Future of RMG sector brightening | The Daily Star
12:00 AM, September 05, 2012 / LAST MODIFIED: 12:00 AM, September 05, 2012


Future of RMG sector brightening

New markets opening up

At a time when European and US markets are shrinking for Bangladeshi apparel exports, the news that one of the biggest names in Swedish retail industry H&M has decided to double its business to US$3 billion in Bangladesh over the next five years is welcome news indeed. The move by the global giant that sources its materials from some 250 factories in Bangladesh goes to show the growing confidence of foreign buyers in the future trajectory of the country as a global player in readymade garments (RMG) industry. The fact that the RMG sector has responded to calls for taking initiatives to improve the wellbeing of its workers by means of opening up health and recreational facilities is helping to improve its image as a responsible sector to foreign buyers.
It is not only the Scandinavians who have faith in Bangladesh's potential to become the country of choice for sourcing different types of garments, the Peoples' Republic of China is set to become a multi-billion dollar destination market for our products. With China's labour wages hitting new highs, the country has been eying Bangladesh as a major destination to shift the production base for the basic apparels segment. Coupled with the granting of import tax waiver on 4,721products that include garments, the country has the potential of developing an alternative destination to the falling European and US markets, which till date, constitute 87 per cent of the share of RMG sector's nearly $19 billion annual export basket.
However, for Bangladesh to take advantage of potentially significant foreign direct investment from China, it would have to make serious improvement in infrastructure, particularly in communication and energy sectors. Long tailbacks on highways, limited inland transportation options, and inefficient cargo handling capacity at Chittagong port adds to Bangladesh's woes for meeting buyer lead times. The constant power crunch industry faces is another constricting issue for growth. With little chance of getting reliable gas from public utility service providers, the industry is having to count millions by way of generating own power. Such a scenario has severely curtailed expansion of production base for the RMG sector as a whole. Unless these basic problems are tackled in the next two to three years, the windows of opportunity that have presented themselves for the apparels industry will be lost.

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