Our textiles and apparel sector surely has a good year ahead

After the devastating Covid-19 outbreak and lockdown, our apparel and textile industry were on the path to recovery. But due to some recent events, both RMG and textile producers are passing through hard times. The major challenges faced by them are – shock of the new Covid variant, high price of raw materials, high freight cost etc.

The Omicron variant of the coronavirus has not affected our economy that much, but infections are going up every day in European countries. This is creating a growing sense of uncertainty among RMG and textiles producers. 

The shipping crisis and high freight cost is creating a spiral effect, along with cotton prices. This is affecting textiles producers and eventually RMG makers. Although buyers are aware of such high cotton prices, their acceptance is yet to be reflected in final product prices. But we hope they will be more cooperative in the near future.

 Now we must understand, the above difficulties may linger on for an uncertain period. So we need to find solutions to cope with them and keep moving forward. Having said that, our apparel and textiles sector surely has a good year ahead. Here are some reasons for that:

• Buyers/brands need to place orders immediately. During the pandemic period, buyers/brands had to sell from their own stock, so all of their outlets require RMG stock without further delay.

• Bangladesh is undoubtedly one the most reliable places for apparel orders, because it is a mature industry with over forty years of experience. Bangladesh is a proven and reliable sourcing destination for the lower and medium segment. We have achieved this position thanks to our regimented workforce. Though at one point it seemed like our female population was a burden, it turned out to be a blessing for our RMG industry. Large population means more available workers, which means more productivity in the RMG sector.

• Now, to ensure further growth, we need to increase expertise in high value RMG production.  At the moment we specialise in "large volume production of single item", but high value RMG garments require "small volume production of multiple products". This will require shifting from "line setup of 90/100 sewing machines to cluster setup of around 20 machines". A number of high-value buyers are already moving to Bangladesh. Recently luxury brand Ralph Lauren has started denim sourcing from Envoy textiles. It is an indicator of changing trends.

• One more point to note is that the recent trade war between China and the USA has created more opportunities for us. A significant number of supply chain leaders are in the process of moving sourcing and manufacturing out of China. It will be beneficial to attract those businesses to set up shop in Bangladesh.

• Further to that, political stability in our country for almost 15 years is an added advantage for more investment in Bangladesh, because the political situation is a major consideration of foreign entrepreneurs before investing. 

During post pandemic recovery, we have been receiving a good amount of export orders. But meeting the target price of buyers and on time import of raw materials are the biggest challenges at present. In 2019, Bangladesh apparel export was about $34.13 billion, hopefully, it will exceed that in this fiscal year.

Bangladesh is scheduled to lose its GSP facility in 2026 due to graduation from LDC. This may create a major challenge for RMG growth. If the Bangladesh government can negotiate with the EU to get GSP+ facility, the apparel sector will have a bright future and will reach the $100 billion export landmark by the next decade.

Kutubuddin Ahmed. Sketch: TBS

The writer is a former president of BGMEA and Chairman, Envoy group and Sheltech group