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June 13, 2025

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FRIDAY, JUNE 13, 2025
Apparel industry lacks long-term planning

RMG

TBS Report
27 June, 2020, 10:00 am
Last modified: 27 June, 2020, 02:38 pm

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Apparel industry lacks long-term planning

Vietnam is better-placed for a recovery earlier than Bangladesh as Bangladesh RMG industry does not have any long-term plan

TBS Report
27 June, 2020, 10:00 am
Last modified: 27 June, 2020, 02:38 pm
Apparel industry lacks long-term planning

As coronavirus pandemic tore holes in Asia's garment industry, many outsourcing competitors such as Vietnam and Sri Lanka are working on long-term strategies to overcome the shocks and sustain future growth.

Bangladesh, though faced with a similar situation like order cancellations and a bleak future, is lagging behind in devising a long-term plan, global industry analysis shows.

As an apparel supplier, the situation faced by Vietnam is in common with that of Bangladesh. But armed with the FTA with the European Union, Vietnam is better-placed for a recovery earlier than Bangladesh.

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Vietnam, with a more diversified export market, had some flexibility and was in a "better position," said Sheng Lu, an associate professor at the University of Delaware's department of fashion and apparel studies.

Analysing the impact of Covid-19 on Asia's apparel industry, he told Nikkei Asain Review that Bangladesh, as a leading supplier to both Europe and America, would be "significantly hit".

An earlier estimate of the university showed Bangladesh was set to lose more than 15 percent exports to the US and more than 10 percent to the EU, which would be around 5 percent for Vietnam.

Vietnam's apparel industry is not sitting idle on the government's package.

Factory owners there, who reported 50 percent drop in order in May and 10 lakh job cuts, have teamed up with business chambers and workers' bodies to sign an "action plan" towards a sustainable industry, ratifying international conventions and compatible with the socially responsible requirements. The initiative came after the support package announced by their government was found not accessible to most of the affected businesses and workers.

The apparel industry in Bangladesh has already exhausted the first wage support scheme of the government. The EU also announced wage support for 10 lakh workers.

The industry is asking for more support from the government to help it overcome pandemic shocks.

But they seem least concerned about an action plan for a sustainable development for both employers and employees.

The Sri Lankan clothing industry cut its export target drastically by $1.7 billion for the current fiscal year and estimates 1 lakh job cuts. Factories reopened with 50 percent workers.

The government support measures include moratoriums on interest payments and delaying payments for provident and trust funds – two schemes mandatory for workers. This support will apply to factories that will pay their workers minimum 50 percent wages.

Faced with order cancellations and refusal of shipments, many clothing companies are not able to meet the condition and avail of the government package.

The industry association, while lobbying for six months' moratoriums on those payments as a short-term relief, is also asking the government for long-term measures for backward linkages, local base for textile raw material and relocation of Japanese companies leaving China to underutilised free-trade zones.

The South Asian island nation is pioneer in readymade garment export until it was troubled by Tamil insurgency, paving way for Bangladesh to enter the scene in 1980s.

Sri Lankan businesses still boast about being a pioneer in innovation, which will help them adjust to the "the new normal post-pandemic, with sustainability one of the key pillars of doing business," a top Sri Lankan company director told Just Style, a London-based apparel news portal.

The country's apparel association leader Tuly Cooray admits the weaknesses of their textile industry and calls for incentivising foreign investment to reduce dependence on imported raw materials.

They are concerned about activities in key outsourcing competitors Vietnam and Cambodia, which were able to receive orders even during the pandemic when factories in Sri Lanka were shut.

But industry associations in Bangladesh are least concerned about any long-term plan. They are busy with immediate concerns, and requesting the government for extension or expansion of the already announced short-term packages like wage support and cash incentives.

The BGMEA president in an application to the commerce ministry has urged the government to raise the rate of cash support given for six months to 10 percent from the current 4 percent, said BKMEA Senior Vice-President Mohammad Hatem. The BKMEA and BGMEA later wrote separately to the finance minister, seeking this facility for the next two years, he added.

"Factory owners and the government only respond when workers protest. You will see no long-term plan. Owners are concerned about immediate gains," said Jolly Talukder of the Garment Workers Trade Union Centre.

The situation of garment workers in Bangladesh can in no way be compared to those in China and Vietnam, where the governments are committed to protecting workers' rights. Joly's organisation roughly estimated around 110,000 job loss in the apparel industry so far, which she said gives a partial picture.

Nazma Akhter, another rights activist, said the apparel industry demands a comprehensive systematic change now like the one it had gone through after the Rana Plaza collapse. Factory owners need to think beyond short term.

"They must develop a system to provide workers with unemployment scheme and social protection," Nazma said, citing instances of the US and European countries helping workers through hard time now.

She suggested that long-term sustainability, workers' welfare must be given priority.

Prof Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, said the apparel industry needs medium-term policies for trade, industry and incentives on the basis of market dynamics arising out of the pandemic.

"The industry should look beyond the labour-intensive approach. They need to think about man-made fibre, automation, and more value addition," he said.

Foreign investment and joint venture could be major contributors in technology transfers not alone in the apparel industry, but in other sectors as well, requiring the government to reform corporate tax structures among other things, the trade analyst suggested.

"Vietnam is doing well as they could attract foreign investment," he said.

Economy / Top News

RMG / Ready Made Garment (RMG) Sector / ready made garment / RMG sector / RMG industry / Apparel industry / Long-term plan

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