Policy support for circular economy needed to sustain RMG exports to EU: Expert

Bangladesh needs to provide policy support for the development of a circular economy to sustain readymade garment exports to European Union (EU) countries and prepare for future challenges in this regard, said Ferdaus Ara Begum, chief executive officer of the Business Initiative Leading Development (BUILD).

Today (18 May), on the second day of the Biennial Conference of the Bangladesh Economic Association, she said the EU has initiated the development of a carbon-neutral supply chain. In line with this vision, they are planning to impose carbon taxes on various goods.

Additionally, they have introduced legislative measures such as the Digital Product Passport (DPP) under the EU Green Deal and the Eco-design for Sustainable Products Regulation, she added.

Bangladesh's major export product, apparel, is currently not on the risk list but it could be included at any time. The country should prepare to address any challenges in this regard, Ferdaus Ara said during a presentation on Circularity in the Textile and RMG Sector of Bangladesh.

"Of the $47 billion of our RMG exports, about $37 billion is exported to the EU. Now they are giving various regulations on the issue of circularity. EU's green deal, ecological design issues are now getting attention. Therefore, Bangladesh has to prepare from now to face possible future situations," she said.

The presentation mentioned that global textiles production almost doubled between 2000 and 2015. Consumption of clothing and footwear is expected to increase by 63% by 2030, from 62 million tonnes now to 102 million tonnes in 2030, according to the European Environment Agency (EEA) in 2019.

About 5.8 million tonnes of textiles are discarded every year in the EU, averaging around 11kg per person. Additionally, every second, somewhere in the world, a truckload of textiles is landfilled or incinerated.

With these considerations in mind, the EU is moving towards a systemic solution called the Green Deal, aiming for climate-neutral textile development that is energy and resource efficient and produced in harmony with nature. The EU is transitioning towards a circular economy where products can be reused through recycling.

Ferdaus Ara Begum said that according to various reports, 4.5-5 lakh tonnes of waste are generated annually in the country's garment and textile sector. Only a fraction of it is recycled. Consequently, there is a pressing need to address this issue.

She said environmental concerns will become the primary challenge in production following the transition from less developed country status. Therefore, there is no alternative to increasing resource recycling to maintain competitiveness.

Ferdaus Ara Begum said, "If we do not put the issue of circularity in our policy now, the market of our products in the EU will not be sustainable. It will be a challenge for us to retain this market."

She further said that it is important to maintain the recycling system at the post-consumer stage.

"The manufacturers in the country are reluctant to assume responsibility for post-sale recycling. However, efforts to establish policies regarding producer responsibility are underway." 

The presentation highlights that the garment and textile sector contributes 10.35% to Bangladesh's gross domestic product (GDP). It generates employment for 4.1 million people, contributing to 65% female empowerment and 9.1% poverty reduction.

As per the article read during the presentation, taxation structures, such as high VAT rates, are hindering local recycling initiatives aimed at promoting sustainable practices. Therefore, policy advocacy in this regard is crucial.

Ferdaus Ara Begum said, "We need to explore the feasibility of waste management projects in dispersed textile factory locations and conduct comprehensive feasibility studies for specific initiatives."