drawn the attention of the world to the capabilities of our entrepreneurs. In terms of employment, this industry employs around 4.4 million workers --mostly women. Garment is responsible for about 80 per cent of the country's export earnings. The industry also has huge spill over impact on many other sectors such as banking, insurance, shipping, transport and ports. A bright future is awaiting Bangladesh's garment industry provided it meets certain challenges for its sustained growth.
At present, the volume of the global garment trade is estimated at around $ 450 billion. It is predicted that the global apparel market would be $650 billion by 2020. It means that a fresh demand for $ 200 billion will be created within the next few years. It is expected that Bangladesh would gain a considerable chunk from this new demand provided the industry overcomes the challenges. The challenges for the Bangladesh garment industry are mostly domestic. With a $25 billion export turnover in the last fiscal, Bangladesh's apparel sector is now ready to take the next giant leap.
Exporters have hosted an apparel summit with twin objectives to hit $50 billion garment export by 2021 and to restore the sector's image that was dented by incidents of fire and factory collapse.  The three day apparel summit has brought together retailers, trade body leaders, policy makers and scholars, especially from the US and the EU-- the two main export destinations of Bangladesh garments. Bangladesh is the second largest apparel exporter after China. The country now enjoys a 5 per cent share of the global apparel business. Bangladesh will have to grab another 3 per cent of the global market to reach the $50 billion export target by 2021. While opening the summit the prime minister called upon the international retailers to raise prices of the garment items they buy from Bangladesh. Rise in garment prices will improve the living standards of the workers who will be encouraged to improve their productivity.
A coordinated work plan is needed to address the challenges of the garment sector. The government and the BGMEA will have to jointly work on this plan. Experts have to sit down immediately to work for the plan. Lots of inputs have come from the apparel summit. Once the plan is finalised, work must start on implementations. Implementation will be in phases. Strict monitoring would be needed to oversee implementation.
Political stability is a big challenge for the growth of any industry. The garment industry has become the worst sufferer during the political unrest in recent past. Timely shipment is not possible when there is turmoil in the country. Timely shipment has to get top priority.
Labour management is another challenge that the garment industry needs to address. While the industry has to show total respect and commitment to uphold labour rights, stakeholders have to be farsighted and courageous enough not to give in to any undue and illogical pressure from outsiders. Government officials, entrepreneurs and labour leaders should have a consensus on the rights of workers as well as the rights of protecting businesses.
The garment industry now needs skilled human resources in terms of both skilled workers and mid-level management. A large number of expatriates are working in mid-management and higher positions in our garment industry. The industry is yet to attract a large number of brilliant youths who are entering the job market. Very few young graduates from the best institutions are interested to work in the garment industry, despite the importance and contribution of the RMG industry to the country's economy.
The Prime Minister opened the Centre of Excellence for the Bangladesh Apparel Industries on December 7. This is an initiative to create a skilled labour force for the export oriented industry. Based in Ashulia, the centre will help meet the sector's need for skilled labour. In a hugely competitive global market, the skills and productivity of the workforce must be strengthened. This is an example of how the private and public sectors can join hands to meet the demands of the industry.
China, India, Sri Lanka, Indonesia, Vietnam and Cambodia are the competitors of Bangladesh in the garment sector. Rate of interest is low in these countries compared to Bangladesh. The government is reportedly considering this issue. Some solution may emerge in future. Service charges are also very high in Bangladesh.
Shortage of gas and electricity has been adversely affecting the RMG sector. While new enterprises can not emerge due to lack of gas connection, production in the running factories is hampered due to low pressure of gas and load-shedding of electricity. Cost of production is also a big challenge for its growth. Over the last few years, utility and service charges have increased manifold and the minimum wage was increased. But to keep pace with increased cost, productivity and efficiency of the RMG factories have not improved.
Experts feel that in order to reach an export target of $50 billion by 2021, there is no alternative to infrastructure development. An investment of Tk. 100.00 billion may be needed in next ten years for infrastructure development. Infrastructure is the biggest problem. Energy adviser said that it will not be impossible to double power production in next few years.
Fixing safety flaws is the need of the time. Bangladesh may become the largest garment exporter if it can overcome certain challenges, including workers' safety, which came to the fore since the Tazreen Fashions fire and Rana Plaza collapse. There are real challenges but these can be overcome with commitments from the government, factory owners and all other stakeholders
The Alliance of the US and Accord of the EU have so far inspected about 2,000 factories. These two organisations have identified a large number of problems, most of which are not easy to rectify in a short time. Solving these problems towards ensuring safe environment in factories would require Tk 200.00 billion. This is a big challenge. Retailers should make a sizable contribution in order that the sector is rendered free from the numerous problems it is faced with.
 Relocation of garment factories outside Dhaka and Chittagong is also a challenge. Garment factories have sprung up in different areas of Dhaka and Chittagong. These factories need to be shifted to garment villages with required infrastructure.
Media must be a partner and play a constructive role in helping the garment sector earn $50 billion in annual exports by 2021.The sector needs support from both the local and international media. Media is proud of the achievement of the garment sector. The sector has played a fantastic role in the evolution of Bangladesh in the last three decades. BGMEA has to develop a capacity within the organisation to interact with the media.
Challenges mentioned above have to be resolved if we want to achieve the target of garment export of $50 billion by 2021. Authorities have to outline the manner in which the challenges will be met.

The writer is an economist and columnist.

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