Overcoming threats to the apparel sector
Sunday, 25 November 2007
Shahiduzzaman Khan
DESPITE inclement weather caused by the Hurricane SIDR, the three-day Bangladesh Apparel and Textile Exposition-2007 (BATEXPO '07), concluded in the city recently amid much enthusiasm. The exposition received spot orders worth $53.43 million by showcasing the country's entire range of apparel items. The ready-made garment (RMG) manufacturers also received $3.83 million spot orders from stock lot.
A total of 110 foreign buyers from Canada, Germany, the UK, the US, Spain, Poland, the Netherlands, Turkey, Denmark, Sweden, Italy, France, Korea, China, Hong Kong, India, Sri Lanka, Saudi Arabia, Pakistan, Greece, Taiwan, Thailand, Singapore and Australia attended the BATEXPO this year. The number of local representatives of the foreign buyers was 3,250.
Marking the conclusion of the three-day exposition, the Commerce Secretary stressed the need for exploring new potential markets apart from the ones in North America and the European countries, and diversification of products. Indeed, Bangladesh's garment sector has earned a place on the global export market map as a strong and matured industry as its apparels are known for their quality and price competitiveness. As such, any wrong strategy of the government may trigger setback in country's international textile market. The country's apparels are now being exported to 90 different countries with the USA being its single largest buyer.
Although the EU is the largest export market, Bangladesh is now in the process of expanding its market to countries like Australia, Canada, Japan, Norway and New Zealand in order to avail of the duty-free market access and generalised systems of preference (GSP) benefits provided by these countries to the LDCs.
Reports prepared by the United Nations Development Programme (UNDP) and the International Monetary Fund (IMF) suggested that Bangladesh ran the risk of losing about one and a half million jobs, mostly women. They also pointed out that there was a serious possibility that uneven competition from China would suffocate demand from Bangladesh.
The BGMEA wants the government to provide 15 per cent cash incentives for encouraging backward linkages. Such proposal deserves further scrutiny. The government, as such, should back the BGMEA initiative to persuade the US Congress to accord duty-free access to Bangladeshi products (as has been provided to 33 other sub-Saharan and Caribbean LDCs). Intense lobbying needs to be undertaken to point out that the USA cannot discriminate between LDCs. Bangladesh agreed with US demand to allow trade union activities in the EPZs. Now it is the turn of the US to give Bangladeshi entrepreneurs a helping hand in the post-MFA era.
The country, by maintaining its current pace in exporting garments products, hopefully will earn $10 billion by 2010, revealed a study conducted by a Switzerland-based organisation. The study gives detailed data that includes yearly enhanced figure of exporting garments from imported fabrics as yarns, and knitting and woven materials from locally produced fabrics.
As the Generalised System of Preferences (GSP) facilities have been ensured by the EU for the country, there is a scope of investment for establishing 150 to 200 composite textile mills. This will create employment opportunities further. Earlier there were some uncertainties expressed by some business groups or individuals as the country was facing giants in an uncontrolled global market but at the end many had agreed about the positive signs. Bangladesh is the only non-cotton producing country which is the most organised among the developing nations both in the field of woven and non-woven fabrics.
Recently, there is a sharp fall in the RMG export orders from the US and the EU. The withdrawal of all restrictions on China's garment exports by end of this year is leading many buyers to switch over to China and Vietnam. Due to heightened competition from China, sustaining the current export growth will be an uphill task for Bangladesh in the coming years. Overseas buyers generally come to Bangladesh due to availability of cheap labour force. On the contrary, everything else in garment production here needs to be imported. Country's lead-time is also long. Buyers want shipment in 20 days, but it is not possible to ship, from here, the consignments before 60 days, earlier which was 120 days.
Some reports suggest that certain quarters are desperately trying to destroy the country's burgeoning garments industry. Allegations have it that a US labour rights group is engaged in instigating labour unrest in Bangladesh, taking advantage of the grievances of the workers of several sick garment units in the industrial belt. The human rights group is reported to have been allegedly serving the interests of competitor countries.
