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[🇧🇩] Textile & RMG Industry of Bangladesh
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Safety condition improves, challenges remain
Saddam Hossain 23 April, 2025, 23:34

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Representational image. | New Age file photo

Bangladesh’s readymade garment industry has undergone a significant change in the aftermath of the Rana Plaza collapse, one of the deadliest industrial accidents in the country, but there are still in the sector many issues to be addressed.

RMG businesses said that once criticised for its unsafe working conditions, the country’s sole multi-billion-dollar export sector had taken serious strides in rebuilding its reputation and restoring global confidence after the tragic accident 12 years ago.

However, rights activists, brands and foreign partners said that safety issues in the sector had improved after the accident, but the progress could not be termed sustainable.

On April 24, 2013, Rana Plaza, an eight-story building at Savar, on the outskirts of the capital Dhaka, crumbled during working hours, killing 1,138 people, mostly garment workers, and injuring thousands others.

Talking to New Age, Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that issues related to safety, compliance and worker rights had experienced a major improvement since the Rana Plaza collapse.

‘However, the incident was a tragic and painful event for the industry and we will have to feel the pain in our whole lifetime,’ he added.

Industry insiders said that the factories had followed strict policies to ensure fire, electrical and structural safety and had spent significant amounts of money on those areas.

Mohiuddin Rubel, a former director of the Bangladesh Garment Manufacturers and Exporters Association, told New Age that in recent years, they had taken major initiatives to ensure a safe working environment in the RMG industry.

‘An extensive reform has been carried out in the industry with the support of the government, buyers, trade unions and other international organisations, including the International Labour Organisation,’ he added.

He also said that the government-led initiative and the buyers-led Accord and Alliance inspected about 4,000 factories with the aim of improving safety issues in the units.

‘The building collapse was a tragic incident in the history of this industry. But we have taken that as a turning point and put in all-out efforts to build a safe and sustainable industry,’ he added.

He also said that each factory spent on average Tk 5 crore on factory renovation, detailed engineering assessment and retrofitting.

A 2021 report by McKinsey consultancy labelled Bangladesh’s RMG sector a frontrunner in transparency regarding factory safety and value-chain responsibility.

Another report by QIMA, a global supply chain compliance solutions provider, ranked the country second in the same year’s ethical manufacturing index.

Moreover, Bangladesh also amended its labour law twice, in 2013 and 2018, to safeguard workers’ rights and ensure workplace safety.

The country increased workers’ minimum wages by 56 per cent in 2023 and raised the increment to 9 per cent from 5 per cent in 2024.

In terms of LEED-certified green factories, Bangladesh also witnessed a big jump.

Before the Rana Plaza accident, there were only two green factories in the country.

Currently, the US Green Building Council has certified 240 Bangladeshi factories as LEED (leadership in energy and environmental design).

There are 98 platinum-rated, 128 gold-rated, 10 silver-rated and four certified factories. Moreover, the highest-scoring factory is also from Bangladesh.

After the Rana Plaza collapse, the Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Workers’ Safety helped the country’s factories to improve their fire, structural and electrical safety measures.

The Alliance left the country in 2018 after remediating 93 per cent across 700 factories it inspected, and the Accord, which lasted until 2020, helped standardise fire and building safety in more than 2,000 RMG factories.

After their departure, the RMG Sustainability Council, an entity comprised of RMG manufacturers, global brands and retailers, and global unions and their Bangladeshi affiliates, started its journey in 2020.

Regarding the RSC, Hatem said that the entity was doing its job as per the global standard, but it also sometimes tried to put artificial pressures on the industry.

‘The biggest paradigm shift since Rana Plaza has been the safety culture that has been developed through public-private partnership in the factories,’ said Mohiuddin.

The BGMEA has also framed its new policy on new member enrolment and subcontracting, he said.

Despite facing crises like the Rana Plaza collapse, Covid pandemic and global economic turmoil due to the Russia-Ukraine war over the years, the RMG sector’s export earnings have never experienced a hard hit.

Bangladesh exported apparel worth $38.48 billion in 2024, a 7.23-per cent increase compared with $35.89 billion in 2023.

