[🇧🇩] Textile & RMG Industry of Bangladesh

[Saif]

Growing demand in denim item has created new opportunity

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Growing demand in denim item has created new opportunity​

1 Mar 2024, 12:00 am

Staff Reporter :

Increase in consumption of denim items internationally has created a new opportunity for Bangladesh and the local entrepreneurs are desperate to grab a share of the growing market.

The local exporters are now competing with China, Pakistan, Vietnam, Turkey and Mexico as the size of the global denim is expected to stand at over $76 billion by 2026.

The entrepreneurs are showing interest in producing the items as most of the fabrics used in the denim sector are being manufactured in the country, which is popular in various countries like the USA and Europe.

The share of Bangladeshi denim in the US market is over 22 per cent and 27 per cent in the EU market. Denim shipment to the US and EU has increased by 42 per cent and 15 per cent respectively in just one year.

Following this, local entrepreneurs have invested nearly Tk 25,000 crore in the denim segment of the primary textile sector, which already has 42 modern mills capable of supplying over 900 million metres of denim fabrics each year, according to data of the Bangladesh Textile Mills Association (BTMA).

Syed M Tanvir, Managing Director of the Chattogram-based Pacific Jeans Ltd, told The New Nation, “We want to increase denim production by more than 12 per cent this year compared to 2023. The outlook for denim in 2024 is better than last year, so the export of denim items is expected to grow this year.”

Reaching to the current state of the sector, the entrepreneurs had to struggle hard as there was no washing plant in the country till 1984. Later, late Nasir Uddin, founder of the Pacific Jeans Ltd, set up a washing plant in Chittagong Export Processing Zone (CEPZ) taking technical support of Italian buyers during the time.

As the entire work of fabric production, sewing and washing is being completed locally, lead time denim export has reduced significantly, the manufacturers said.

They further said demand for denim has been rising worldwide because of changes in fashion as the denim is more flexible and comfortable.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has set a target of apparel export worth $100 billion in 2030 and denim can play an important role in this regard.

Monsoor Ahmed, Chief Executive Officer of the BTMA, said that fresh investment and reinvestment in the sector was continuing as Bangladesh had already proven itself as a reliable source for denim fabrics.

Despite the fact that most mills were established over the past 10 years, they have had to increase their capacity due to demand from international clothing retailers and brands, he said.​

 

[Saif]

Apparel sector must adapt to climate crisis

Climate-adaptive measures are vital for the sector’s future

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Apparel sector must adapt to climate crisis​

Climate-adaptive measures are vital for the sector’s future

VISUAL: STAR

We are alarmed to learn of a new study that suggests that Bangladesh could lose $27 billion in annual apparel exports by 2030, and $711 billion—or 68.5 percent of total RMG exports—by 2050 if it does not adopt a climate-adaptive approach. According to the study, climate-induced disruptions, primarily due to extreme heat and flooding, are already causing Dhaka's garment workers to miss an average of three days of work per month, incurring an income loss of Tk 1,200 to 1,500. Additionally, by 2030, up to 2.5 lakh employees are at risk of losing their jobs due to climate change. If left unaddressed, this situation could lead to billions of dollars in lost productivity and push apparel buyers to source from less climate-vulnerable countries, further jeopardising our export earnings.

We cannot underestimate the gravity of these findings and predictions. To address this situation, the study recommends embracing climate-adaptive approaches, such as by treating heat and flood events as health hazards or engaging with the investors, apparel companies, and other stakeholders to address the absence of adequate adaptation measures in their risk management strategies. Bangladesh, ranked as the seventh-most extreme disaster risk-prone country in the world, stands at the forefront of climate adversity.
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A staggering 56 percent of the population resides in high climate-exposure areas. The country already faces heightened vulnerability to child marriage, illiteracy, erosion, displacement, extreme weather, land loss, food insecurity, diseases, pollution, and other related threats. Over the past 20 years, climate change has cost Bangladesh $3.72 billion. Additionally, extreme heat exposure results in an annual loss of 254 work hours per person, translating to $280 to $311 billion in lost productivity.

Against this backdrop, we must intensify our efforts to avoid further distress. Focused regional research and adaptive strategies are crucial, alongside developing more persuasive climate justice advocacy measures to expedite effective action, including in the apparel sector. Bangladesh has taken a leading role in advocating for climate justice and collective action in the world. But we must do more, considering the ever-increasing risks we face.

 

[Saif]

'Why don't RMG owners pressurise buyers instead of workers?'