Many exporters have reasons to believe in 'conspiracy theories' where the image of Bangladesh is being deliberately tarnished for some competitors' gains. Some leading media outlets in the UK are frequently reporting on Bangladeshi garment sector's non-compliance with international standards, by selectively exhibiting the sick industries in and outside Dhaka. In fact, more than 70 per cent of the factories are compliant, yet the media outlets are only showing the problem factories. And there is a British non-government organisation (NGO) -- War on Want -- is campaigning that Bangladesh pays an exploitative hourly wage of only 5.0 cents to its workers, in contrast to the 5.0 pounds in the UK, encouraging Britons not to buy clothes from stores that sell Bangladeshi made garments.
The lead-time on delivery issues matters most in the RMG export trade. In the beginning, the lead-time was 120-150 days but now in 2007, this has been reduced to 40 to 60 days, thanks to the timely intervention of the joint forces. China requires only 30 days due to their textile and other backward linkage facilities as well as export-friendly policy. There is a need to set up a central bonded warehouse for woven and grey fabrics in order to help the manufacturers collect the fabrics within seven days from the issuance of LCs and thus reduce lead-time.
The standard of customs service has improved a lot; still there is a scope for its further development up to the international level. Responding to the demand of the time, the customs service to the RMG owners should be relaxed and related officials must do their job with honestly and sincerity. In order to expand the market share and survive in the upcoming free global competition in the international market, product diversification appears to be an indispensable strategy. The more stretched the product lines and ranges, the better is the competitive strength.
Countries like Vietnam, China, Cambodia and Sri Lanka are offering high incentives to investors and the investors are drawing in an ever-increasing number of buyers. But in Bangladesh, if anybody wants to start a business, he needs permissions from 30 different agencies and such permissions do often entail informal costs. The interest rate on capital investment is also as high as 16 per cent, making the products non-competitive. The situation puts the burden of cost cutting in production on the workers.
The government needs to make the required permission to be reduced to just one, cutting down the 'hidden' cost of doing business by at least 2.0 per cent. If the government and the BGMEA take adequate care of this sector and implement the suggested measures for the purpose, experts expect the country will be able to attain the status of a major exporter to the extent of $ 25 billion a year in the next 20 years.
DESPITE inclement weather caused by the Hurricane SIDR, the three-day Bangladesh Apparel and Textile Exposition-2007 (BATEXPO '07), concluded in the city recently amid much enthusiasm. The exposition received spot orders worth $53.43 million by showcasing the country's entire range of apparel items. The ready-made garment (RMG) manufacturers also received $3.83 million spot orders from stock lot.
A total of 110 foreign buyers from Canada, Germany, the UK, the US, Spain, Poland, the Netherlands, Turkey, Denmark, Sweden, Italy, France, Korea, China, Hong Kong, India, Sri Lanka, Saudi Arabia, Pakistan, Greece, Taiwan, Thailand, Singapore and Australia attended the BATEXPO this year. The number of local representatives of the foreign buyers was 3,250.
Marking the conclusion of the three-day exposition, the Commerce Secretary stressed the need for exploring new potential markets apart from the ones in North America and the European countries, and diversification of products. Indeed, Bangladesh's garment sector has earned a place on the global export market map as a strong and matured industry as its apparels are known for their quality and price competitiveness. As such, any wrong strategy of the government may trigger setback in country's international textile market. The country's apparels are now being exported to 90 different countries with the USA being its single largest buyer.
Although the EU is the largest export market, Bangladesh is now in the process of expanding its market to countries like Australia, Canada, Japan, Norway and New Zealand in order to avail of the duty-free market access and generalised systems of preference (GSP) benefits provided by these countries to the LDCs.
Reports prepared by the United Nations Development Programme (UNDP) and the International Monetary Fund (IMF) suggested that Bangladesh ran the risk of losing about one and a half million jobs, mostly women. They also pointed out that there was a serious possibility that uneven competition from China would suffocate demand from Bangladesh.