Talking to New Age, Nazma Akter, president of the Sommilito Garments Sromik Federation, said that the accused in the Rana Plaza case were yet to be punished and most of the accused were in hiding.

‘Accused Rana along with others must be brought to justice,’ she said.

‘The factory authorities are yet to regularise the remediation activities and the government should do it by maintaining global standard,’ she said.

She also said that safety issues had improved a lot, but this could not be called sustainability, as accidents and fire incidents were still persistent in the sector, along with the absence of earthquake safety.

In some cases, the blacklisting of workers is also persistent, she added, noting that owners had safe passage after committing crimes.

Regarding the cases, Hatem said they also demanded punishment of actual criminals.​
 

Can Bangladesh fend off Vietnam in RMG race?

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Bangladesh's status as the world's second-largest garment exporter has become increasingly precarious, driven by a confluence of global trade shifts, regional competition and structural inefficiencies at home.

The imposition of 37 percent tariffs by the Trump administration has only intensified the pressure on Bangladesh, prompting industry leaders and analysts to express concern over the country's ability to maintain its global standing.

The country now faces a decisive test of its export resilience and trade negotiation capacity. For a sector built on cost competitiveness and heavily dependent on price-sensitive markets, the tariff escalation poses a direct threat to a business model long anchored in low-wage labour.

Many industry leaders are monitoring Vietnam's ascent warily. Although Vietnam faces a steeper tariff -- 46 percent compared to Bangladesh's 37 percent -- there is growing concern that Bangladesh's limited trade diplomacy, coupled with its slower shift towards value-added production, could allow Vietnam to surpass it in global rankings.

"If we don't move fast, we will not be able to save the day," said Rubana Huq, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

In 2023, Bangladesh accounted for 7.4 percent of global apparel exports, valued at $38 billion, according to the World Trade Organization (WTO). Only China ranked higher, with $165 billion in exports and a commanding 31.6 percent market share. Vietnam followed closely, exporting $31 billion of garments and holding a 6 percent share.

These rankings, however, reflect 2023 performance. The WTO's 2024 data -- yet to be released -- may offer a clearer picture of shifting dynamics. Compounding concerns, the WTO revised Bangladesh's previously reported export figures downward by $9 billion due to discrepancies in data submitted by the Export Promotion Bureau, raising questions about statistical reliability.

Despite the correction, Bangladesh retains several structural strengths: a large and affordable labour force, robust backward linkages through its $25 billion primary textile sector, a global lead in certified green factories, and rising compliance with international safety standards.

But these are increasingly offset by entrenched weaknesses -- underdeveloped infrastructure, extended lead times, high borrowing costs, bureaucratic frictions and overreliance on low-value, basic garments.

What separates Bangladesh from competitors like Vietnam is not just cost structure but strategic direction. Vietnam has steadily moved up the value chain, diversifying its product base and leveraging free trade agreements to secure preferential access. With both countries subject to elevated tariffs in the US market, the decisive variable may be the ability to offer differentiated, value-added products and to navigate trade diplomacy with agility.

Without targeted reforms and meaningful trade engagement, Bangladesh's position in global supply chains risks being overtaken -- not through a sudden collapse, but by gradual erosion in competitiveness and missed opportunities.

Tapan Chowdhury, a garment exporter and managing director of Square Pharmaceuticals, acknowledged that Vietnam could eventually overtake Bangladesh if key structural challenges remain unaddressed. However, he believes Bangladesh retains its competitive edge -- at least for now.

"Given that the Trump administration set the tariff at 37 percent, Bangladesh retains its competitiveness since the effective tariff rate for Vietnam is nearly 10 percentage points higher in the same market," he said.

Tapan urged exporters to shift towards high-value products to withstand price pressures. "International retailers and brands always offer lower prices for basic items. Exporters must adopt the right strategies and be selective in choosing buyers to offset challenges."

Echoing the need for deeper reforms, Rubana Huq, also managing director of Mohammadi Group, said Bangladesh's growth narrative often overlooks entrenched problems.

