![]() ![]() According to an estimate, the top five products of Bangladesh’s RMG exports account for 53.3%, whereas the figures are only 22.7%, 28.7%, and 25% for its competitors such as China, India, and Vietnam, respectively. However, sustaining this position would be challenging for Bangladesh due to the Free Trade Agreement between the EU and Vietnam. Only three RMG items have exceeded Bangladesh’s main competitors, China, India, and Vietnam, at the 4-digit Standard International Trade Classification (SITC) level, and the advantage Bangladesh holds in these three products is negligible.Īround 72% of Bangladesh’s apparel export earnings come from the USA and EU countries. Bangladesh’s attempt to move from low-quality to high-quality products has not been very successful. Bangladesh continues to be an attractive supplier of cheaper RMG items, according to the Global Sourcing Survey 2018 by Asia Inspection. The majority of Bangladesh’s RMG export products are of low value and basic quality. Around 36% of the RMG exports in 2017-18 were made up of just two products-T-shirts and men’s trousers. The top 10 RMG products accounted for 70% of the total RMG exports from Bangladesh in 2017-18. Other major traditional challenges that the RMG sector in Bangladesh is facing are increased competition in the global market, working conditions and labour unrest, and increased pressure on workplace safety and compliance.Īlthough Bangladesh’s exports are still mostly concentrated on RMG exports, diversification within the RMG sector continues to be extremely challenging. Bangladesh will no longer be considered a least developed country (LDC) by 2026, at which point it will have to contend with the erosion of export preferences in important markets and the ensuing risk of export loss, particularly the loss of RMG exports. ![]() Historically, the RMG sector in Bangladesh flourished for a variety of reasons, including favourable policies, government support, and several critical political economy factors, such as the generation of sizeable ‘rents’ in this sector through the Multifibre Arrangement (MFA) quota (which no longer exists) and the Generalized System of Preferences (GSP) various forms of subsidies tax exemptions the maintenance of a suppressed labour regime inadequate factory compliance and both legal and unlawful RMG by-product businesses (for example the scrap from clothing items, locally referred as jhut, can be used for recycling). There are some crucial and imminent issues that the RMG sector currently faces: poor working conditions, labour unrest, technological advancements and the resulting loss of jobs, fierce competition from rival nations, and pressure from foreign buyers to address compliance-related issues.Īs Bangladesh’s RMG industry has grown, both the export basket and the export market have become increasingly concentrated, leaving it highly vulnerable to exogenous and endogenous shocks. Nonetheless, there are several challenges that raise worries about the sector’s future. The rise in Ready-Made Garment (RMG) exports in Bangladesh has catalysed economic growth, macroeconomic stability, employment creation (particularly among women), and poverty reduction. Note: Banner photo courtesy of a garment worker in Bangladesh. To read this blog in Bangla, please navigate here. While SANEM’s recommendations for sustainable growth are far-reaching, they also remind us that garment workers, their skillsets and their own futures need to be incorporated into country-wide planning. The team at SANEM has been talking with and listening to garment workers for nearly five years without break, making their perspective a unique one. This 4th blog post continues the broad perspective, discussing the various challenges the industry in Bangladesh has faced and will confront in the future. Each blog post has been guest-written by our partner in Bangladesh, the South Asian Network on Economic Modeling ( SANEM). This week’s Garment Worker Diaries blog is the final post in a series of blogs which have focused narrowly on Corporate Sustainability Due Diligence, CSDD compliance and worker well-being, and more broadly on the future of the RMG industry in Bangladesh. ![]()
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