Economic Development Through Textile & RMG Industry Transformation

- Mar 26, 2018 -

With formidable improvement in the working conditions in the RMG industries for the past couple of years now Bangladesh is becoming destination for more and more buyers. After the intervention of Accord & Alliance; unprecedented effort was evident from the stake holders from different sides to ensure a safe and secure industry base. Energy crisis and inefficient mid-level management still are the next big challenges to overcome. It seems 2018 can be the beginning of the transformation of the textile and RMG industry towards value addition and sustainability.  

The availability of cheap manpower and some enthusiastic entrepreneurs led the RMG industry to reach today’s position. The ever growing RMG industry is being assisted comprehensively by the Primary Textile Industry to maintain competitiveness as the room for profitability is shrinking day by day.  With more emphasis on the OHS and compliance issues and with the emergence of more and more potential competitors around the world, the dynamics of the RMG business has changed considerably. Fortunately, Bangladesh is still holding a top place firmly amid multifaceted weaknesses and threats.But business is becoming very tough in the upcoming days as the costs are inexorably rising in parallel with the buyers’ crave for low prices. That’s why the transformation of the textile and also the RMG industry is a call of time. The growth of RMG export didn’t register negative growth after the 80s making Bangladesh the second largest RMG exporter in the global market. But the exports of textiles and textiles’ article has not been something formidable in those years. Textile industry remained more of a backward linkage industry for the RMGs rather than an exporting industry.

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The above chart clearly depicts the dependence of our economy on the exports of RMG. The % of RMG exports to the total exports has been remaining on average above 80% over the years. The number of garments industries are growing; around 150 new RMG units have been installed in the last year according to BGMEA statistics. But the primary textile industry which supplies the lion’s share of the raw materials for the RMGs are facing a dearth of fresh investment for the last few years due to gas crisis and scarcity of bigger industrial land.Only 5 new spinning, 3 weaving and 2 dyeing mills with an investment of about Tk. 1,300 crore were set up in the last four years, according to data from the Bangladesh Textile Mills Association. The textile industry supplies about 90% of the raw materials for the knit RMG industry and about 40% of the woven RMG industry. Butthe contribution of textile industry directly in export basket is very low compared to the other RMG making countries. In fact the exports of textiles and textiles articles are decreasing year on year which is an alarming issue. As the chart below depicts the export of textile goods has been declining over the last five years to only 1.91 billion USD. The export from textiles was 2.09 billion USD five years ago. In fact the other RMG exporting countries are also emphasizing on developing the textile industry and capitalizing the global textile market alongside garments.

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