Bangladesh’s apparel export industry showed grit, determination and the much-needed resilience during hardship times in last two years to not just survive but clock the highest RMG export revenues in a calendar year – US $ 35.81 billion in 2021. The goal for factories is now to work relentlessly towards achieving US $ 50 billion target and that just seems to be a matter of time for Bangladesh to touch the milestone, even if the perennial issues such as global economic challenges; political instability in some parts of the world and raw material’s high cost are still there. The role of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) – the apex body of the country’s garment export industry – in this growth is going to be as critical as it can be. Faruque Hassan, President, BGMEA recently sat with Team Apparel Resources (AR) in Dhaka to have a candid conversation on where the Bangladesh’s RMG industry stands in today’s time and what does the future hold for it.
AR: BGMEA has been aggressively promoting ‘Made in Bangladesh’ goods in the global apparel retail industry in the last couple of years. What strategy are you following to give a better push to your export industry?
Faruque: When Bangladesh started RMG manufacturing business 40 years ago, 75 per cent of the total products were shipped to the US market and this share has reduced to just around 20 per cent in 2022 but still the US is a dominant market for us. Of the total apparel imports done by USA during 2021, our share has jumped to 8.76 per cent from just 6 per cent a year ago! The EU plus UK markets now constitute over 60 per cent share and we are gradually increasing our market share in non-traditional markets such as Japan, India, South Korea and Australia amongst others.
Of all regional countries, India is going to be a much better market for us in future than what it is today. We believe, with India, we should not compete but complement. We can bring in more yarns, fabrics, textile machinery, dyes and chemicals from India and produce more value-added garment products in our country for export markets. This means if we increase our global garment exports, India is directly benefiting out of it because raw material used in those garments majorly comes from India.
We also want to collaborate with India and South Korea to use their design development expertise because those countries have a rich experience in setting up design studios which are used for R&D in product development and Bangladesh still doesn’t have such facilities. So, we can work together where Indian and Korean companies, individuals or designers can collaborate with factories in Bangladesh and we can together produce value-added garments to fetch greater revenues and capture the larger chunk in the Western world’s apparel market. Win-win for all, isn’t it? And, this is really the need of the hour as China is facing hardships that are pushing buyers to move out of the country. It would be a great opportunity for us to grab this shift.
AR: Till around 5 years ago, Bangladesh was accused of doing more of basic commodity business. But the situation has changed a lot now as factories are going for not only value-added products but engineered apparel items as well. Please share your views on this.
Faruque: That’s the area we are working on resolutely. To increase share in the global apparel markets, we are doing product diversification, fibre diversification, market diversification, technology upgradation and value addition. Just for an overview – we are still shipping cotton-made apparels in majority that is around 75 per cent of our overall garment shipment, so we are undeniably winners in cotton-made apparels. However, non-cotton made apparels constitute around 75 per cent of global consumption. So in non-cotton, there is huge opportunity and the focus of factories is increasing on non-cotton fabrics, especially MMF, and Bangladesh is gradually looking to gain expertise in MMF-based garment manufacturing. To assess the prospects of fibre diversification, BGMEA has undertaken another study titled Exploring the Prospect of Bangladesh’s Non-cotton Textile and RMG Products in the Global Market: A Guide to Future Investors and Policymakers. This study will focus on Bangladesh’s overall competitiveness and strength in the area of non-cotton apparel item production and export.
‘Fair Price’ is what Bangladesh weighs upon
“One thing is there – we were complaining about low prices offered by buyers previously and this is true. Now we are not accepting lower prices in overseas orders! In fact some buyers have increased prices than before; however, the industry is still facing some challenges. The price of raw material (almost 100 per cent increase in yarns, and 40 per cent increase in dyes and chemical), gas, electricity and fuel have increased tremendously. Also, the freight costs have gone up to 350 per cent – 450 per cent. So our margins are still low!” – Faruque Hassan
Previously, the country was not able to tap a bigger chunk in MMF market because of lack of understanding and lack of capital investment in high-temperature (120-160℃) and high-pressure dyeing machinery for polyester and other MMF fabrics. The situation is not the same anymore as we have gained technical know-how and increased investment in technology, particularly in backward linkage industry. We need investments in these sectors, especially foreign investments in high-end textile sectors, specialised fabrics and technical textile manufacturing will bring in new expertise and technologies, which will support our next growth phase. This we can also do together with India, especially Surat area that is strong in MMF.
