Writes Enamul Hafiz Latifee,
-Chanakya, the ancient Indian teacher, philosopher, economist, jurist and royal adviser (350 BCE - 275 BCE)
However, getting back into the liberation war, after nine months, when it ended on 16th December 1971, the economy of newborn country- Bangladesh was left prostrate; fate had been muddied down and most of the economic and physical assets were shattered or in bad condition. In the opinion of Choudhry and Basher (2002), the direct and indirect costs due to the massive destruction were US$ 9.53 billion and US$14.08 billion respectively. But yes, the objective of independent Bangladesh was very clear to achieve sustainable development by ensuring uplifted living standard of all citizens irrespective of ethnicity, race and religion. By the flow of time, Bangladesh is now recognized as miraculous country at international arena and referred as exemplary for encouraging least developed countries globally, as if according to the World Bank on 1972, following year after achieving independence it had Gross Domestic Product (GDP) of US$ 6.29 billion, and on 2014 it encompasses GDP of US$ 173.82 billion, that means within four decades, GDP grew almost 27.63 times. In addition, Bangladesh has exported US$ 31.2 billion worldwide at the Fiscal Year (FY) 2014-15, where Ready-Made Garments Industry of Bangladesh comprises 81.69 per cent, in monetary terms the export was US$ 25.49 billion. More specifically export of Knitwear Sector has exceeded US$ 12.43 billion comprising 39.83 per cent of the total export. Moreover, due to emergence of the strong backward linkage within the country, Knitwear Industry is adding 75 per cent value here which opens up huge opportunity toward investors of home and abroad to invest more in the backwardly linked spinning, weaving, sewing, packaging and accessories manufacturing sectors. In addition, at last five consecutive fiscal years (i.e., from FY 2010-11 to FY 2014-15) share of Knitwear Sector in the Gross Domestic Product (GDP) was 7.2 per cent on average. That means, undoubtedly still now RMG sector is a strategic and commercially beneficial sector to Bangladesh which is always in the challenge to cope up with changing international market.
Before you start some work, always ask yourself three questions- Why am I doing it, what the results might be and will I be successful? Only when you think deeply and find satisfactory answers to these questions, go ahead.
-Chanakya, the ancient Indian teacher, philosopher, economist, jurist and royal adviser (350 BCE - 275 BCE)
The country, Bangladesh got the most awaited independence on 1971 under the dynamic geopolitical leadership of Bangabandhu Sheikh Mujibur Rahman and through blood-spattered sacrifices of 3 million pure souls, with a view to breaking the multi-dimensional chains of exploitations insisted by the rulers of East Pakistan at that time, which was mainly compelled into the vein of Bangladeshis by the Vasha Andolon of 1952, a crucial movement, through what Bangladeshi people first started realizing the identity ‘Being Bangali’.
However, getting back into the liberation war, after nine months, when it ended on 16th December 1971, the economy of newborn country- Bangladesh was left prostrate; fate had been muddied down and most of the economic and physical assets were shattered or in bad condition. In the opinion of Choudhry and Basher (2002), the direct and indirect costs due to the massive destruction were US$ 9.53 billion and US$14.08 billion respectively. But yes, the objective of independent Bangladesh was very clear to achieve sustainable development by ensuring uplifted living standard of all citizens irrespective of ethnicity, race and religion. By the flow of time, Bangladesh is now recognized as miraculous country at international arena and referred as exemplary for encouraging least developed countries globally, as if according to the World Bank on 1972, following year after achieving independence it had Gross Domestic Product (GDP) of US$ 6.29 billion, and on 2014 it encompasses GDP of US$ 173.82 billion, that means within four decades, GDP grew almost 27.63 times. In addition, Bangladesh has exported US$ 31.2 billion worldwide at the Fiscal Year (FY) 2014-15, where Ready-Made Garments Industry of Bangladesh comprises 81.69 per cent, in monetary terms the export was US$ 25.49 billion. More specifically export of Knitwear Sector has exceeded US$ 12.43 billion comprising 39.83 per cent of the total export. Moreover, due to emergence of the strong backward linkage within the country, Knitwear Industry is adding 75 per cent value here which opens up huge opportunity toward investors of home and abroad to invest more in the backwardly linked spinning, weaving, sewing, packaging and accessories manufacturing sectors. In addition, at last five consecutive fiscal years (i.e., from FY 2010-11 to FY 2014-15) share of Knitwear Sector in the Gross Domestic Product (GDP) was 7.2 per cent on average. That means, undoubtedly still now RMG sector is a strategic and commercially beneficial sector to Bangladesh which is always in the challenge to cope up with changing international market.
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| Caption: Finished T-Shirt Sample; Made in Bangladesh. Photo Source: Internet |
Doing business and earning foreign currencies through growing export is becoming harder for Bangladeshi RMG entrepreneurs not only for internal detrimental factors, such as recent price hike in gas price, i.e., 15 per cent price rise for industrial units and 100 per cent for captive power producers; which is quite enough to make RMG manufacturers and exporters out of the world competition, but also for anti-tidal external factors such as getting lower price that is lack in assurance of fair prices offered by buyers of major RMG trading partner countries even after meeting all the social compliance, sustainability issues, however, during January-July, 2015, price for RMG products has fallen by 2.45 per cent imported by USA buyers from Bangladesh and by 1.41 per cent imported by EU buyers, while to meet up infrastructural upgrade, fire safety and electrical-electronics safety as of the international standard, every factory is enforced automatically to spend Taka 50 million to Taka 200 million, perhaps this huge amount seems to be in risk if those internal and external detrimental issues are not sorted out as soon as early, as if there is another major geopolitical issue which was perceived earlier to go in favor of countries like Bangladesh but in reality is going against of the commercial interest of Bangladesh, namely that is- Regional Trade Agreements; which have become progressively rampant since the early 1990s. According to the World Trade Organization (WTO), till 7th April 2015, counting services, accession and goods discretely 612 notifications of RTAs has been received by the WTO/GATT and of these, 406 are in force. These WTO figures correspond to 449 physical RTAs (counting goods, services and accessions together), of which 262 are currently in force. As if Bangladesh could not make any RTA with it’s major RMG trading partners yet so that the sector is losing the competitiveness at greater extent only due to artificial matters created externally.
