2023 was one of the most challenging years for Bangladesh (be it in terms of power and energy crunch, currency depreciation, dollar shortage, Bangladesh Bank (BB) report claiming that Bangladesh’s economy is under stress and many more) but thanks to the spirit of Bangladeshi entrepreneurs, they not only survived but also grew on all fronts be it in green building revolution, focus on CSR, worker welfare, capacity enhancement etc. Apparel Resources brings for you a recap of 2023 and how the industry showed resilience and moved towards achieving greater strides throughout the year.
Sustainability drive: Focus on green factories and much more
In 2023, many companies increased their tilt towards usage of more energy-efficient technologies in factories; more solar panels were incorporated in commercial spaces and old boilers were replaced with new ones so as to reduce gas consumption in factories.
Various companies have shown good progress in attaining their sustainability targets like energy saving, groundwater saving, recycled water use, Co2 reduction, sustainable sourcing, renewable energy use, recycling of solid waste, ZDHC compliant chemical use.
Collective efforts were also there in this direction as BGMEA entered into an MoU to collaborate on enhancing energy efficiency and promoting the use of green and clean energy sources within garment factories.
UNDP Bangladesh and H&M Group also signed a partnership at the UNDP Bangladesh office to work on climate action and help Bangladesh to achieve the Sustainable Development Goals (SDGs). The initiative will have a pivotal role in initiating policy dialogues focused on reducing CO2 emissions, developing climate-responsive power policies, establishing Power Purchase Agreements (PPA), and identifying climate-smart investment opportunities.
In 2023, BGMEA announced that time has now come to import scrapped clothes to make garments from them in order to save the environment. The spinners in Bangladesh were already facing shortage of the same. Bangladesh has the potential to save around US $ 500 million in imports if all its textile waste is recycled locally and this was widely discussed in 2023 amongst the industry.
Along with the above specified sustainable targets, companies increased their efforts towards worker welfare and women empowerment which includes opening fair price shops in factories that sell daily commodities
Contributing massively in sustainability with green factories, Bangladesh is home to the highest number of green manufacturing facilities globally and 2023 highlighted this through its strong focus on green factories. In the beginning of 2023, Bangladesh had close to 200 green units including 9 amongst the top 10 globally and proved to be a trendsetter in sustainability and green factories. That’s not all! More than 500 units are in the pipeline awaiting LEED certification.
This ‘revolution’ was started by Epic Group, whose CIPL Project was the first to be LEED Platinum certified in Bangladesh by USGBC way back in 2011.
Though the Green certification alone is no guarantee for business even as the industry continues to debate on the key aspects of investment and RoI. Entrepreneurs have to spend 30 per cent more for constructing green factories compared to the conventional ones but buyers do not pay anything extra for products from the green factories. At the same time, industry experts announced that there is huge competition which has reached such levels that without a green unit, it would be difficult to sustain in business.
However, industry saved a lot of resources with its focus on green factories as such facilities help reduce overall operational costs in the long run as they reduce use of electricity by 24 per cent to 50 per cent, water consumption by 40 per cent and carbon emissions by 33 to 39 per cent.
Tilt towards technology
2023 was the year in which many companies increased their integration with the latest technologies. In fact top players are taking lead in this direction and motivating other export houses too as this tilt towards technology will help the RMG companies on many fronts.
Like Epic Group’s new facilities are fully digitalised including RFID tags for each garment that track work-in-progress and drive efficiencies throughout the production process even if the factories’ data is stored on cloud through an app where all concerned people, including the senior management, can see the performance of operators, sewing lines and even the entire shopfloor in real-time.
Floreal Bangladesh is adding implementation of 3D technology in Floreal’s product development process which has resulted in significant raw material savings while also improving the vital aspect of speed to the market.
M B Knit Fashion Ltd., considered one amongst the big names in knitwear in Bangladesh, has recently introduced software in its cutting section, which analyses all the possible angles based on the input of product measurement to cut the fabric so that it can ensure best usage. Fatullah Apparels Limited has incorporated automated systems that can monitor and report workers’ productivity.
These are just few of the examples while the list is long. There are collaborative efforts too being taken up in this direction as BGMEA tied up with Jeanologia to support the country’s RMG industry in adopting innovative technologies and processes to become more efficient and sustainable. Crony Group, a leading garment manufacturer, teamed up with Solvei8 for its digital transformation journey, as the two companies collaborate to digitise the group’s factory operations.
Such developments have proved fruitful for the industry as reports underline that higher technology levels in Bangladesh’s manufacturing sector helped it to perform better (after taking into account key differences such as size, physical capital and age), while adding a 25 per cent increase in the overall technology level was found to be associated with a 3 per cent increase in profits per worker.
Expansion took centre stage, diversification also got thrust
To achieve the massive target of US $ 100 billion by 2030, Bangladesh needs more capacities and also needs to diversify in terms of markets and fabric base such as shifting from cotton to MMF.
To mention a few, leading denim manufacturer and exporter Envoy Textiles finalised a deal to the tune of € 10.80 million as loan from the Asian Development Bank (ADB) to procure machines for its second spinning unit. The new unit will have an annual yarn production of 3,600 tonnes.
