Time to build infrastructure to support RMG export growth

The year 2021 was a mixed year for Bangladesh ready-made garment (RMG) industry. The downward trend in the export sector due to the outbreak of the pandemic in 2020 continued at the beginning of 2021. 

Because of the sharp decline of Bangladesh's apparel export in the pandemic, in July 2021, Vietnam overtook Bangladesh in the global apparel market and became the second-largest global ready-made garment (RMG) exporter. 

Bangladesh regained its position as the world's second largest RMG exporting country in the very next month; as in the first seven months of 2021, Bangladesh exported apparel products worth $18.80 billion against Vietnam's exports worth $16.86 billion. 

From April 2021, the downward trend started to change. We witnessed a staggering apparel export growth of 571.8% in the month of April. In the July-September period of the fiscal year 2020-21, we exported $9.05 billion worth of garment items, registering an 11.48% year-on-year growth. 

There was a happy ending of the year, as far as our apparel export is concerned. For the first time in the history of Bangladesh, the monthly export of garment items crossed $4 billion in December 2021. 

We must thank our honourable Prime Minister for her timely stimulus packages and other government policy support, which helped the industry to quickly heal the wounds of the pandemic and turn around. 

However, uncertainty still looms large in the new year as the new strain of Coronavirus 'Omicron' spreads across the world at an alarming rate. But I do think the surge of apparel orders to Bangladesh is largely due to geopolitical reasons. Bangladesh is a preferred option for buyers in an uncertain world. 

Ethiopia has proven to be a failed case for brands and retailers due to the violent inter-racial rivalries and riots there. Political instability in Myanmar is also causing sleepless nights for the buyers now, who started to source from the country in the last decade. 

The US-China's tug of war is a major reason behind the increase in our apparel exports to the US in recent months. Moreover, China, the world's biggest RMG exporter, is also gradually shifting its focus from apparel to high-tech industries. 

Obviously Bangladesh, which occupies only 6.3% global share, could claim a major portion of what China is leaving behind. The prospect of nearshoring, however, is still a far cry, in my opinion. 

It is very much possible for Bangladesh to continue to export $4 billion, if proper infrastructures are put in place. The pertinent question is – are our infrastructures ready? 

We have read and seen several media reports in recent days that many of our apparel factories are failing to operate in their full capacities due to shortage of workers. The shortage of skilled workers is becoming acute. 

Enjoying monthly $4 billion apparel exports without a proper supply of skilled workers will not be sustainable. 

The spinning sector witnessed a major jump in investment last year as entrepreneurs pumped Tk5,970 crore to set up 26 new mills to meet the rising demand. 

But to sustain the growth of apparel export in the long run we need to strengthen our backward linkage industries, especially the woven textiles sector, to lessen our over-dependence on the import of woven fabrics, which proved to be suicidal at the advent of the pandemic in China in early 2020. 

Enhancing the capacity of Chattogram Port is extremely crucial for augmenting our apparel export. The average anchorage wait time for vessels at the port is still 7-8 days. 

Without reducing the feeder vessel wait time or improving the existing off dock capacities of the port, any hope or plan to increase our apparel export in the years to come will be a chimera.  

Last but not the least, sustainability and innovation will continue to be the keys for the progress of Bangladesh apparel industry. 

Bangladesh apparel industry has come a long way. The sector has made the largest contribution in transforming Bangladesh from a least developing country to a middle-income country. But as the saying goes, if one cannot seize opportunities, opportunities seize to come to them. 

The recent surge of our apparel orders is an opportunity we have to avail for the longer run. That will be only possible if we can build the infrastructure needed to hold on to the orders. We should start to build the infrastructure in 2022. 

If we can do that, though we could not achieve the $50 billion apparel export milestone in 2021 for valid reasons; reaching the milestone in 2024, when Bangladesh will be officially eligible as a middle-income country, would not be impossible at all. 

Ashikur Rahman Tuhin is the Managing Director of TAD Group. He is a former Director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). 

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.