Strategies for the RMG sector
Tuesday, 20 November 2007
THE three-day long Bangladesh Apparel and Textile Exposition (BATEXPO) ended Saturday last. It fetched spot order from buyers valued at some US $53.43 million. A significant feature of the fair was that a large number of foreign buyers participated in it. They went round the stalls, carefully examined the products on display and in some cases placed orders. More spin-offs are likely from the exhibition, since many buyers, though they did not place immediate orders, were visibly impressed by the range and quality of the products. They may follow it up through contacts with the producers for importing apparels. So, it can be said that BATEXPO-2007 was a successful event in that it showcased Bangladeshi garment sector's comparative advantage as a producer of the cheapest but good quality apparel in the world. This is a strong plus point in Bangladesh's favour, despite the fact that restriction on entry of Chinese apparels of some categories to the US market will soon be over.
The export-oriented readymade garment (RMG) sector in Bangladesh has been developing almost entirely from the dynamism and coping abilities of the private sector entrepreneurs. Here the credit goes entirely to the enterprising qualities of the private sector. But this is not to say that government can or ought to be noncommittal about the RMG sector, especially at a time when it is faced with difficulties due to various developments, both internal and external. It should be more proactive to find out who are behind the unrest and violence in the sector. Even an Adviser minced no words recently when he warned about interest groups working to undermine the viability of RMG industries. Adequate measures must be in place to hedge the sector against any kind of damage and insecurity.
Conditions at Chittagong port have considerably improved in recent months helping the 'lead time' in garments exports. But the government can extend further help by facilitating the reduction of port charges. Uninterrupted power supply to the RMG industry at affordable costs can be another major input from the government. The government should also strengthen its diplomatic moves to persuade the US authorities to allow duty-free access of Bangladeshi RMG products to its market. The USA is presently the single biggest export destination of Bangladeshi apparels. The garments exporters, too, need to step up their search for new markets. This is very important for hedging their businesses from any reversal in the traditional markets and to expand their activities. It was expertly evaluated that large markets are there for Bangladeshi garments products in Russia and its former satellite countries in Eastern Europe, in Japan and in the Latin American countries.
The process of achieving more backward linkages for the RMG sector started some years ago. But the existing linkage industries meet the needs of backward linage of the RMG industries only partially. For securing the RMG sector on a more solid basis, the linkage industries must be increased in number. The government may extend its policy supports in this respect through additional fiscal and other incentives to these RMG industries. Steps can also be taken to lower the rate of interest on the institutional borrowings of these industries. The government should also encourage the growing of cotton on a large scale in the country for achieving significant value-addition in the sector.
The RMG entrepreneurs have so far done reasonably well in addressing the compliance issues involving paying more to workers, improving working conditions, etc. However, they should complete, where necessary, these tasks for the longer term sustainability of their enterprises. The entrepreneurs should also go for product diversification and produce higher-value apparels in order to further increase their earning from the RMG exports.
The export-oriented readymade garment (RMG) sector in Bangladesh has been developing almost entirely from the dynamism and coping abilities of the private sector entrepreneurs. Here the credit goes entirely to the enterprising qualities of the private sector. But this is not to say that government can or ought to be noncommittal about the RMG sector, especially at a time when it is faced with difficulties due to various developments, both internal and external. It should be more proactive to find out who are behind the unrest and violence in the sector. Even an Adviser minced no words recently when he warned about interest groups working to undermine the viability of RMG industries. Adequate measures must be in place to hedge the sector against any kind of damage and insecurity.
Conditions at Chittagong port have considerably improved in recent months helping the 'lead time' in garments exports. But the government can extend further help by facilitating the reduction of port charges. Uninterrupted power supply to the RMG industry at affordable costs can be another major input from the government. The government should also strengthen its diplomatic moves to persuade the US authorities to allow duty-free access of Bangladeshi RMG products to its market. The USA is presently the single biggest export destination of Bangladeshi apparels. The garments exporters, too, need to step up their search for new markets. This is very important for hedging their businesses from any reversal in the traditional markets and to expand their activities. It was expertly evaluated that large markets are there for Bangladeshi garments products in Russia and its former satellite countries in Eastern Europe, in Japan and in the Latin American countries.
The process of achieving more backward linkages for the RMG sector started some years ago. But the existing linkage industries meet the needs of backward linage of the RMG industries only partially. For securing the RMG sector on a more solid basis, the linkage industries must be increased in number. The government may extend its policy supports in this respect through additional fiscal and other incentives to these RMG industries. Steps can also be taken to lower the rate of interest on the institutional borrowings of these industries. The government should also encourage the growing of cotton on a large scale in the country for achieving significant value-addition in the sector.
The RMG entrepreneurs have so far done reasonably well in addressing the compliance issues involving paying more to workers, improving working conditions, etc. However, they should complete, where necessary, these tasks for the longer term sustainability of their enterprises. The entrepreneurs should also go for product diversification and produce higher-value apparels in order to further increase their earning from the RMG exports.