DBL Group also received US $ 52 million British loan to establish a greenfield, cotton yarn spinning mill in Sylhet and recently also announced the inauguration of the same.
Malek Spinning Mills Ltd., has authorised an investment of approximately Taka 157 crore through its subsidiary, JM Fabrics Limited to establish various facilities, including one for yarn texturising and covering.
KFL Group, a leading apparel and textile manufacturer whose expansion project started in 2021, successfully completed its trial production phase. Moving forward, the group is preparing for bulk production by making 50 sewing lines operational.
Pakiza Knit Group expanded in woven segment, HAMS Group is eyeing to have another 64 lines in its woven unit wherein it would make denim jackets, padded jackets and other similar high-end garments. Sparrow Apparels is another such name.
Some other medium-level companies are also in process to implement their expansion plans like MU Fashion which plans to increase its capacity to 10 million pieces within one year.
Not only Bangladeshi companies but also Chinese companies continue their expansion as with an investment of US $ 40 million, China’s Fenix Garment Limited announced setting up a manufacturing unit at BEPZA.
Just a few months back, Quality Sportswear Mfrs Ltd., a Chinese company, announced to invest US $ 11.55 million in establishing a garments and accessories manufacturing facility at the BEPZA Economic Zone in Mirsarai, Chittagong.
One more Chinese company, Yun Sheng BD Co Ltd., is set to pioneer the establishment of a composite factory encompassing textiles, garments and accessories in the Mongla EPZ, marking the first-of-its-kind facility in the region. With a record-breaking investment of US $ 89 million, Yun Sheng BD aims to manufacture fabrics, garments and garment accessories, representing the highest proposed investment by a single company in the history of agreements signed for factories in Mongla EPZ.
A lot of work orders shifted to Bangladesh from China because of the trade war with US and so the scope of production shifted to high-end, value added garments, most of which were MMF-based. Similarly, companies having strong hold on knitted segment so far have also entered/increased their reach in woven segment.
Along with the apparel companies, few of the local textile mills enhanced their spinning capacity to produce cotton and synthetic blended ‘expanded yarn’ as a substitute for imported yarn. Noman Group, Envoy Group and Youngone Corporation took the lead with regard to MMF. Fashion Flash Limited also announced its venture into MMF-based garments too as some products have never been made by Bangladesh and FFL wants to make its space in such products.
Data of Bangladesh Textile Mills Association (BTMA), maintained that only between January and April of the current year, Bangladesh imported 30,653 tonnes of PSF worth around Taka 330 crore even as in last year (2022), local spinners imported 1.10 lakh tonnes of PSF at a cost of about Taka 1,243 crore.
LC issues remained a concern
The dollar crisis has given rise to a host of issues related to LC openings and the issue prevailed on and off through the entire year.
In the first eight months (July-February) of the current fiscal year, Bangladesh has witnessed a 23.45 per cent year-on-year drop in opening of LCs for imports. In its efforts to curb money laundering through imports, Bangladesh’s central bank- Bangladesh Bank halted as many as 100 LCs which were 20 per cent – 200 per cent higher than the usual prices of goods. In the beginning of the year, it was also announced that Central bank will form a crisis management cell to deal with LC opening issues. Dollar shortage in the banking sector forced local banks to take 10 to 15 days more than usual in opening LCs.
The issue also emerged in the last months of 2023 as textile millers urged the Bangladesh Bank to enhance the limit of LCs to facilitate the importation of more raw materials. The Bangladesh Textile Millers Association (BTMA) conveyed this request in a letter to the central bank. The association also sought a higher limit for single borrowers and proposed paying 20 per cent of their term loans in the current year, with the remainder deferred for four years after the payment period concludes. At the same time, it was reported that certain western buyers are stipulating the recently issued LCs that they will bear no responsibility for goods and payments in the event of trade restrictions imposed on Bangladesh by western countries. Despite reassurances from Bangladesh’s State Minister for Foreign Affairs, Md Shahriar Alam, the Bangladesh embassy in Washington expressed concerns, suggesting that Bangladesh might be a target of the US memorandum.
Wage Issue: Dust settled, real challenge begins
The discussions were started in early 2023 when Department of Labour (DoL) under the Ministry of Labour and Employment reportedly sought names of representatives from the BGMEA and BKMEA to represent in the wage board to re-fix the monthly minimum wages.
In November, finally the Government announced wage hike by 56.25 per cent as the first hike since 2019 along with a 5 per cent annual increment.
Though there were protests as wage hike was not as per the workers’ demand but industry believes that these were well managed by the Government and remained in control. Few of the global brands came forward and announced the hike in price but industry is strongly of the opinion that this hike in FOB price is not justified at all.
As the industry in Bangladesh has overcome plenty of challenges in the past and is continuously growing, it will not be wrong to expect that the wage hike will also be observed by the manufacturers and brands together and it will not have any major and long-term impact on the country’s RMG trade.
| Companies with eye on expansion |
| Envoy Textiles |
| DBL Group |
| KFL Group |
| Pakiza Knit Group |
| HAMS Group |
| Fenix Garment Limited |
| Quality Sportswear Mfrs Ltd. |
| Yun Sheng BD Co Ltd. |
| MU Fashion |
| Youngone Corporation |
| Fashion Flash Limited |