While the potential of the apparel sector is widely recognised, Rubana warned that optimism alone is not enough. "Relying solely on the continued growth of basic garments is no longer a viable strategy," she said. The sector must diversify its product base, invest in technology upgrades, and develop a skilled workforce capable of adapting to global demand. She stressed the urgency of expanding capacity in man-made fibre (MMF) garments, where Bangladesh continues to lag behind competitors.

"Bangladesh will lose its competitive edge if we can't engage in active economic diplomacy," she warned, calling for stronger international engagement to secure favourable trade terms.

Faruque Hassan, managing director of Giant Group, raised another important distinction in the comparison with Vietnam. He said Vietnam's export statistics often include both garments and textiles, unlike Bangladesh, which reports garments only.

"For example, Vietnam last year reported more than $37 billion in combined textile and garment exports, which included several billion dollars worth of textiles," he said. "If we exclude garments from that equation, it will take more time for Vietnam to overtake Bangladesh."

Nonetheless, Hassan stressed the need for swift action. "We need to explore new markets, diversify both products and destinations, invest in technology, and produce more value-added garments. That must go hand-in-hand with improving customs services, port operations, gas supply, and utility services, and removing non-tariff barriers."

Other exporters remain more confident. Md Fazlul Hoque, managing director of Plummy Fashions Ltd, dismissed speculation that Vietnam is about to overtake Bangladesh.

"For years, people have been saying that Vietnam will surpass us, but that hasn't happened. Bangladesh remains competitive and continues to grow."

He added that rankings are less important than performance. "Meeting the market demand is how we can climb even higher."

Indeed, Bangladesh has maintained a strong presence in key markets. It is currently the second-largest apparel exporter to the EU, with annual shipments exceeding $25 billion, and ranks third in the US with yearly exports of over $8 billion. In Canada and select emerging markets, Bangladesh has also expanded its footprint significantly, with market share rising to more than 20 percent, double the level from five years ago.

Still, concerns over looming threats persist. Anwar-Ul-Alam Chowdhury, chairman of Evince Group, pointed to two immediate risks: Trump's tariffs and Bangladesh's upcoming graduation from least developed country (LDC) status, scheduled in November 2026.

He stressed the need for proactive diplomacy in addressing the US tariffs. "Bangladesh must address Trump's tariffs politically. And the government must take timely policy steps to offset the immediate impacts of LDC graduation."

Although countries like the EU, the UK, Canada, and Australia have pledged to extend duty-free access beyond 2026, Anwar-Ul-Alam argued that Bangladesh must not be complacent. He called for negotiating free trade agreements (FTAs) with major trading partners and enhancing engagement with Asian markets such as China, India, and Japan.

If positioned strategically, he noted, Bangladesh could attract new orders as sourcing patterns shift away from China and Vietnam under US tariff pressure. "But this will depend entirely on our diplomatic and strategic responses."

Mostafa Abid Khan, a former member of Bangladesh Trade and Tariff Commission, warned that even a 10 percent tariff burden could be difficult for many local exporters to absorb. He also flagged Vietnam's advantage under its free trade agreement with the EU, saying the Southeast Asian country continues to strengthen its foothold in the European market.

Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development, echoed this concern. "Under the EU-Vietnam FTA, Vietnam's exports to Europe are bound to rise. Its presence in the US and Canadian markets is also expanding."

Razzaque also pointed to a critical structural difference. Vietnam's rapid growth in the garment sector is driven largely by Chinese investment, reportedly $61 billion in textiles and garments. In contrast, Bangladesh's $55 billion textile and garment sector has less than 5 percent foreign investment.

"This is a relative advantage for Bangladesh," he said, suggesting that US buyers may be wary of Vietnam's deep production ties with China.

However, to seize any potential gains from declining Chinese exports, Bangladesh must address one key weakness: its limited capacity in MMF-based apparel, according to Razzaque. "Countries that wish to fill the gap left by China in the US market must be able to scale up MMF production."​
 

RMG orders adequate until Christmas
Exporters say

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Local suppliers have secured adequate work orders from US clothing retailers and brands to stay busy until Christmas at the end of this year, although the shipments are likely to be subject to Trump's reciprocal tariffs.

