Bangladesh well-positioned in new era of trade wars: BGMEA president

In the wake of the US decision to impose a tariff of 20 per cent on Bangladeshi products, Mahmud Hasan Khan, the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in an exclusive interview with UNB, discussed the immense opportunities for Bangladesh's apparel sector amid global trade tensions. Khan emphasised that while the current tariff war presents a favourable landscape, the country must address critical infrastructural and logistical challenges to fully capitalise on it. Bangladesh has a significant opportunity to boost its exports to the US and global markets in the current climate of international tariff disputes, he said. Excerpts:

UNB: Bangladesh seems to have a new opportunity for export growth. What are your thoughts on this?

Khan: This new era of global tariff wars presents a great opportunity for Bangladesh to enhance its exports, particularly to the US and other major global markets. We are in a strong position. While major competitors like India face a 25 per cent tariff and China a 30 per cent tariff from the US, Bangladesh's tariff is currently at 20 per cent. This tariff reduction will naturally divert a significant portion of global apparel business to Bangladesh. To attract buyers from China and India, however, we must ensure rapid and timely shipment of goods.

UNB: Beyond the tariff advantage, what does Bangladesh need to do to sustain this growth?

Khan: Business growth isn't solely dependent on opportunity; it requires a robust supporting infrastructure. We urgently need to improve the capacity and international-standard handling of the Chittagong port, along with streamlining customs facilities. Infrastructure development, efficient use of existing facilities, and an uninterrupted supply of gas and electricity to our factories and export sectors are absolutely crucial for us to perform well in the global trade competition. All of these supporting facilities, alongside our production capacity, are vital for us to stay ahead of our competitors.

UNB: Regarding port management, is hiring foreign companies a viable solution?

Khan: Hiring foreign companies with experienced and skilled management is a good option. However, if their charges are excessively high, it will negatively affect our business competitiveness. We need to strike a balance between efficiency and cost.

UNB: What specific initiatives are your top priorities for the BGMEA right now?

Khan: We need to focus on several key areas immediately. First and foremost is ensuring an uninterrupted supply of gas and electricity. Additionally, we need to guarantee a smooth, four-hour journey on the Dhaka-Chittagong highway. Other priorities include reducing non-performing loans in banks to bring down interest rates, rationalising the NBR's tax structure, and maintaining a good law and order situation across the country.

UNB: You mentioned a 20 per cent tariff for US exports. Are there any ways to reduce this further?

Khan: Yes, there is a significant opportunity for further tariff exemption. If our products use 20 per cent or more US content—such as US cotton or other materials—exporters can receive a tariff discount on that portion. For example, if a product contains 20 per cent US content, the effective tariff would be reduced to 16 per cent. The more US content we use, the greater the tariff exemption becomes, potentially reaching zero tariffs on that portion.

UNB: What are the challenges in implementing this US content-based tariff exemption?

Khan: The main challenge is the lack of a certifying body. There is currently no institution established to verify the traceability of US content in a way that would be acceptable to US customs. While the price of US cotton is higher, its quality is excellent. The entire process is machine-run, making the cotton fresh, dust-free, and with very low wastage. We believe that Bangladeshi factory owners will increase their use of US cotton as buyers will push for it to get the additional tax exemptions in the US market. US cotton is completely clean, machine-fit, and will result in a 2-3 per cent lower cost at the processing level.

UNB: What reforms are underway within the BGMEA itself?

Khan: We have brought all BGMEA activities under an online service, allowing members to easily view and monitor all our work. A major reform has been the recent fair election for the association, where over 90 per cent of our members participated. This was a direct result of the July uprising, and this practice of holding free and fair elections will continue so that we never return to the previous situation.

UNB: How is the BGMEA addressing the alleged misuse of 'Bonded Warehouses'?

Khan: We are committed to tackling this issue. If the NBR provides specific allegations of bonded warehouse rule violations, the BGMEA will actively assist them in taking action. However, the NBR and its intelligence units must provide us with specific information about misuse. To date, the NBR has not filed a single complaint against any of our members. In fact, BGMEA is sometimes criticized for creating barriers to importing legal goods, which is time-consuming.

UNB: You've mentioned a lot of reforms. Can all of this be accomplished in a single term?

Khan: Many reforms are required in our trade association, and it's not possible to complete all of them in a single two-year term. We have started the reform process, but I won't be able to conclude everything. The series of reforms will continue. As promised during our election campaign, we have already reduced the subscription fee by 25 per cent. We are also working on easing the tax system, addressing SDG challenges, establishing a member welfare fund, building a hospital for our workers, amending labour laws, and bringing the BGMEA University under the association's full control. We have started this journey to strengthen the BGMEA, and future presidents will build upon this foundation.

UNB: How will the BGMEA protect its members from non-paying buyers?

Khan: We want to assure our members that we will take a firm stance against buyers who do not make timely payments. The BGMEA will create a blacklist of such buyers and inform our members to avoid doing business with them. Suppose we receive complaints from members about buyers who refuse to accept goods after shipment. In that case, we will resolve the issue through negotiation with those buyers or the ambassadors of their respective countries. The BGMEA has the authority to blacklist buyers who fail to pay manufacturers on time or refuse to receive goods after they have been shipped.