Prospects and challenges of garment industry | The Daily Star
12:00 AM, April 22, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Prospects and challenges of garment industry

Prospects and challenges of garment industry

The readymade garment sector in Bangladesh is a multi-billion-dollar manufacturing and export industry. With about 4.4 million workers employed in the sector, about 80 percent of whom are women, the growth of the garment industry has far-flung implications for the economy. The RMG sector alone does export worth $21.5 billion a year, which is 79 percent of the total export earnings of our country.
Given the dominance of the sector in the overall economy, any sort of vulnerability and threat to this sector should be a matter of concern. So rather than basking in glory we should concentrate on retaining sustainable growth and competitive edge.
Over the last three decades, our apparel industry has achieved a phenomenal growth due to policy support from the government, dynamism of the private sector entrepreneurs and extremely hardworking workers. Now the number of RMG units is more than 5,000 and export earnings have reached $22 billion with more than one hundred countries using 'made in Bangladesh' knit garments and woven products.
A McKinsey survey also tells us that the potential for the garment industry is promising. McKinsey forecasted export-value growth of 7-9 percent annually within the next ten years, so the market will be double by 2015 and nearly triple by 2020.
There are several external factors that have been playing an important role in facilitating the growth of the sector. One of these crucial factors is gradual reduction in China's bulk production due to labour shortages and higher wages, which also contribute to a decline in its appeal in the apparel realm. Moreover, China is now interested in manufacturing products that require greater skills, better technology and more investment in advanced equipment.
According to a survey conducted by McKinsey in 2001, 86 percent of the chief purchasing officers in leading apparel companies in Europe and the US planned to decrease levels of sourcing in China over the next five years because of declining profit margins and capacity constraints, and their next preferred sourcing destination is Bangladesh. They viewed Bangladesh as the next hot spot for sourcing in the RMG market. So Bangladesh is expected to gain much from the changed scenario in the global apparel market.
Another key prospect for growth of our garment industry lies in the size of the global apparel market, which is gradually growing bigger. According to a recent report, the global apparel market will cross the $2 trillion mark by 2025 from the current value of $1.1 trillion. So there is a great opportunity for us to further penetrate the global apparel market and boost our export earnings.
Despite the epic growth of our industry and its bright prospects, challenges are still there. However, we always believe that challenges can be turned into opportunities if they are addressed with steely determination and pragmatic steps and such instances are galore in our history.
One of the biggest challenges currently facing our garment industry is to make our factories safer and ensure better working conditions for millions of garment workers. The Tazreen fire and Rana Plaza collapse have brought the issue of workplace safety to the fore. The accidents have caused a paradigm shift within the industry. Following the unfortunate incidents a number of initiatives have been taken to improve building and fire safety in the industry.
Platforms such as Alliance, Accord and National Plan of Action have been formed and all are working sincerely to make every factory safer and compliant. Moreover, the factories which were established in an unplanned way and housed in converted and shared buildings have started relocating to purposely-built buildings. Moreover, an initiative has been taken to set up an industrial park to relocate the non-compliant garment factories.
A total of 67 inspectors have already been appointed who will monitor workplace safety at garment factories and recruitment of more inspectors is in the process.
However, ensuring workplace safety at all garment factories is a gigantic task and will take time to accomplish it. But we believe the government of Bangladesh with the support of global brands and international development partners, will be able to ensure the safety of the industry and maintain the momentum of socio-economic development in the country.
Another challenge for our RMG industry is to ensure workers' rights. The government of Bangladesh has amended the Labour Law 2006 in July 2013 making it more favourable for ensuring workers' rights, including the right to freedom of association and collective bargaining.
The legal requirements for trade union formation are more flexible now. The number of trade unions at the garment factories has increased significantly in recent times. Besides, the government promptly takes steps to investigate any complaint of violation of labour rights.
The huge expansion of the garment industry has reinforced the need for development of infrastructure, which is quite a big challenge for us. Ensuring energy and power supply to the industry has also appeared as a major challenge.
Skilled workforce is a prerequisite for the development of an industry.
But unfortunately we have a shortage of skilled workforce, especially at mid-management level, as we do not have sufficient number of vocational institutes and textile universities though our industry has started its journey in the early 1980s.

We have realised there is no best alternative but to improve productivity in order to compete in the global market since the prices of garments in the world market have gone down to such an extent that there is hardly any scope for a further decrease in the price level. Keeping the fact in mind due emphasis should be put on developing the skills of our workers.
Practically saying one word that describes our garment sector is 'resilience'. Even after many external and internal challenges, we have come out successful and still going strong. This sector has such strong foundations that a few mishaps cannot and will not take the glory away.
We may have had disruptions in our supply chain but still we met our shipments and deliveries, though they have cost more than usual but at least we kept our words. No one can deny our commitment that buyers have enjoyed all these years by importing from us. Unfortunate incidences happened but with time and effort we can avert such incidents. It is good to see that even during our difficult time in the wake of Tazreen and Rana Plaza tragedy, buyers have not lost their confidence in us and they are still supporting.
The RMG industry has the potential to grow more in the coming years. With tangible support from our government, buyers and all other organisations concerned, we can reach heights. But with dreams in the eyes of millions of Bangladeshis, achieving that feat may not be impossible.
The writer is president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

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