Urgent action needed to address three challenges for RMG industry

For the sustainable development of the Readymade Garments (RMG) industry in the country and to thrive in the current competitive market, it is necessary to address three urgent challenges.

The remarks were made at a roundtable discussion titled ‘Bunon 2030: Policy discussion’ at a hotel in Dhaka on Saturday.

LightCastle Partners, a global prominent business consultancy firm, and Policy Exchange Bangladesh, jointly organised the event, says a media release.

Zahedul Amin, Co-Founder and Director of LightCastle Partners, made the remarks in a presentation at the roundtable discussion.

The challenges for the RMG sector are: decarbonisation, the transition from the list of Least Developed Countries (LDCs), and the impact of automation technology on the fourth industrial revolution (4IR).

Decarbonisation involves reducing carbon emissions across the RMG value chain, while the impending fourth industrial revolution poses a threat to jobs due to automation and artificial intelligence. Therefore, there's an urgent need to reskill and upskill workers to mitigate job displacement.

M Masrur Reaz, chairman of Policy Exchange Bangladesh, moderated the event, while Ainee Islam, director of the Program Development Department at the Asia Foundation, delivered the opening remarks.

The event was graced by the presence of Md Selim Hossen, Deputy Secretary, Ministry of Commerce, Md. Ariful Hoque, Director General of Bangladesh Investment Development Authority (BIDA), Md. Abdur Rahim Khan, Inspector General, Department of Inspection for Factories and Establishments, Mohammad Hatem, Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Md Selim Hossen, Deputy Secretary, Ministry of Commerce, said Free Trade Agreements (FTAs) necessitate diversification of the export basket. Bangladesh could adopt a product-based business model and invest in sector-specific initiatives to facilitate the transition away from reliance on the RMG sector.

The meeting aimed at highlighting actions and recommendations for addressing the multifaceted challenges in the RMG industry during the LDC transition and to thrive in the competitive market.

In his address, Md Ariful Hoque, Director General, of Bangladesh Investment Development Authority, said policymakers can engage in consultations with pertinent stakeholders to craft effective export-oriented policies tailored to the needs of the apparel sector in Bangladesh.

Abdur Rahim Khan, Inspector General, Department of Inspection for Factories and Establishments, said emulating successful models like the Product Linked Incentive (PLI) scheme in India, tailored mechanisms could be devised to support and incentivise Bangladeshi apparel export market.

Mohammad Hatem, Executive President, of Bangladesh Knitwear Manufacturers and Exporters Association, said to facilitate the diversification in fibre production, there can be duty-free access on importing raw materials for the production of Man-Made Fibers (MMF).

According to the keynote paper, the biggest crisis will arise after the transition from the list of the LDCs status in 2026. This crisis is likely to be worsened by the loss of other trade benefits, including the Generalized Scheme of Preferences (GSP) due to LDC status, rising wages of workers, concerns about international buyers and importers shifting to countries with lower garment production costs than Bangladesh, and non-compliance by some garment industry owners.

The keynote also mentioned that, according to data from the Export Promotion Bureau in 2023, Bangladesh currently ranks as the second-largest exporter of ready-made garments globally.

The same source indicates that Bangladesh exported garments worth USD 47.0 billion by the February 2023-2024 fiscal year.

According to the Bangladesh Bank, the contribution of this sector to GDP in the fiscal year 2023 was 10.35 per cent, employing over 4.1 million garment workers, 60 per cent of whom are women.

Consequently, if these issues are not addressed promptly, they may negatively impact both the industry and the overall economy.