It is somewhat strange that when the total world garmenttrade is going through uncertain phase, Bangladeshi exporters are thinking ofexpansion of their capacities. What is the reason for their newfoundenthusiasm for further expansion?

The foreign business delegations to the 5th Knit Expo Showand 20th Bangladesh Apparel and Textile Exposition (Batexpo), who talked withthe Bangladeshi garment exporters, found them brimming with confidence andplanning for further expansion. This is particularly surprising when those withrisk management skills have not found anything, which should promise a brightand assured future, particularly unless the Government does not quickly removesome major constraints. Those in the know of things say that unless one can ensureuninterrupted access to energy, improved social compliance, enhancedproductivity and further backward integration of the sector including by goingin for spinning, weaving and dyeing, it would be difficult for Bangladesh torealize the high hopes it has built up for itself.

Commendable Growth

One, however, must admit that ready-made garment industry in Bangladesh has made a commendable growth over the last 12 years, with annualgrowth averaging nearly 20%. And the interest shown by the foreign buyers forBangladeshi products at Knit Expo 2009 suggests there is still plenty ofuntapped demand. One could forgive Fazlul Hoque, the dynamic President of BKMEA(Bangladesh Knitwear Manufacturers & Exporters Association), for makingsome bold predictions. He boasts that: "Bangladeshi knitwear exporterswill break the Chinese wall." And that within a few years,"Bangladeshi apparel manufacturers will export US$2bn to Japan," up from US$74m in 2008-09. Did he really mean that? Hoque explains: "Bangladesh is presently the world's number three knit wear exporter after China and Turkey. "Pretty soon, maybe next year, we'll snatch position two from Turkey. "Okay, I know that our current knitwear exports at US$6.43bn [FY 200809] areonly a fraction of Chinese exports. It may take us 10-12 years, maybe more, tobeat China. But one must have a dream."

Fazlul Hoque is not alone in believing that the annualapparel export target of US$2bn to Japan is attainable. Subhan Abdus, Presidentof Japanese trading company Taiyo Japan, from Kawasaki, said: "Japanesebuyers don't compromise on quality.But from what I saw in a number of selectedBangladeshi factories, I can conclude that with a few improvements thesefactories are fit to export to Japan. The US$2bn target sounds realistic tome." The Japan Textile Product Quality and Technology Center QTec, from Tokyo, says that by February 2010 its Dhaka lab will be ready to carry out the specifictests demanded by Japanese buyers. Also, most of the Bangladeshi exhibitors ofshirts, pants and other woven garments at Batexpo 2009 appeared confident abouttheir future. The fact that big numbers of foreign buyers are flocking to Bangladesh is excellent news, not only for the 4,825 garment factories and their 3.1mworkers, but for the whole economy too. In 2008-09, RMG exports from Bangladesh represented 79.3% of national exports.

Shifting of Orders from China to Bangladesh

International buyers are well aware that Bangladesh is the country with the lowest hourly labour cost according to the 2008 comparisons madeby Werner International and Jassin O'Rourke; and the lowest garment productioncost according to the KSA 2009 sourcing guide. No wonder, then, that many ofthem are thinking of shifting part of their orders from China and other countries to Bangladesh. Foreign investors, in contrast, especially in the primarytextile industry, are long term thinkers. So it will be interesting to see howthey react on the growing popularity of 'sourcing location Bangladesh '. "For the time being no-one is coming. Everybody is scared and adopts a'wait and see' policy," Hassan Towfique, Secretary General of BTMA(Bangladesh Textile Mills Association) comments regretfully. Will theGovernment of Bangladesh be capable of fixing the problem of frequent energyshortages and breakdowns? Further, what effect will the battle for a higherminimum wage have on the RMG sector? Labour unions want to see the minimum wageraised from its current EUR16.6 to EUR50 per month. But credible union leaderMushrefa Mushi (GWUF) says that many manufacturers still stubbornly pay theirworkers as little as EU R 1 012 a month. What could save the Bangladeshiprimary textile sector from collapse if the EU rules of origin forEBA-countries (Everything but Arms) are changed and based on 'single-stage'criterion?

Originallypublished in The Stitch Times: February 2010