The factories will start manufacturing garments in full swing for the Christmas season from June, and it will continue until the end of July.

The shipment of the goods to the US will start from August so that they can be sold in November and December.

The autumn and winter seasons, Christmas, and Thanksgiving are major sales seasons for garments in the Western world.

However, a majority of local garment exporters are still waiting for Trump's final decision on tariffs, as his administration has given a 90-day pause on the reciprocal tariffs on the countries concerned.

Regarding the next summer season's work orders, both suppliers and buyers are yet to hold negotiations to confirm their values and volumes, as retailers and brands are waiting for Trump's final decision.

Like other countries, the 10 percent baseline tariff is still in place for Bangladesh, except for the 145 percent tariff on the import of Chinese goods. Although Trump on Wednesday assured he would consider a substantial reduction of tariffs on Chinese goods, he made it clear it would not be to zero.

Bangladeshi garment suppliers are now busy holding negotiations on work orders to increase export volumes to Europe and other countries because of favourable or zero tariff rates for Bangladesh.

Bangladesh may face tough competition in other markets such as the European ones, as China and Vietnam will also try to grab bigger market shares to offset the probable reduction in shipments to the US due to the high tariffs imposed on them by the Trump administration.

The booking of orders until Christmas was confirmed by Abdullah Hil Rakib, managing director of TEAM Group, which exported $560 million worth of garments last calendar year, about 25 percent of which were destined for the US.

"So, I am not worried about the next Christmas shipment," Rakib told The Daily Star over the phone.

He also said that over the last few years, he has been increasing garment exports to the US but might have to conduct reviews due to the high tariffs that have been proposed.

Rakib is hopeful that garment exports to the US from Bangladesh will increase further because of the high tariffs imposed on products from China and Vietnam.

He said that after Trump's tariffs were announced, a US-focused retailer came to his factory.

The retailer was planning to shift work orders from China to his factory as the tariff on Chinese goods is very high at 145 percent, and the effective rate on Bangladesh was 26 percent, including a previous 16 percent and a 10 percent baseline tariff.

Rakib is hopeful that US buyers will ultimately come to Bangladesh for sourcing garments as the tariff on products from China and Vietnam—two global giants in garment production—is higher than that on products from Bangladesh.

On the other hand, the tariff on Indian goods is lower than that on Bangladeshi products, but India does not have high manufacturing capacity.

Moreover, Pakistan will face lower tariffs than Bangladesh, but its product varieties are not as diversified as those of the latter, he said.

Shovon Islam, managing director of Sparrow Apparels Ltd, which annually exports garments worth $300 million, about 50 percent of which end up in the US, said some of his buyers were demanding that he bear half of the 10 percent baseline tariff.

However, in garment manufacturing, 70 percent is spent on fabrics, which the manufacturers import to make the garments.

He also said he would have to ship all the goods by mid-September to his US buyers so that the goods could be sold during the Christmas season.

He has received 10 percent fewer work orders year-on-year from his US buyers this season because of the Trump tariffs.

Syed M Tanvir, managing director of Pacific Jeans, said he was still holding negotiations with his US buyers over the Christmas shipments.

"My US buyers neither cancelled nor increased the work orders and also did not seek any discount from me," said a Rupganj-based garment exporter asking not to be named.

Some 40 percent of his yearly exports go to the USA.

But at the same time, it is also not clear what the buyers will do after August, as they are also in a wait-and-see approach now because of the 90-day pause in tariffs, he said.

By June this year, the buyers will be able to confirm work orders for the next season, the exporter also said.

Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the buyers may offer lower prices because of the high tariffs, but the exporters would have to stay positive and strong in negotiations.

Currently, more than 900 local garment factories send apparel to the US, and nearly 25 factories have a high concentration on the American markets.

