New recession and garments sector

Morshed Ali Khan It is high time for Bangladesh to diversify its export market for garments products by progressively giving up its reliance mainly on some western countries. Some successes on this score have been witnessed recently. But much remains to be done before the expected second round of recession hits the western economies with greater force. This is more so because the longer western economies remain in downturn, along with reduction in state supports for people, may translate into much depleted disposable income. Then the present typical instinct of throwing away a used T-shirt for a new one after only, say, a month, could change to clinging on to it for longer periods. In those circumstances, Bangladesh's garments sector could feel the pinch as the grip of economic hardship in buying countries becomes tighter. For its part, Bangladesh could largely avoid the effects of the first global recession in 2008 because of its relatively insular position in the global economy or having fewer linkages with it. Whether this time round the country can weather the looming European economic crisis is difficult to judge at present. Bangladesh produces apparels mainly for low segments of the market, the demand for which is usually inelastic. People of modest means in the West will likely continue to buy the cheaper Bangladeshi apparels, no matter what their earnings are. It is, however, somewhat encouraging to note that Bangladesh RMG products are breaking into some new markets like Japan. Everything possible should be done to enlarge and consolidate market shares in such vital emerging markets. In this context, Japanese quality inspection companies in particular need to be persuaded to start operations in Bangladesh since Japanese apparel importers are touchy about quality. There is no denying of the possibilities of Bangladeshi garments products making a breakthrough in the Latin American countries, too. Unfortunately, Bangladesh has been lagging behind in establishing diplomatic relations with most major Latin American countries. Trade activities between South American countries and Bangladesh are only in thousands of US dollars when it has the potential of swiftly rising to millions of dollars provided sustainable large-scale entry of Bangladesh's garments can be achieved in these countries. Virgin markets for exploration and exploitation by the Bangladesh garments industry remain largely untapped in Russia, the former Soviet-bloc countries of East Europe and Central Asia. South Africa, Australia and New Zealand are also potentially good promising markets. By holding government-to-government talks, the government of Bangladesh (GOB) has engaged itself constructively in paving the way for the export of the country's RMG to Indian and Chinese markets. Both countries have otherwise been pro-active about facilitating duty-free entry of a good number of Bangladeshi RMG products to their markets. If non tariff barriers to Bangladeshi products can effectively be dismantled, the opportunities will become wide open. India and China are presently more interested to give up producing certain types of common or inexpensive garments to concentrate on making up-market garments for export. The RMG industry in Bangladesh can seize this opportunity by producing and exporting such common apparels to these two vast Asian markets. Furthermore, GOB, has, on the whole, much to do to help out the garments sector to retain its competitiveness in the face of growing adverse conditions in many western countries - which happen to be traditional importers of Bangladeshi garments. Bangladeshi garments producers, so far, have been helped out very little to remain competitive in contrast to producers in some other Asian countries including those in its neighbouring South Asia and south East Asian regions. RMG products in those countries have so far been the beneficiaries of generous governmental packaged assistance.