This is actually necessary as, out of hundreds of items that we are producing, around 82 per cent of revenue is shared by five categories – trousers, sweaters, shirts and blouses, T-shirts and underwear. In FY ’21, we shipped US $ 31.45 billion worth of apparels, and these five products collectively contributed US $ 25.81 billion in that! We know we need to work to increase share of other products too and the factories have now started producing lingerie, suits, workwear, sportswear and activewear/athleisure and many new investments are entering into these segments.
AR: As far as pricing is concerned, how challenged are garment factories in Bangladesh in today’s time?
Faruque: One thing is there – we were complaining about low prices offered by buyers previously and this is true. Now we are not accepting lower prices in overseas orders! In fact some buyers have increased prices than before; however, the industry is still facing some challenges. The price of raw material (almost 100 per cent increase in yarns, and 40 per cent increase in dyes and chemicals), gas, electricity and fuel have increased tremendously. Also, the freight costs have gone up to 350 per cent – 450 per cent. So our margins are still low!
And, this is one of the areas where Bangladesh factories, under BGMEA’s guidance, are working wherein they are focusing aggressively on eliminating wastes in factories, reducing production loss and improving efficiencies.
AR: When you say orders are pouring in, what type of buyers are coming to Bangladesh? And, what are the factories’ offering to buyers to fetch more orders?
Faruque: We are enjoying working with all types of buyers currently – retailers, marketplaces, e-commerce brands, wholesalers.The main reason behind this flourishing order trend is that, during COVID-19, we performed and our supply chain showed continuity. The buying community knows this very well. We are far ahead of other manufacturing destinations when it comes to taking care of our employees both financially and from safety point of view; and following all standards, compliances in our factories.
We have invested hugely in machinery upgradation, capacity expansion, high-end automats and Industry 4.0 solutions in last few years.
We do have top denim factories, top knitwear factories and top garment washing plants here. Collectively, all these factors have worked in our favour and helped us (still helping) get more orders from buyers. However, as I mentioned above, we are only accepting orders that come with fair pricing.
AR: How does the industry plan to ensure factory safety and worker well-being?
Faruque: Over the last decades, Bangladesh has made significant progress in the area of safety and social sustainability. From child labour elimination in 1995 till today, we are making many positive changes in the areas of compliance, safety and well-being of our workers. In the past 7 years, we have made massive efforts in transforming the industry in terms of safety remediation of factories and creating a culture of safety at the workplace. To carry forward the progress that we have already made and to bring the Bangladesh RMG safety monitoring regimes under one umbrella, a national monitoring organisation, the RMG Sustainability Council (RSC), has been established and working since 1st June 2020.
We have taken several initiatives for protecting occupational health and safety of our workers and workers’ empowerment. Apart from that, the individual factories of this sector are doing so many CSR activities for the well-being of the workers and even for their families. Factories are now into practices like – day-care centre for workers’ children, healthcare centre with full-time doctors and nurses, fair price shop and many other facilities.
Ensuring female participation in the higher and mid-level (e.g., CAD operator, supervisor and Virtual Prototyping machine operator) is one of the most important agendas of our industry. We have created higher educational opportunity for women garments workers. 96 female garment workers have been given a chance to pursue their graduation at Asian University of Women (AUW) with the assistance from the respective factory owners. Going forward in future, we will be continuing our initiatives and intensively working on other issues for the betterment and well-being of our workers.
Emphasis is on ‘Collaborate and not Compete’ mantra with India
“Of all regional countries, India is going to be a much better market for us in future than what it is today. We believe, with India, we should not compete but complement and collaborate. We can bring in more yarns, fabrics, textile machinery, dyes and chemicals from India and produce more value-added garment products in our country for export markets. This means if we increase our global garment exports, India is directly benefiting out of it because raw material used in those garments majorly comes from India only.” – Faruque Hassan
AR: How does the industry plan to boost environmental sustainability?
