Kazi Zahidul Hasan :
Bangladesh’s garment industry is in deep trouble owing to a wave of factory closures and unabated decline in exports.
At least 59 apparel units have been forced to shut down for losses since the implementation of new pay structure for workers, rendering 30,000 jobless.
Besides, exports of ready-made garments (RMG) declined 7.7 per cent to $13.08 billion in between July and November, missing the target of $15 billion by 13.63 percent, according to Export Promotion Bureau.
Industry bigwigs voiced alarm over the development saying it can upset many aspects of the national economy, which relies heavily on apparel industry.
“The industry is reeling under pressure due to factory closure and falling exports,” MA Rahim (Feroz), Vice-President of Bangladesh Garments Manufacturers and Exporters’ Association (BGMEA) told The New Nation.
He cited that factories were closed after the hike in minimum wage, and ‘recession’ in Europe, a major market for Bangladesh’s garment items, hit the exports. “If the current trend of export continues, the situation of the country’s vital industry would be worsened,” said MA Rahim, calling for policy support and more cash incentives to help the industry survive.
He also mentioned that our competitors are doing well in the export markets taking advantage of their state policies. Even, they devalued the dollar exchange rates to stay competitive.
“It is high time to devalue the US dollar to sustain our apparel export in global market,” he said, adding, “The BGMEA has already demanded the US dollar be devalued by Tk 2.”
MA Rahim also urged the government to ensure easy-access to finance for the small and medium apparel factories to maintain their production. Otherwise, more factories will go out of production due to lack of working capital.
Apparel industry contributes 85 per cent of the country’s total export and employs around 45 per cent of the industrial workforce (4.4 million) in more than 4,500 factories. Of these employees, 80 per cent are women.
In 2018-19, Bangladesh earned $40.53 billion by exporting goods. The overall exports beat the target by four per cent with a 10.55 per cent rise.
“Rising labour costs and slow growth in overseas demand left the industry in dire strait,” M Shafiul Islam Mohiuddin, a former BGMEA President, told The New Nation.
He attributed Brexit worries, US-China trade conflicts and lower demands globally to the recent drop in apparel exports. Regarding factory closure, he said, they shut their production due to the burden of the wage hike of workers and poor orders.
When asked, Mohiuddin said, “Made in Bangladesh products are losing their price competitiveness because of the overall supply chain inefficiency. A longer lead-time, inadequate Port facility and undeveloped infrastructures have made ‘black holes,’ in the supply chain ultimately raising costs without meeting buyers’ satisfaction.
Referring to media reports, he said, Bangladesh’s garment shipments had dropped 1.64 per cent year-on-year to US$8.05 billion in the first quarter of the current fiscal year. At the same time, shipments from Vietnam had increased by 10.54 per cent, from India by 2.2 per cent and from Pakistan by 4.74 per cent.
“How they can manage to maintain export growth amid slowdown in global demand,” he questioned, saying that only an efficient supply chain management helped them boosting exports despite the gloomy global trade scenario.
Mohiuddin, also the former president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) further said Bangladesh must also meet customer expectations in a cost-effective manner to maintain export growth in line with its competitors. And it only lies on managing a proper supply chain.
Both industry bigwigs stressed the need for shifting the industry to high-value products to sustain its growth and rebound exports.