The BGMEA wants the government to provide 15 per cent cash incentives for encouraging backward linkages. Such proposal deserves further scrutiny. The government, as such, should back the BGMEA initiative to persuade the US Congress to accord duty-free access to Bangladeshi products (as has been provided to 33 other sub-Saharan and Caribbean LDCs). Intense lobbying needs to be undertaken to point out that the USA cannot discriminate between LDCs. Bangladesh agreed with US demand to allow trade union activities in the EPZs. Now it is the turn of the US to give Bangladeshi entrepreneurs a helping hand in the post-MFA era.
The country, by maintaining its current pace in exporting garments products, hopefully will earn $10 billion by 2010, revealed a study conducted by a Switzerland-based organisation. The study gives detailed data that includes yearly enhanced figure of exporting garments from imported fabrics as yarns, and knitting and woven materials from locally produced fabrics.
As the Generalised System of Preferences (GSP) facilities have been ensured by the EU for the country, there is a scope of investment for establishing 150 to 200 composite textile mills. This will create employment opportunities further. Earlier there were some uncertainties expressed by some business groups or individuals as the country was facing giants in an uncontrolled global market but at the end many had agreed about the positive signs. Bangladesh is the only non-cotton producing country which is the most organised among the developing nations both in the field of woven and non-woven fabrics.
Recently, there is a sharp fall in the RMG export orders from the US and the EU. The withdrawal of all restrictions on China's garment exports by end of this year is leading many buyers to switch over to China and Vietnam. Due to heightened competition from China, sustaining the current export growth will be an uphill task for Bangladesh in the coming years. Overseas buyers generally come to Bangladesh due to availability of cheap labour force. On the contrary, everything else in garment production here needs to be imported. Country's lead-time is also long. Buyers want shipment in 20 days, but it is not possible to ship, from here, the consignments before 60 days, earlier which was 120 days.
Some reports suggest that certain quarters are desperately trying to destroy the country's burgeoning garments industry. Allegations have it that a US labour rights group is engaged in instigating labour unrest in Bangladesh, taking advantage of the grievances of the workers of several sick garment units in the industrial belt. The human rights group is reported to have been allegedly serving the interests of competitor countries.
Many exporters have reasons to believe in 'conspiracy theories' where the image of Bangladesh is being deliberately tarnished for some competitors' gains. Some leading media outlets in the UK are frequently reporting on Bangladeshi garment sector's non-compliance with international standards, by selectively exhibiting the sick industries in and outside Dhaka. In fact, more than 70 per cent of the factories are compliant, yet the media outlets are only showing the problem factories. And there is a British non-government organisation (NGO) -- War on Want -- is campaigning that Bangladesh pays an exploitative hourly wage of only 5.0 cents to its workers, in contrast to the 5.0 pounds in the UK, encouraging Britons not to buy clothes from stores that sell Bangladeshi made garments.
The lead-time on delivery issues matters most in the RMG export trade. In the beginning, the lead-time was 120-150 days but now in 2007, this has been reduced to 40 to 60 days, thanks to the timely intervention of the joint forces. China requires only 30 days due to their textile and other backward linkage facilities as well as export-friendly policy. There is a need to set up a central bonded warehouse for woven and grey fabrics in order to help the manufacturers collect the fabrics within seven days from the issuance of LCs and thus reduce lead-time.
The standard of customs service has improved a lot; still there is a scope for its further development up to the international level. Responding to the demand of the time, the customs service to the RMG owners should be relaxed and related officials must do their job with honestly and sincerity. In order to expand the market share and survive in the upcoming free global competition in the international market, product diversification appears to be an indispensable strategy. The more stretched the product lines and ranges, the better is the competitive strength.
Countries like Vietnam, China, Cambodia and Sri Lanka are offering high incentives to investors and the investors are drawing in an ever-increasing number of buyers. But in Bangladesh, if anybody wants to start a business, he needs permissions from 30 different agencies and such permissions do often entail informal costs. The interest rate on capital investment is also as high as 16 per cent, making the products non-competitive. The situation puts the burden of cost cutting in production on the workers.
The government needs to make the required permission to be reduced to just one, cutting down the 'hidden' cost of doing business by at least 2.0 per cent. If the government and the BGMEA take adequate care of this sector and implement the suggested measures for the purpose, experts expect the country will be able to attain the status of a major exporter to the extent of $ 25 billion a year in the next 20 years.