Bangladesh's apparel exports to one-third of the 27 European countries, including Germany, the Netherlands and Poland, increased in the first half of fiscal year (FY) 2020-21 amid Covid-19. According to reports, Denmark, Hungary, CzechRepublic, Latvia, Slovakia and Slovenia also raised their garment imports from July to December.
It is believed that exports increased at a time when overall apparel shipments to the European Union (EU) declined by 1.28 per cent to $9.69 billion in the corresponding period last year. They attributed transhipment of apparel items to other EU countries through Germany, the Netherlands and Poland for a rise in exports to those destinations
Insiders, however, said exports increased at a time when overall apparel shipments to the European Union (EU) declined by 1.28 per cent to $9.69 billion in the corresponding period last year..
Apparel export to Bangladesh's largest destination, the USA, fell by 2.65 per cent to $2.90 billion and 2.23 per cent to $487.02 million to Canada in July-December of this fiscal over that of last fiscal. Improved work environment in the factories and policy support from the government have brought about positive result in the country's garment sector by overcoming various setbacks.
Business in the apparel sector has increased two and a half times in the last decade. The sector now accounts for more than 83 per cent of the country's total export earnings.
The biggest achievement in the garments sector in the last one decade is the improved work environment in terms of labour safety. It played a major role in recovering the image of the sector. Moreover, use of advanced technology by 20 per cent of the factories has proven vital in increasing production.
The government decided to raise the wage of the workers in six grades to address the grievances. Even so, relations between owners and workers have shown little improvement so far. This is one of the biggest challenges of the industry. Vested quarters are taking advantage of such weakness. However, the factory insiders say most of the factories received adequate work orders before the outbreak of the coronavirus. Of late,, the industry has reduced its dependency on traditional markets such as US, European Union (EU) countries and Canada and expanded its business in new countries.
Duty-free access of Bangladeshi products to the EU market will end in 2027 as a result of the elevation of the country to the status of a developing country. This will pose a major challenge to the RMG sector. As such, the country's garment industry needs to move up the value chain to remain competitive in the global market.
From traditional products, Bangladesh needs to move to branded products. There is also a need for enhancing negotiation capacity of entrepreneurs. They should focus not only on price competitiveness but also on quality.
There is no denying the fact that the country's apparel industry is seriously lacking skilled labour force, which is hurting the scope to move up the value chain. Vietnam is going to pose a challenge to the country's RMG market in the near future, and that challenge will come not in the form of price competitiveness but of quality.
According to an international study, apparel workers in Bangladesh work for 60 hours per week while it is 47 hours in Cambodia and 46 hours in India. At the same time, 54 per cent of the garment workers are living below the minimum wage in Bangladesh.
The country needs to integrate its economy regionally through platforms like the South Asian Association for Regional Cooperation (SAARC) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). This, in turn, will help the country to expand its market within the region.
Bangladesh also needs to sign free trade agreements (FTAs) with countries around the world. While Vietnam has FTAs with around 20 countries, Bangladesh has none.
There is a serious lack of marketing and negotiation capacity from Bangladesh side. Already, a good portion of the manufacturing jobs is shifting from China to countries like Vietnam and Cambodia. But Bangladesh is yet to make the most of that development.
Again, management of the labour regime is an issue of serious concern for the local garment industry. Apart from ensuring adequate wage for the garment workers, workplace safety and compliance issues need to be addressed quickly to remain competitive in the global apparel market.