Bangladesh is the third-largest garment exporter to the US after China and Vietnam, and accounts for 9.3 percent of the over $100 billion worth of garments it imports in a year.​
 

Apparel exports to EU witness robust 37pc growth in Jan-Feb
FE Report
Published :
Apr 27, 2025 00:10
Updated :
Apr 27, 2025 00:10

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Bangladesh's readymade garment exports to the European Union (EU) recorded a robust 37-percent growth during January-February period of 2025, staying ahead of the major competitors like China, Vietnam, Turkey, and India.

Apparel exports to the EU market during the first two months of this year fetched US$ 3.69 billion, compared to US$ 2.69 billion earned in the same period of last year, according to data compiled by BGMEA based on Eurostat, the statistical office of the EU.

Exporters have attributed the rise to a number of factors, including rising global demand, shift of work orders from China, and duty-free market access, while local reasons are competitive pricing, enhanced capacity, efficiency, productivity, workplace-safety compliance, and the production of quality goods.

The developments during the last several years, enhanced buyers' confidence and trust, and good business environment have also helped boost the country's main export trade.

The EU's total apparel imports in January-February of 2025 stood at US$16.09 billion, 17.81 per cent higher than US$ 13.66 billion logged in the corresponding months last year, the data revealed.

Among Bangladesh's main competitors, China recorded a 25.12-percent growth during January-February period of 2025, while India, Pakistan, and Cambodia witnessed double-digit growth of 25.60 per cent, 29.65 per cent, and 41 per cent, respectively.

When asked, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) former director Mohiuddin Rubel said Bangladesh's apparel exports to the EU experienced remarkable growth both in value and volume.

The RMG exports in January-February 2025 grew remarkably by 36.99 per cent supported by a strong 39.02 per cent increase in volume.

However, a decrease of 1.46 per cent in unit price underscored the challenges of maintaining profitability, he noted.

He also attributed several factors that contributed to this positive export trend, including value-added garment production, the EU's economic recovery, duty-free market access, adherence to safety standards, and collaborative efforts of manufacturers and workers.

Looking ahead, the outlook remains optimistic with an expected increase in work orders throughout 2025, sustaining growth momentum, he added.

As buyers expand their sourcing activities in Bangladesh, the growth trajectory is expected to continue, especially amidst rising tensions between the US and other countries, he added.

Meanwhile, the BGMEA data showed that China's apparel exports to the EU reached US$4.54 billion, up from US$3.63 billion in January-February 2024.

However, Turkey faced a 3.64-percent decrease in apparel exports to the EU, amounting to US$1.61 billion during January-February period of 2025.

Vietnam recorded a 16.58-percent growth, reaching US$759 million exports.

India, Pakistan, and Cambodia fetched US$865.18 million, US$710.65 million, and US$775.11 million respectively during January-February period of 2025 from clothing exports to the EU.

Mr Rubel added that data highlighted the necessity for strategic adaptations to foster future growth.

"Despite Bangladesh's resilience in upholding export levels both in quantity and value, there is a clear imperative for the country to sustain its competitive edge and enhance profit margins amidst persistent global price declines," he noted.

Key factors such as value addition and expanding market reach remain pivotal for Bangladesh's economic sustainability and prosperity, he further said.

In the meantime, RMG exports to the United States, the single-largest destination for Bangladesh, grew by 26.64 per cent to US$1.50 billion during the January-February period of 2025 which was US$1.18 billion in the corresponding period of 2024, according to the data by OTEXA, an affiliate of the US Department of Commerce.​
 

January-February RMG exports to US up 26.64pc​


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Apparel exports to the United States, the single-largest market for made-in-Bangladesh clothing, sustained double-digit growth during the first two months of 2025.

Bangladesh fetched $1.50 billion from the US market during the January-February period of 2025, marking 26.64 per cent growth from $1.18 billion in the corresponding period of 2024, according to the data by OTEXA, an affiliate of the US Department of Commerce.

The data was released on Thursday, a day after the US imposed 37 per cent tariffs on Bangladeshi goods.

Readymade garment (RMG) exports to the US, which bounced back strongly in January, saw 45.9 per cent growth and fetched $799.65 million that month, which was $547.95 million in the same month of 2024.

However, exports may face a blow due to the new tariff imposition by the US.