Despite the five-year minimum wage review cycle, there seems to be no preparation on the factory owners’ end

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'Why don't RMG owners pressurise buyers instead of workers?'​

'Why don't they pressurise the buyers instead of workers?'

Kalpona Akter, a labour rights activist and president of Bangladesh Garment and Industrial Workers Federation, discusses the ongoing protest of garment workers, their circumstances, and demands for a liveable minimum wage in an exclusive interview with Naimul Alam Alvi of The Daily Star.

Can you contextualise the latest protests by garment factory workers in Bangladesh?

The minimum wage for ready-made garment factory workers was last reviewed in 2018, when workers demanded Tk 16,000 of monthly wage. The government and RMG factory owners settled on Tk 8,000; since then, the workers have received a mandatory five percent wage increment. Even with the increment, entry-level workers currently earn only around Tk 9,000 per month.
Since 2020, the Covid-19 pandemic and the Russia-Ukraine war have triggered a worldwide cost-of-living crisis, impacting everyone, including the RMG workers. Regardless of their wage level, workers are struggling to make ends meet, unable to afford basic necessities for themselves and their families.

Despite the five-year minimum wage review cycle, there seems to be no preparation on the factory owners' end. Their proposal should have come earlier, but instead, they belatedly offered a disrespectful proposal in late October to set the minimum wage at Tk 10,400—not even half of the workers' demand. This angered the workers, whose demand is now clear: either reduce essential commodity prices or increase wages.

But the workers' voices are being suppressed. They are being beaten by law enforcement members and goons, fired at indiscriminately, and subjected to lawsuits. Some have been arrested, creating a climate of fear among workers and labour rights activists alike.

The owners accuse the workers of conspiracy, but how is it a conspiracy when eggs cost Tk 15 apiece, onions Tk 120 per kg, and potatoes Tk 70 per kg?

How long can the police suppress the workers? The owners may not be able to "afford" Tk 23,000, but the wage certainly cannot be Tk 10,400 or even Tk 12,000. It must enable the workers to survive, buy food, pay rent, and support their families. With stagnant wages, reduced capacity to meet basic needs, and no significant growth between entry-level and skilled workers, how long will the workers suffer in silence?

Factory owners argue that they are unable to increase minimum wages or overall wages due to competitive market pressure and the need to maintain low prices. What's your perspective on that?

The factory owners claim they must produce low-cost products due to buyers' low prices. They create a competitive environment both internationally and domestically. However, Bangladesh is the world's second-largest apparel producer. If we still cannot strengthen our position and negotiate with our buyers, establishing a minimum price below which we will not go, it's disheartening. We have powerful organisations like the BGMEA and BKMEA. What do they do? Why do they foster internal competition within our sector? What is the purpose of their association then? As long as they don't learn to say no, they'll keep producing cheap clothing and claiming no profit. Yet, we see many of them expanding their businesses and building new factories. If they don't have the money, I'm at a loss as to how they find the funding to build these factories.

Why do you think factory owners redirect pressure from buyers onto workers when such demands arise, offering excuses that the buyers will not listen, rather than negotiating for better prices and subsequently better wages for the workers?

Because they can get away with putting pressure on the workers. Factory owners have embedded themselves within the government. If the legislators are the factory owners themselves, where can I go to seek justice? Where is the impartial body that will listen to the workers? The government is not neutral. A high percentage of MPs are garment factory owners. They are concerned about themselves, not the workers. Their "power" works to silence the workers, labour rights activists, and those who are part of unions. Their strategy does not include negotiating with the buyers.

Whenever there has been a movement to raise wages, the workers have been suppressed. PHOTO: AMRAN HOSSAIN

They should have met with the buyers back in 2022. They should have informed them that the workers' wages in Bangladesh would need to be increased the following year, and set a minimum price limit that the buyers must adhere to. Instead, whenever there has been a movement to raise wages, the workers have been suppressed. Cases have been filed against the protesting workers; they have been fired from their jobs, and they have been blacklisted. The factory owners have managed to do this because they have the muscle, money and administrative power, none of which the workers possess.

However, there is hope for a solution. Many of the sourcing countries are working on laws for human rights due diligence. Germany, France and the Netherlands have already enacted them, and the European Union is also going to adopt one. One of the elements of such laws is to ensure a living wage for workers. We are trying to ensure that the question of living wage covers contributing countries, so that sourcing countries cannot shake off their responsibility by saying the manufacturing countries will ensure the living wage of the workers. We are saying that no, the companies that are sourcing from manufacturing countries have to make sure that they are paying enough and that the money contributes to the living wages.

