Beyond LDC: 5 ideas for a future-proof RMG sector
The United Nations Conference on Trade and Development (UNCTAD) has released a new report which looks at how the economies of the least developed countries (LDCs) have progressed during the past 50 years. There is good news for Bangladesh: our country is ranked as one of only seven LDCs that are in the "catching up" category, as defined by the UN.
What does this mean? Well, the report grouped the LDCs into three categories: "falling behind," "muddling through," and "catching up." The countries that are in the "catching up" category are defined as such because their growth rate per capita has exceeded the world's weighted average by more than one percent over the past 50 years.
To be in this category is impressive for Bangladesh. Our annual GDP growth has consistently outpaced many major economies in the last few decades, thanks in large part to the success of the ready-made garment (RMG) sector—our largest export sector.
But now, more than ever, is the time to kick on. There will come a time when we no longer have some of the preferential trading terms that we have been given because of the LDC status. We will need to stand on our own two feet, and to do that our largest export industry and the key driver of our GDP growth needs to evolve. But how? Five ideas come to mind.
The first is to begin the gradual shift to higher-value apparel products. A key feature of textile-producing countries is that they begin with low-value clothing, including basic staple items, before moving to making more sophisticated apparel products with higher values. We should seek to become a source of choice for high-value and luxury brands. Leading US luxury brand Ralph Lauren and Disney are already sourcing from Bangladesh; there is no reason why many more should not open and/or extend their sourcing operations in Bangladesh.
To this end, it was also good to see the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Faruque Hassan, recently met with major US fashion retailer VF Corporation to discuss matters related to the expansion of the retailer's business in Bangladesh, and how the relationship with this renowned apparel brand can be developed further.
The second idea that I believe we need to look into is pushing more for the use of man-made fibres (MMFs)—including viscose and synthetic fibres such as polyester and nylon. There has been a huge growth in demand for MMFs in the global fashion industry in recent years, and these can be used on their own or in conjunction with cotton.
There is a strong argument for nudging RMG manufacturers towards MMFs—for instance, by financially incentivising them to shift towards their usage. One option, which has already been discussed, is for policymakers to introduce an incentive on export receipts from MMF garments to encourage investment in non-cotton garment production and export. I would firmly support such a move.
The third point I feel we need to address is to encourage more inward investment into our RMG sector. In fact, there is evidence that China views textiles as the "sunset industry" at present, and is looking at other high-end sectors to take their place. At the same time, many Chinese investors are now putting their money into other textile sourcing hubs. These investors are cash-rich as China has been generating a huge trading surplus for years. They have funds to invest, so why not in Bangladesh? Joint ventures between Chinese and Bangladeshi entrepreneurs are another opportunity we should consider. Aside from bringing in investment, China's major textile owners can also offer expertise in different types of textile production, including technical textiles, for different uses—e.g. outdoor clothing.
The fourth step should be for Bangladesh to become an early adopter of clothing recycling. Our biggest customer, H&M, has a mission to only use recycled or other sustainably sourced materials by 2030. This goal is just over nine years away. H&M and other retailers that have set similar targets will only achieve these goals via huge investment in recycling infrastructure in apparel supply chains. Bangladesh needs to take a lead in this area to meet the future requirements of the industry. This will include major tie-ups with recycling technology providing companies and the development of recycling infrastructure within Bangladesh, such as clothing collection, sorting, and recycling facilities.
There is much to do in this area, and we need to start now if we want to become a global leader in this arena—which surely must be the goal.
Finally, I believe it is vital that we get the messaging right. Concerted efforts are needed to build bridges with the media and to put out the right messages about the RMG industry in Bangladesh. This includes correcting misconceptions and mistruths about our RMG industry that have been implanted in the Westerners' minds over many years and are proving difficult to dislodge. We still see many stories in the foreign press about the Bangladeshi RMG industry which simply do not reflect the reality on the ground. For too long we have been passive by-standers amid a tide of unfair negative publicity for Bangladeshi garment manufacturers. As we move beyond the LDC status, we will need to "control" the message about our remarkable RMG industry and, in doing so, truly take our destiny in our own hands.
Mostafiz Uddin is managing director of Denim Expert Limited. He is also founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).