Yet another year full of global disruptions has passed, and yet another time, Bangladesh’s RMG continues showing its grit and determination. Credit goes to our entrepreneurs who have shown their resilience and commitment to the industry, the Government of Bangladesh, and of course, BGMEA which never looked down even in hardships. Even if things started looking a bit gloomy due to the anticipated global economic slowdown in 2022, BGMEA still went ahead and organised the highly successful first-ever ‘Made in Bangladesh Week 2022’ that received an overwhelming response from the global garment buying community, stakeholders, sustainable organisations and the domestic RMG industry.
Faruque Hassan, President, BGMEA shares with Team Apparel Resources (AR) about his ongoing stint in the official RMG export association of the country, current business challenges and contingency plans. Though this exclusive face-to-face interaction touches upon various aspects of RMG business in Bangladesh, our team also got to know about the interesting studies that the recently launched Innovation Center by BGMEA is conducting.
AR: You took charge as BGMEA President during Covid-19. Your tenure is about to be over. What sort of challenges have you faced in last almost two years?
Faruque: It really was a pretty challenging time for me as an incoming President during the pandemic. The first challenge was to keep the factories running so as to not lose revenue streams. We had to make a tough call between life and livelihood, and we managed to save both. But we proved our resilience by continuing our operations through maintaining stringent health protocol in the factory. I extend my sincere thanks to our Honorable Prime Minister Sheikh Hasina because with her visionary leadership and direct intervention by Her Excellency, we were able to face all the challenges and stay on course.
The second challenge that we faced was of order cancellation worth US $ 3.18 billion and that really was a setback for all of us. The global freight system was severely disrupted pushing the container freight cost up. Prices of cotton, yarn, fuel, dyes and chemicals went up causing significant cost burden to manufacturers who were already struggling.
However, BGMEA met with brands, buyers, governments of EU and North American countries and explained the hardships that we were going through. With our economic diplomacy, things stayed on track.
Even during the rough times, we did a lot of machinery upgradations, invested in workplace safety measures, installed new and energy-efficient technologies, focused on productivity enhancement and succeeded in market and product diversification. On top of that, the revolution in the area of workplace safety and environmental sustainability continues which has set a unique example in the world. In 2022, a number of 30 RMG factories in Bangladesh have become LEED certified by USGBC which made 2022 as the year seeing the highest number of LEED certifications in a single year. Currently, we have 183 LEED-certified RMG factories.
Now that the pandemic woes are almost over, we have seen new challenges emerge due to Russia-Ukraine war. We are going through unprecedented times but we believe that with the assistance and support from Bangladesh Government and other stakeholders, we will be able to overcome this situation too, just like we did before.
“We are living in a complex world where the risks, challenges and prosperity are interconnected. As global business shifts its values and vision, sustainability sits at the core. Sustainability is not only about fulfilling social, ecological and community obligations; it is also about how we remain economically viable through innovation, value-addition, digitisation, diversification and being more productive.” – Faruque Hassan
AR: The talks of attracting Foreign Direct Investment (FDI) in Bangladesh’s RMG sector have been there for quite some time now. Where does the country stand today on FDI front?
Faruque: FDI is the area where we are still struggling; however, we are in touch with the Government to further simplify import-export policies so that the business environment can be more investment-friendly. The investment queries from foreign sources are increasing, we are encouraging FDIs in those sectors where we lack capacity. Bangladesh needs FDI in backward linkage industry particularly in woven. Because if we look at the current picture of our industry, we can see capacity-wise, there is still a 60 per cent shortfall of woven fabrics.
We also need investment in high-end product segments such as activewear, lingerie, loungewear, outerwear and suits. We don’t have even a single unit of spandex yarn manufacturing in Bangladesh and that’s where FDI can help tremendously.
Another way of looking at FDI from our perspective is that we are not looking at small FDIs as small investors tend to wrap their operations up if they can’t keep up with market disruptions which leave our workers and supply chain broken. However, big FDI is not an issue and we are open to that.