Another hope will emerge if the power is neutralised here. And to do that, you have to give the opportunity to form free unions in the factories. Only when there is an opportunity for free unions will the workers have power in collective bargaining agreements. They will be able to decide whether to accept the mandatory five percent increment or demand 10 percent, should the wage review be done every five years or should it be three years.

We see RMG workers frequently taking to the streets to demand wage increases and other improvements. Why does this have to happen so often?

The legal framework exists. The law clearly states that the owner, worker or the government can review the wage structure after three years if the inflation rate is high. It is only mandatory after five years. Workers should not need to take to the streets. The procedure should involve a wage board meeting every five years. Both parties will submit proposals, there will be discussions, and the wage will be announced.

I spoke with labour rights activists in Kerala, India; they were surprised to learn that our minimum wage review occurs every five years. They do it annually there, and workers don't have to take to the streets for it. Wage review is the owners' responsibility. They announce a wage that aligns with the inflation rate. If our neighbouring country can do it, why can't we? Why wait five years; why not review the wage every year?

Repression can never silence workers' voices or labour movements. It needs to be addressed systematically. We need to have discussions and provide workers with a platform for dialogue, such as a trade union. The second step is to move beyond the profit paradigm. If we don't include workers in profit-sharing, this backlash will continue. Calling the workers a part of the owners' families is a mere lip service if we don't believe it wholeheartedly and don't demonstrate it in our actions.​

 

[Saif]

A garment powerhouse

Walk down the road in Savar, Gazipur or Narayanganj in the morning hours and you will see a long line of workers heading to work.

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A garment powerhouse​

A closer look at how retailers, from H&M to Walmart, turned Bangladesh into the world’s second-largest clothing supplier

Walk down the road in Savar, Gazipur or Narayanganj in the morning hours and you will see a long line of workers heading to work. They will soon join the production lines behind silent brick walls to make clothes for the world. The garment industry, home to 40 lakh workers, is one of the largest employers, fetching $47 billion in annual exports, a milestone Bangladesh crossed in 2023. Behind this growth story exists another group -- fashion retailers perpetually in pursuit of low-cost products.


After a journey of nearly five decades, Bangladesh has morphed into the second-largest garment exporter in the world after China, accounting for 7.9 percent of the global market share. It is now the mainstay of Bangladesh's economy with the sector's rapid growth and modernisation over the past decade. The transformation of the garment industry was catalysed, in part, by a series of workplace tragedies, including the Rana Plaza disaster that took the lives of more than 1,100 workers. In those dark days, retailers stayed with Bangladesh in a push for workplace compliance. The groundbreaking International Accord that made jobs safer for millions of garment workers in Bangladesh was later extended to Pakistan.​

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Photo: Saurav Hossain Siam

It is now expected that Bangladesh's share in the global market will continue to grow. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) aims to capture 12 percent of the international market share by 2026 when Bangladesh is scheduled to graduate from the group of the least-developed countries. That partly depends on the retailers' appetite for Bangladesh as the nation will lose most of the duty benefits after LDC graduation.

Initially, Bangladesh's garment industry grew under a quota system introduced by an international trade agreement, known as the Multifibre Arrangement (MFA), in 1974. The MFA, which persisted until January 2005, imposed quotas on the amount of clothing and textiles that developing countries could export to developed nations. Thanks to the agreement, the garment sector found a niche in the market for many years and continued to thrive.


However, the main role was played by the buyers, who flocked to Bangladesh to source clothing items at competitive prices.

With local garment makers working under the cutting and making (CM) method, the onus was on the buyers to play the vital role of supplying designs, patterns, fabrics and raw materials. The CM method, which involves costs of cutting, sewing, pressing, folding and packing, is still popular in Bangladesh, with suppliers mainly doing so to avert risks.

Photo: Saurav Hossain Siam

In the late 1970s and mid-1980s, buyers used to place orders in small quantities and the sales of garment items were mainly facilitated by third-party vendors because the size and scale of businesses were so small that international retailers and brands were uninterested in placing direct orders.


However, with time, major retailers and brands, especially from Europe and the US, started arriving here and directly purchasing goods. About 50 of them now have liaison offices in Bangladesh, allowing them to buy garment items at competitive prices. By and large, Bangladesh has proven itself as a reliable supplier of value-added garment items while also growing by leaps and bounds in design and pattern-making.

