Bangladesh has significant growth opportunities in the apparel sector if the country diversifies into producing high-end apparels like suits, ties, etc., according to a study of Bangladesh German Chamber of Commerce and Industries (BGCCI).
It says Bangladesh’s main focus is on the manufacture of low-value clothing items, creating low margins and low profitability.
The study says a gradual shift from low-value products to higher-end products faces challenges including weak backward linkages for inputs besides fabrics, severe power shortages, and poor transport and logistics systems.
The challenges also include low production and port efficiencies, compliance with international standards remain areas of urgent and consistent improvement.
“Clear signals are visible towards addressing some of these challenges including increasing minimum wages for the estimated 4.5 million workers in the RMG sector last year,” the study says.
It says Bangladesh can realize significant growth potentials of the textiles and clothing industry if it can successfully address the challenges of backward linkage industries, production and port efficiencies, compliance with international standards and branding Bangladesh.
Germany imported more than 11 percent of total textiles and clothing export from Bangladesh for the period of April-September 2010.
During the same period, Germany became number one in importing woven products from Bangladesh, according to the statistics of the central bank of Bangladesh. It makes Germany the largest textiles and clothing importer in the EU and second largest in the world.
The newly adopted revised Rules of Origin of the EU is expected to make Germany the most significant export destination for Bangladeshi textiles and clothing products soon provided that Bangladesh can mitigate the challenges of the RMG industry.
It says Bangladesh was the top export performer in the EU in 2009 with 6 percent growth, while all other countries, except for Qatar, suffered an export fall in the EU common market due to a global financial contraction.
Qatar exported products worth three billion Euros to the EU in 2009, predominantly hydrocarbon.
Bangladesh shipped products worth 5.8 billion Euros to the EU in 2009, increasing from 5.7 billion Euros in 2008, witnessing a 6.3 percent increase. Duringthis time, Bangladesh outperformed its global competitors like China, India and Vietnam.
In 2009, China posted a 13.4 percent export fall in the EU market compared to 2008, while India and Vietnam sustained 13.9 percent and Vietnam 9.5 percent fall respectively.
The study says degree of success or failure of the garment industry lies in the hands of policymakers, industry leaders, market players and workers to handle the delicate act of balancing among the challenges and opportunities ahead.
-UNB