In order to attract more FDI, we have to look at easing business in Bangladesh. The country shares borders with neighbouring countries. There are a number of land custom ports but most of them aren’t being used for trade – either from our side or from other’s side. What we know from official sources is that more land ports are coming up to support exports. We, as BGMEA, had a series of meetings with officials regarding port infrastructure development and the Bangladesh Government is positively working on suggested solutions. These positive changes will certainly help attract investors to our country. Also currently the construction of a number of mega projects including 100 economic zones are going on which will increase the confidence of foreign investors on us.
AR: The global economic situation isn’t positive and Bangladesh is facing heat on various fronts such as gas and electricity shortage, currency depreciation and draining foreign reserves. What are BGMEA’s contingency plans?
Faruque: Since this is a global issue, no particular country can avert the consequences. It’s true that we are undergoing a rough phase but currency depreciation is happening globally including in our neighbouring countries. Though the Government of Bangladesh has taken a number of austerity measures to safeguard our economy from the fallout of recent global economic downturn, the operations of the textile and garment industry here including imports of raw materials and machinery remain unaffected without worrying about foreign reserves; thanks to the support from the central bank and commercial banks in Bangladesh.
Power and gas crisis have been there for last few months now but India has started sending us electricity from Adani Godda power plant. However, we know it’s not a long-term solution, but we have to address this energy shortage issue. Our Government has taken a power sector master plan and is working accordingly which contains a number of mega projects and renewable energy vision by 2041. BGMEA has asked all members to use more energy-efficient technologies in factories; more solar panels at commercial spaces; and replace old boilers with new ones so as to reduce the gas consumption in factories.
AR: BGMEA recently launched its Innovation Centre globally during ‘Made in Bangladesh Week’. Please tell us about the offerings of this centre.
Faruque: While Bangladesh remains a strong sourcing hub, the manufacturing and sourcing landscape is fast changing, disrupted by the fourth industrial revolution and we are preparing ourselves to cope up with that.
Keeping that in mind, BGMEA has established the Centre of innovation, Efficiency and OSH. The main objectives of the centre are to find out the areas where Bangladesh RMG sector lags behind global best practices and standards in terms of product development, efficiency, use of technologies, process upgradation, environmental sustainability and social innovation. The centre will be an exchange hub of industry-wide best practices as it endeavours to disseminate knowledge to beneficiary groups continuously. It will strive to extract knowledge about best business practices, most-advanced technology and the latest trends of the global fashion industry and inject those ideas into the apparel industry of Bangladesh through trainings, workshops and stakeholders’ gatherings.
As we have a bigger growth vision ahead, technology and innovation will be a crucial part for the next stage of our industrialisation with regard to sustainability, competitiveness and creating decent employment. Our success will depend mainly on developing skills and efficiency of our people and creating decent jobs for them. We can ensure better livelihoods and better opportunities for our people if we can produce right skills and create better jobs, and better jobs can be created through enhancing level of skills and value of products.
And to execute that, we will be needing assistance from our entire esteemed stakeholders. I am cordially inviting buyers, tech companies, solution providers and everyone relevant in any category to work with us, to help us bring the change. Only collaboration and hand holding approach can make the second-largest garment producer country in the world more enriched and impactful. Let’s make this centre a hub of innovation, whether it’s in terms of technology adaptation or in terms of knowledge sharing.
Our efforts are not just limited to this centre as we are setting up labs in BGMEA University to impart more practical knowledge in students. We have also been given go-ahead by the Government to set up another Fashion and Textile University in Chattogram which is going to be inaugurated soon.
AR: Going forward, do you think non-traditional destinations will help Bangladesh fetch greater export revenues?
Faruque: Bangladesh’s position in non-traditional markets such as India, South Korea, Japan, Australia among many others is strengthening rapidly. I remember that I started working with a new market back in 2010, and at that time, our market share in non-conventional markets was less than 7 per cent which has now jumped to over 17 per cent. This stands at around US $ 6 billion in value-terms. During ‘Made in Bangladesh Week 2022’, we interacted with a lot of buyers from non-traditional markets, particularly from middle-east countries from where around 150 buyers showed up! Interestingly, they had never been to Bangladesh before but they were quite impressed. We are confident that we will be able to increase our market share, percentage-wise, even if stagnation is there in 2023.