Bangladesh cemented its position during the peak of the coronavirus pandemic when it kept its factories open except for the initial few months of the health crisis in 2020 while factories in all other supplying nations were shut for many months at a stretch.

Of the $47 billion worth of exports of garment items last year, the lion's share was shipped through a direct purchasing method by retailers and brands. With direct sales, both buyers and suppliers benefit as no third party shares the profit. However, many small buyers, who can't afford an overseas office, still rely on third-party vendors.

Swedish retail giant H&M is the largest buyer of Bangladeshi clothes, purchasing items worth nearly $4 billion annually. The country is also the single largest sourcing destination for H&M, which has its own office in Dhaka.

US retail giant, Walmart, is the second-biggest buyer of Bangladeshi apparel, procuring nearly $2.5 billion worth of products a year. It was the largest buyer for the country for many years before ceding the top spot to H&M in recent years.

Spanish company Inditex, which owns brands like Zara, Pull&Bear, Massimo Dutti, Bershka, Stradivarius, Oysho and Zara Home, buys nearly $2 billion worth of garment items from Bangladesh every year.

Shafiur Rahman, regional operations manager of G-Star in Bangladesh, said Bangladesh will remain an important sourcing destination for his company in future. G-Star Raw, a Dutch designer clothing company, buys nearly $1 billion worth of garments, including denim and T-shirts, from Bangladesh a year.

Photo: Saurav Hossain Siam

"We will keep sourcing the same amount of clothing in 2024, anticipating slight growth in the fourth quarter onward," said Rahman.

British retail giant M&S procures more than $2 billion annually from Bangladesh. Japan's Uniqlo has turned into nearly a billion-dollar buyer. Of the $1.6 billion worth of garment items exported to Japan last year, the majority was secured by the Japanese retailer alone.

Japan has remained a major destination for Bangladesh since 2011, when Tokyo started allowing zero-duty benefits to the LDCs for garment items and knitted items, even if they are made from imported fabrics.

Photo: Saurav Hossain Siam

With such a major trade benefit in place, Japanese clothing retailers started clamouring to Bangladesh and thus Japan became the largest export destination for the country in Asia.

Irish retail giant Primark has ramped up purchases, with their annual purchases now valued at nearly $2 billion.

Puma, Nike, PDS, Adidas, Gap, Levi Strauss & Co, VF Corporation, PVH Corporation, Old Navy, Banana Republic, Sainsbury's, Esprit, and C&A are some other major buyers, with each buying nearly $1 billion worth of clothes from Bangladesh a year.

The sourcing pattern from Bangladesh has also changed a lot over the years because of the changing habits of buyers and consumers, and the sales of retailers and brands.

Many top retailers and brands source garment items in small quantities but at higher prices. For instance, Hugo Boss, a German luxury fashion brand, procures garment items worth a few hundred million.​

 

[Saif]

Bangladesh uses more manmade fibres to make garments for global buyers

The use of non-cotton fibre in garment production in Bangladesh has increased to 29 percent from 25 percent in the last three years as exporters go for diversification for better prices and to expand their global footprint, according to a new study.

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Bangladesh uses more manmade fibres to make garments for global buyers​

Study finds

Photo: Star

The use of non-cotton fibre in garment production in Bangladesh has increased to 29 percent from 25 percent in the last three years as exporters go for diversification for better prices and to expand their global footprint, according to a new study.

Varun Vaid, business director of Wazir Advisors Pvt Ltd, shared the findings at a press conference on the premises of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) in Dhaka today. He conducted the study on behalf of the BGMEA in the last two years.

Globally non-cotton fibre is used in 75 percent of garment manufacturing. In contrast, Bangladesh relies on cotton fibres to make 71 percent of the country's export-oriented products.
However, Bangladesh has more potential to use non-cotton fibre as the demand for manmade fibre garments is on the rise globally, according to the study.

If Bangladesh invests $18 billion, the country will be able to export $46 billion worth of non-cotton garment items by 2032, it said.

Speaking at the event, BGMEA President Faruque Hassan said that by using manmade fibres, the BGMEA wants to raise the global market share of locally made apparel items to 12 percent from 7.87 percent now since the prices are higher for the products made from artificial fibres.

He said climate change also has a major impact on fashion as consumers prefer non-cotton garment items to cotton items because of more functionality and sustainability.
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"Local garment exporters are producing cotton garment items. By just increasing the volume of non-cotton products, we can expand to more markets and get better prices."