In terms of quantity, Bangladesh shipped 488.27 million square metres of apparel to the US market in the January-February period of 2025, marking 23.38 per cent growth from 395.74 million square metres in the corresponding period of 2024, the OTEXA data shows.

Industry experts say January and February are unusual months and attributed the export rise to the likely attempts by importers to clear shipments before the Trump administration imposed higher tariffs.

The growth in Bangladesh's RMG exports to the US in January and February of this year outpaced that of all other major suppliers, including India at 25.70 per cent, Pakistan at 23.05 per cent, Vietnam at 11.14 per cent, and China at 8.85 per cent.

Despite the global economic challenges, Bangladeshi products' competitive pricing, enhanced production capabilities, and commitment to sustainable and ethical manufacturing practices contributed to the robust rebound, exporters said.

But the competitiveness may erode in the coming months due to the US tariff hike. Bangladesh may lose competitiveness to India and Pakistan, which face lower tariffs of 26 per cent and 29 per cent, respectively, they observed.

According to the OTEXA data, Bangladesh's RMG export earnings from the US market were $7.34 billion in 2024 and $7.28 billion in 2023. In 2022, clothing exports to the US hit an all-time high of $9.73 billion.

Amid the slow growth last year, Bangladesh's apparel export share in the US market fell to 9.26 per cent in 2024, which was 9.7 per cent in 2022.

The rise in exports from countries like Indonesia, India, Pakistan, and Cambodia in 2025 indicates that US buyers are diversifying their sourcing, influenced by competitive costs and geopolitical considerations.

On the other hand, China's slower growth, which economists and exporters apprehend would slow further, indicates shifting dynamics in global sourcing patterns, while factors such as trade policies, production costs, and sustainability requirements continue to shape these trends.

When asked, Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said importers may have made early shipments to have a good stock fearing possible tariff hikes so that they can immediately adjust during a crisis period.

The US market that started getting better after a long time of weaker position may face a decline in demand because of the new tariffs, which would raise the prices of garment items, he said.

This means the US consumers would purchase less, resulting in a squeezed market, Hoque noted, adding that the new tariffs may not sustain.

Exporters say Bangladesh needs to address its internal issues, including energy crisis, high cost of production, high bank interest rate, and other complexities, to sustain its competitiveness amid the possible volatile global trade war situation.

However, experts and economists think the new tariffs imposed by the US may not bring any major change in market competition as similar tariffs have been imposed on other garment-producing countries at various rates, with some of them facing higher rates like Vietnam and Cambodia.

Besides, they apprehend a possible global trade war that would result in economic recession and affect almost all exporting countries.

According to some exporters, while Vietnam is doing ever so well in the US market and the new tariffs may affect its growth, India will be a new concern and challenge for Bangladesh as the next-door neighbour is shipping higher volumes of apparel to America, offering lower prices by banking on its own raw materials.

Now India would be in an advantageous position with a low 26 per cent tariff, they said.

Talking to The Financial Express, Rubana Huq, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said Bangladesh's exports to the US would fall by at least 25 per cent in the near future.

"Eventually, we will lose to India and Pakistan in general. Also, we will lose to Jordan and Egypt in the higher value-added knit categories," she noted.

Turkey will also be a competitive sourcing hub considering its low tariff as it only has a 10 per cent reciprocal tariff, she added.

According to OTEXA, India received $955.50 million by shipping 263.87 million square metres of apparel to the US in the first two months of 2025. In terms of quantity, the shipments were 31.91 per cent higher compared to that in the same months of 2024.

Vietnam's apparel exports to the US in the period under review fetched $2.62 billion, recording 11.14 per cent growth. It recorded 7.25 per cent growth in terms of quantity as the US imported 753.44 million square metres of garment from the country.

Meanwhile, China recorded 8.85 per cent growth and fetched $2.77 billion during the period. It shipped 1.52 billion square metres of apparel to the US, marking 5.78 per cent growth.

The overall US apparel imports during the first two months of 2025 marked 11.21 per cent year-on-year growth to $13.55 billion.
 

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