Bangladesh Knitwear Manufacturers and Exporters Association
Bangladesh textile and knitwear industries are currently passing through a very critical state. Do you agree, and if so why?
"No, I don't agree that the textile and knitwear industries are passing through a critical stage. Rather the knitwear industry is experiencing a phenomenal growth in USA and growth in other parts is also in line with our expectations. The growth particularly in USA, which was our concern as we were considering it as a new destination, after the post-MFA is 70% which is very encouraging. The job market is also booming with the growth of the knitwear sector. But the woven industry is passing through a critical stage after post-MFA as their growth has reduced radically. Though they are yet to face a decline in terms of quantity or value, but in general this is not good sign. The reason is our country is too much dependent on the RMG, and the burden can not be borne by any sole sector no matter how big it is, as the scenario makes the economy vulnerable. So, we need to diversify our export basket and at the same time we also need to diversify our RMG products. As of today outer wears specifically T-shirt and sweater are the two main export items, we can think also under wears as we have the explicit desire of buyers to source those products from Bangladesh."
Can you describe in details the profile of Bangladesh Knitwear Industry?
"If we look at the following facts and figures then we will get an over view of the knitwear sector of Bangladesh: Total Export: US$ 2819.47 million (2nd Largest) Cumulative Average Growth Rate: 27% (approx) Share in Export: 32.58% (2nd Highest) Share in Net Export: 32% (Highest) Contribution in National Export Increase: 63.85% (Highest) Net Retention Amount: US$ 1691.68 million (Highest) Net retention rate: 60% (Highest) Value addition: 75% (Highest) Quantity Exported: 120.13 million dozen (Top sector in RMG) Labor Force Employed: Direct: 1.00 million; about 70% of them are women. Indirect: 0.50 million Number of Member Units: 983 So, knitwear is undoubtedly the number one sector of the country. Though knitwear's share in the country's export is after woven, but by the end of the fiscal year, we are confident to supercede them with huge margin; till date we are exporting at 9% ahead of our target and our last year's growth was 31.26% compared to woven's 1.7%. The sector has created a job boom in the economy and since August 2004, we have 316 new members (all of these are new set ups). The dyeing and accessories industry is totally dependent on the knitwear sector, and we have significant contribution in the growth of the banking and insurance services sector."
Textiles contribute largely to the foreign exchange earnings for Bangladesh. Against this valuable contribution, how has the Government support been so far and what are your expectations from it in the future?
"To date government support can be termed as moderate. We have received cash incentive, back to back L/C, duty drawback system, bonded ware house facility, duty free import of machinery, and some other facilities in areas of utility services in the form of VAT reduction. Recently government has lifted ban on importing yarn through Benapole Land port, which we were demanding for last couple of years, which is a significant development and will help the industry to grow. But government poorly failed to assure us the minimum electricity requirement, even as gas pressure is also decreasing at an alarming rate. Physical infrastructure has deteriorated in many cases and the port facility is worse. If these are not worked out on a priority basis and improved immediately, then it will act as a detriment to the industry as we will not be able to reach the targets. We can not show any apathy towards the aforementioned problems when our economy is dependent on only one sector that is capable of creating employment at an exponential rate if the problems are properly addressed."
Pakistani textile manufacturers have expressed keen interest to invest and establish manufacturing facilities in Bangladesh. How do you read this move?
"The move is encouraging for Bangladesh. In fact, we welcome the initiative and last week we had a very fruitful meeting with All Pakistan Textile Processing Mills (APTPMA) and Pakistan Hosiery Association (PHMA) regarding investment in Bangladesh, particularly in knit and allied sector. The outcome of the discussion is quite optimistic and we hope they will invest a lot. We particularly encouraged them to invest in Dyeing industry. We have also signed an MoU with PHMA regarding cooperation in investment, technology transfer, and in other areas. If they invest, it will also help us to market our investment climate to others. So far, we have queries from other countries too, regarding investing in the knitwear sector. The total picture as a whole is very positive for us."
What steps are being taken to modernize the textile and knitwear industry?
"There was, and is a continuous process to modernize textile and knitwear industry. The factories that are set up recently have installed the latest of the branded machines available. The dyeing industry also has the latest machines and technology. As the process was continuous, we are not facing any 'technology gap' problem in the sector. We are also having machinery exhibition each year that is bringing all latest technology and machines and the industry is adapting the required ones immediately."
What is your observation on the new forum 'sammilito Knit Forum (SKF)' and its views?
BKMEA is not concerned with the so called 'sammilito Knit Forum (SKF)' which is formed by some insignificant portion of the sector. Their views are also not known to us.
Labour productivity is a serious issue in Bangladesh. What are your plans to increase productivity with strict compliance as per international standards?