Faruque: Today our clothing factories are not only safer, but also have become more dynamic, modern, energy-efficient and environment-friendly. And, this fact goes without saying that Bangladesh has the highest number of GREEN factories in the world – 160, out of which 48 are PLATINUM-rated factories, 98 are GOLD factories. 40 out of the global top 100 LEED green factories are in Bangladesh. Another 500 factories are already in process to acquire LEED certificates in next few years. These are state-of-the-art factories, equipped with energy and natural resources, having facilities like rainwater harvesting and daylight saving, and having a healthy and hygienic atmosphere.
BGMEA joined the UN Fashion Industry Charter (UNFCCC) with an ambition to reduce GHG emission by 30 per cent till 2030. Our steps have earned global recognition. BGMEA, being the only association in the country, got the USGBC Leadership Award 2021. Even the industry is embracing circularity and aligning with Sustainable Development Goals for a sustainable future.
All these testify the paradigm shift of philosophy, mind-set and vision of our entrepreneurs in the industry. That’s why they are investing a huge amount of money to make the supply chain cleaner and greener. When we are going green and adopting cleaner production practices, it not only saves our environment but also improves our efficiency and competitiveness.
AR: What type of initiatives the industry has taken to deal with the 4IR?
Faruque: In this era of fast fashion, brands are continuously striving to make production process faster and simpler. Particularly in the area of product and fibre diversification, innovation and value addition, fourth industrial revolution and technology upgradation will be our focus in coming years. As we are preparing for the next growth phase, we have to enhance our business capabilities using latest technologies for fabric and resource optimisation, 3D sampling and pattern preparing, increasing popularity of virtual market and circular fashion.
Automation in the production supply chain of the industry is becoming crucial to achieving a sustainable export ecosystem –though Bangladesh’s RMG industry is still at the beginning stage of automation, while some factories are trying to adopt it. Nowadays, the use of technologies like laser-cutter, sewbot, 3D printer, robotic arm, etc. has increased in garment manufacturing.
Currently, modern automated technologies are being used in the factory, which make the processing and finishing jobs smoother. Factories are also using diverse technologies and auxiliaries like low liquor ratio dyeing machines, ozone wash, use of organic chemicals, laser printing, waterless dyeing, etc., which reduce the consumption of water and energy cost.
With the aim to improve skills and connect a bridge between the industry and updated technologies that are being used across the globe, BGMEA is setting up a ‘Centre of innovation, efficiency and OSH’. The construction work of this centre is almost done. In this centre, we will focus on newer avenues of enhancing our competitiveness through efficiency improvement and cost optimisation. We aim to facilitate automation, innovation, using end-to-end digital manufacturing, inspire modular production, getting prepared for virtual markets, while striving for exploring new markets and products.
AR: BGMEA did set a target of US $ 50 billion in FY ’14 which was supposed to be achieved by FY ’21. When do you think Bangladesh will be able to achieve this target?
Faruque: When we set this target around eight years ago, globally there was de-growth in apparel manufacturing business. We needed to grow by around 8 per cent every year, while our growth rate was even bigger that time. Then came COVID-19 and we faced hardships just like all other manufacturing destinations and our exports of apparels reduced to US $ 27.47 billion in CY ’20 from US $ 33.07 billion in CY’19. With collective efforts – both from factories and Government, we recovered and clocked US $ 35.81 billion export turnover in RMG during CY ‘21– the HIGHEST of ALL TIME! It is noteworthy to mention that BGMEA has also undertaken a research titled Study on RMG Sector Roadmap to Recovery which will provide a clear direction to overcome challenges and support the industry to diversify and achieve sustainable growth in the next ten years.
Hence US $ 50 billion is not a far-fetched goal for us. In CY ‘22, we are going to clock US $ 42 billion as most of our factories are completely booked till December. In the meantime, a lot of factories are expanding and going for high-fashion products such as lingerie, jackets, loungewear, ladies blouses, etc. Most of these factories are supposed to be operational by 2022 end or Q1 ’23 and hence our revenues will increase more in 2023. So, I believe, Bangladesh is going to hit US $ 50 billion target by CY ‘23 end.
