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24 April, 2018 00:00 00 AM
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Brighter future for Bangladesh apparel industry

The spirit of innovative entrepreneurship combined with a diligent workforce is the dominant factor behind the development of the country's apparel industry
Rayhan Ahmed Topader
Brighter future for Bangladesh apparel industry

Over the past several years, Bangladesh has been seeing a significant change in the engagement of youth in business leadership. Textile and apparel being around 40 year old industry requires a boost now for achieving the next level of transformation. In this regard, Bangladesh Textile Today, working for 10 years to change the mindset and culture of the industry and its associative people, organised Textile Youth Leader ship Summit-2018 from the viewpoint of one of the most successful young entrepreneurs in Bangladesh. There has been a healthy debate as to whether Bangladesh should open up Foreign Direct Investment (FDI) in the apparel sector where, until now, the majority of investors are local entrepreneurs, with the exception of some foreign companies who have invested in garment businesses inside the Export Processing Zones (EPZs). Before analysing the arguments in this regard, we need to explore why and when FDI is necessary and also consider the advantages and disadvantages of adopting this practice.

Many will find it surprising that the fledgling apparel industry of Bangladesh flourished in the hands of the first-generation businessmen who got the opportunity to start their business ventures only after the independence of Bangladesh in 1971.They didn't have much knowledge of the business per se. The man largely credited with the revolution of the apparel business in Bangladesh, was a bureaucrat with sound knowledge on how to keep government services functioning smoothly; he was by no means an expert in the apparel field.

The spirit of innovative entrepreneurship combined with a diligent workforce is the dominant forces behind the development of the country's apparel industry. Local entrepreneurs have put their efforts and made huge investment to expand the sector both vertically and horizontally, making Bangladesh the second largest readymade garment exporter in the world. However, Bangladesh's share in the global apparel market is still relatively insignificant only 6.36 percent whereas China's share is 36.37 percent. In addition, most of our apparel items are cotton-based while 65 percent of global apparel is non-cotton. The majority of Bangladesh's apparel export items are concentrated in five basic product categories trousers, t-shirts, sweaters, shirts, and jackets. We have to consider manufacturing more non-cotton apparel items where Bangladesh has huge potential. So investment in non-cotton textile is a highly feasible proposal as we have a captive market and a skilled workforce. It will, however, be necessary to continue to find methods to reduce our production lead time. If we continue to keep our export products limited to a small number of categories, the growth in our industry runs the risk of stagnating or may even take a negative turn. Moreover, with the increasing socioeconomic development of Bangladesh, the living standards of people are improving also. In line with improvements in living standards, it is inevitable that wages will also gradually increase. To manage the demand for increased wages, the industry needs to start focusing on the production of higher valued apparel items.

Upgrading of product in order to achieve a higher purchase price is an approach that needs to be adopted in order for our apparel industry to sustain its growth. For value-added products, we need factories equipped with the most advanced machinery and staff with sound technical knowledge, for which we need huge investment. Value-added items like blazers, jackets, swimwear, lingerie, sportswear, uniforms, raincoats, and fishing wear require manmade fibres (MMF) including viscose, rayon, spandex, polyester and so on. But the MMF production capacity of our existing textile mills is still insignificant. MMF production is complex and constantly requires sophisticated machinery and regular research and development (R&D). Presently, we lack expertise in this area. However, knowledge and guidance can be gained by allowing foreign companies to set up the necessary textile mills in Bangladesh. The benefits of this approach are two-fold: our readymade garment factories will be able to procure the necessary materials from these mills, and lead times will be greatly reduced as our dependency on importing materials from China and India will be significantly reduced. In addition, it will facilitate knowledge transfer as local people, recruited in these fabric mills, will get the opportunity to work with, and learn from, experts in their field the same way we had developed our garment industry in the 1980's with technical assistance from South Korea. So, foreign direct investment in the apparel and textile industry offers the prospect of good returns. However, we must remember several things while considering FDI in the apparel industry.

If we want to attract companies that produce higher valued items, we need to refine our regulatory system in such a way that the majority of investors will find manufacturing high-end products in Bangladesh beneficial, as too many restrictions may discourage the investors. Additionally, if we want to obtain FDI in a particular type of apparel item, we may have to consider setting up an apparel business park with facilities such as fabric and accessories suppliers, testing labs, consultants, etc. all conducive to manufacturing that particular product type. Here, we need to remember that it is not possible to fully dictate what a manufacturer is going to produce. A winter jacket factory will produce basic items for about 5-6 months a year during the summer delivery period. Likewise, a swimwear manufacturer may produce lightweight basic blouses during winter delivery period. An investment-friendly policy and environment is required to attract FDI in Bangladesh. The investment regime will need to be credible and predictable while it should be ensured that there are no frequent changes in policies and regulations. Facilities like infrastructure, energy supply, double tax deduction, etc, should be provided by the government to bring in investment. Tax incentives for machinery import are very important for the apparel industry as automated machines will improve productivity and, at the same time, the quality of the products. When a factory increases its investment, it will feel empowered to take orders of higher value products to cope with its higher overheads.

A rule can be enforced to allow the import of only new machines or machines less than an agreed age, so that FDI will not attract companies wishing to dump outmoded machinery in Bangladesh. It should be ensured that foreign investors can bring in their own managers and supervisors. However, the government must be strict to ensure that license will be issued only if a company complies with all the FDI rules .New factories should install all necessary equipment to control pollution and any negative environmental effects. The rising production cost in China and their shifting to higher-value goods and services has created opportunities for other countries to take the shifting orders Bangladesh is graduating very soon from least developed country to developing country. India is following us in garments sector and we are weaving at China’s neck with our robust demand in garments sector. We are the second largest in RMG sector and it’s not very far that we become the highest exporter in the world. In front of me I see such an army of youth and pre-quote that I cannot they say world never stop trying, never stop believing, never give up, youth they will come. Take Bangladesh as an example, Bangladesh is moving forward with a great speed. In 1972, foreign currency reserve of Bangladesh was only 270 millions, now it is about 33000 millions. You are our future leader, we have come this far and now the responsibility goes to you. I hope you will not let us down. Life is not a bed of roses. You have to be creative, innovative overall there is no alternative for hard work. You people may be interested to hear success stories.

Confidence and hard work are the best medicines to kill the failure and making that your success. On the death bed Abraham Lincoln’s mother said, ‘Be something Abraham,’ this be something became inspiration to him, the driving force, which elevated him from Lord House to White House. Yes my dear friend, be something, hardworking be a remark. Success is when your signature becomes autographs. You are your destiny. Your destiny is the story of your life. You get to tell the story in your own way. Of course, life is full of many barriers in your control, but at the end of the day, you determine the action that influences your path  .Remember, as the wise man says success is 99 percent desperation and one percent inspiration. In the end, I will say something, which regrets such a lively workforce finished their education priority to bank, MNC, FMG, FMCG Company and buying house rather than factory floor. Textile and RMG sector has a very bright future. But we have to be very cautious, as there are reports that some apparel manufacturers in China, whose standards were not up to the mark and were notorious for polluting the environment, are now trying to scatter their production plants in different parts of the world. So, it will be necessary for the concerned departments of our government to strictly monitor the issue.

Adaptability to the changing trends is a must to sustain growth in our apparel industry in the long run. We must keep pace with the demands of the time. Our industry has now arrived at a juncture where we need to move up the value ladder by shifting from basic to higher-end products to sustain our growth.

The writer is a regular contributor to The Independent  Email:    raihan567@yahoo.com

 

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
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Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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