"Yes, you are right; labor productivity is a serious issue in Bangladesh. Though we have cheap labor but to some extent, we failed to convert the comparative advantage to competitive advantage as labor productivity is lower compared to countries like China and even Sri-Lanka. We have taken the issue seriously and are working to increase labor productivity at farm level. As I have already mentioned, we have taken up a program on productivity improvement and we expect to run the program shortly. If the program is successful, then we will progress a lot in this particular area. Uninterrupted power supply is one of the conditions of higher productivity, as we have power shortage and most of the factories operating in the sector are SMEs, so it is not always possible for them to have captive power generating system. In that case, they have to work extended hours to make up for the lost production. I have already said that we have under taken a lot of programs on social compliance."
BKMEA seeks to expand knitwear market in USA through duty free access. What are the prospects for this fructifying, and will it not upset other countries from within the LDC block over this preferential treatment to one of its member country?
"In fact, BKMEA never worked to get duty free access in USA, as knitwear's main destination was EU countries where we were and are enjoying duty free access and the growth is also satisfactory. The post-MFA provided us the opportunity to enter and explore the US market and we have decide to utilize this opportunity in what ever way we can. The growth (70.06%) in US market after the post-MFA tells the story. But after post-MFA, woven products have lost their momentum and as it was predicted so, BGMEA is trying to get duty free access in USA. In fact, Bangladesh is the only LDC country that is not getting any benefit from US as far as apparels is concerned. All other LDC countries are getting benefit from US either under CBI or AGOA. So, Bangladesh is deprived of the benefit of duty free access to US while others are enjoying. We expect US to provide us the duty free benefit and make the platform equal for all LDCs. This will help the country's woven sector to grow and together with knitwear, both sectors can take the country a long way."
Role of Knitwear sector has been very crucial in the progress of the economy of the country. What initiatives has Bangladesh Knitwear Manufacturers and Exporters Association taken or is taking to ensure its progress?
"It is quite vivid that the knitwear sector is playing a very crucial role in the progress of the economy of the country, especially after post-MFA the growth in the export business is basically contributed by this sector only even though it is notable for the sector, but bad for the country. Keeping all the things in mind, BKMEA has under taken several programs for the further improvement of the sector. BKMEA is working with South Asia Enterprise Development Facility (SEDF) and German Technical Cooperation (GTZ) to offer a better business environment, to increase social compliance, to build the capacity, to develop market etc. We have already organized a single country knitwear show in New York, USA, last November 2005; we are going to organize a single country knitwear show in Germany in May, 2006. We will go to USA again in September. We have taken massive programs on social compliance. We are currently running a project with NUK, an NGO working in the RMG sector, for basic social compliance awareness raising; the participants will then be graduated to another program of BKMEA-SEDF which is much more comprehensive and will ensure international certification at the end. We are publishing a handbook on labor laws and basic social compliance, and expect to distribute the same by March, 2006. Besides, posters and stickers will also be printed and disseminated to raise awareness. We are also planning to create advertisements on social compliance and air them on TV channels. BKMEA is actively thinking on the productivity improvement of the individual factories and we are currently in contact with a donor agency to provide us help on the project. We are also planning to train workers of the sector as there is shortage of skilled labor."
Can you draw a comparison between pre and post MFA era and how the knitwear industry has emerged in both the periods?
"BKMEA was always optimistic as far as post-MFA is concern. We always said that knitwear will perform well in the post-MFA, though our remarks were over shadowed by the so called big guns like World Bank and ADB. Interestingly when we were holding our first Knit Exposition in September 2004, we said positively that we would do better, on the same day ADB held a press conference and said that knitwear in particular will be affected. We were astonished, though not afraid by their remarks; but it made the investors and others shaky. Other wise, we could have attracted more investment and our growth rate would have been much higher. I must particularly mention the contribution of the entrepreneurs who actually made it happen and proved the big guns wrong. They not only invested in sewing units, they also invested simultaneously in allied industry: knitting, dyeing, printing etc. that has helped to prepare us for the post-MFA. This backward industry is particularly important to reduce the lead time; it also provided our strong control over the quality. Our backward linkage industry was also very helpful before post-MFA to get the GSP facility of the EU and helped us grow with the facility. Now, as there is no quota we are enjoying the fruit of what we did in the pre-MFA. Today, we are thinking to expand in the US market rapidly because we have the capacity which is also expanding very fast. Since September 2004, we have 316 new factories in the sector which is adding new one every day. We are hopeful to reach US$ 4.00 billion mark this year which will make the sector number one export earning sector of the country by huge margin compared with the woven sector. We have exported to China this year and are very optimistic to expand in Chinese market too. So, the sector is having honey-moon with MFA, irrespective of pre or post situation."