However, for negotiating in the efficient way regarding RMG business nationally and internationally, from entrepreneur to national diplomatic level, for grabbing the diversified world market and to adopt with current market situation, it is the foremost necessity of time to have the proper information about international buyers and tariff-nontariff barriers imposed by different countries or custom unions, unless which RMG export earnings may not grow as expected by 2021 to US$ 50 billion, set by the present government under ‘Vision 2021’.
As Chanakya, the ancient Indian teacher, philosopher, economist, jurist and royal advisor (350 BCE - 275 BCE) has remarkably said that there should be a satisfactory purpose of doing something to be successful; henceforth first of all, the policies that are to be taken to facilitate the RMG industry should be different for Knitwear sector and Woven sector, as if in Bangladesh the characteristics of these two sector are completely different from one another, that is, when the former sector is adding up 75 per cent value within the country then the latter sector is adding up only 30-35 percent value here in Bangladesh which illustrates well, the distinct environment of these two sectors, so that if single policy is taken and implemented through related bodies and ministries then perhaps it is not going to make Knitwear sector of Bangladesh to reach it’s optimal point of gaining that it would have if different policies were being taken for facilitating this one.
Secondly, it is not enough now to send trade missions to different countries or to participate in expos only but we should now move very strategically by combining the efforts of private and public sector for opening warehouse immediately in any of the CIS (Commonwealth Independent State) countries, GCC (Gulf Cooperation Council) countries, moreover in Turkey which is well renown as the corridor between Asia and Europe; also in India to capture one of the largest markets in terms continuously growing consumers, if it is done then surely Lead Time will come down very sharply, and high potential new markets will get opened for knitwear and woven industries.
Thirdly, a specific brand image should be made, Bangladesh RMG industry should transform themselves only from as supplier to branded retailer of RMG products- we have to come out from this thinking as soon as possible that if we establish a brand then fashionable RMG consumers are not going to buy our products, in contrary we should understand the truth that none of the present days world class brand grabbed the consumer’s attention within a day; surely it takes time and proper execution of strategic planning, however, with the assistance of world leading garment fashion houses, here in Bangladesh, world class fashion designing institutes should be set up and processes should be made to show those fashionable products in Fashion Weeks held particularly in Italy and France.
Fourthly, as if Bangladesh is said to be one of the most risky countries among the world due to the climate change so that if any RMG business comes up with Business Continuity Plan (BCP) then for inspiring disaster resilience thus sustainability of the industry and the economy, government should provide cash incentive as per cent of the investment and on the value of export, hopefully it will help Bangladesh not to be in economic disaster which has caused Nepal to face economic loss of 27-30 per cent equal to nation’s GDP due to the earthquake.
Fifthly, there should be accelerated and collaborated program taken by Ministry of Commerce, Ministry of Industries, Ministry of Foreign Affairs, Ministry of Planning and Ministry of Finance to seal the deal of signing FTA (Free Trade Agreement) with countries and RTA (Regional Trade Agreement) with custom unions within the quickest possible time, as if according the different studies conducted by Sohn and Lee (2004) and European Union (2014) show that FTA and RTA enhance the economic growth greatly and for Asian countries these have very in-depth positive meaning for economy.
Sixthly, there should be a sustainable power and energy supply policy from government which will ensure domestic RMG investors thus SME (Short and Medium Enterprises) an uninterrupted power and energy supply for a long period at least not to incur losses just after investing in a project, however, here our Hon’ble Commerce Minister, Mr. Tofail Ahmed can be quoted as he threw a billion dollar question at the occasion of 3rd Front of Bangladesh’s Export Destination: Russia &; other CIS Countries on 12 September 2015 by saying, “If the local businessmen do not get any benefit here, then why foreign investors will come to invest here?”
Seventhly, an individual regulatory authority should be established to let our RMG-SMEs to invest in abroad forming some clusters but not individually at the very first stages and to monitor, prescribe and guide them accordingly to sustain their businesses as there are possibilities, not only gaining profits but also facing losses due to unknown or partially known business environment of those countries to our businessmen.
Being optimist, it can be expected that if these seven crucial recommendations are taken with high importance and implemented with priority basis by related government bodies and private stakeholders then before or by 2021 we are surely going to achieve the targeted US$ 50 billion export earnings from RMG sector by declaring again that Bangladesh is the Tiger’s Den in world RMG sector.
Enamul Hafiz Latifee
The writer, Senior Assistant Secretary, Research and Development Cell, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA)
Email address: enamul.hafiz.sust@gmail.com; iart11@bkmea.com
This write up got published in following media,
1. http://www.thedailystar.net/supplements/25th-anniversary-special-part-2/rmg-sector-towards-thriving-future-210886
This write up got published in following media,
1. http://www.thedailystar.net/supplements/25th-anniversary-special-part-2/rmg-sector-towards-thriving-future-210886
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