Cotton is no longer the king in global apparel market! According to data from the International Textile Manufacturers Federation (ITMF), which is a Switzerland-based platform for global textile makers, of all garment items produced globally, 78 per cent is made from man-made fibres while cotton fibre accounts for the rest.
However, when it comes to the second biggest apparel exporter globally, which happens to be Bangladesh, its exportable garment items are largely based on cotton, which reportedly accounts for more than 74 per cent of total apparel export.
Such a contradiction undoubtedly doesnot play in favour of Bangladesh — the readymade garment (RMG) industry is a mainstay of this economic success story: Bangladesh is today one of the world’s largest garment exporters, with the RMG sector accounting for more than 80 percent of Bangladesh’s exports — keeping the future in perspective and more so considering the fledgling price points in basic apparel items.
As per a McKinsey report, over the past decade, Bangladesh’s RMG sector has made impressive progress in tackling the challenges of growth—particularly in diversifying customers and products, improving supplier and workforce performance, and strengthening compliance and sustainability, which went on to add a key strategy for the sector’s growth over the past decade has been to diversify customer countries and move to more complex products and value-added services even if Bangladesh’s RMG sector has made progress in broadening its customer portfolio to manage risk and adapt to changing demand patterns in the global fashion market.
However, many of Bangladesh’s factories have not yet transitioned to providing these new offerings, and have shied away from the investment required to do so, further stated the report, adding the numbers show that T-shirts, trousers, and sweaters continue to dominate the country’s exports even as Bangladesh’s top ten products accounted for more than 55 percent of the country’s export value of apparel to the EU in 2019, while the iconic cotton T-shirt reportedly accounts for around one-fifth of the value of Bangladeshi garment exports to Europe. Consequently, Bangladesh’s garment industry is facing palpable price pressure in basic product categories.
“The price of garments has gradually been declining by buyers despite the recent increase in export orders…,” maintained BGMEA First Vice President Syed Nazrul Islam Chowdhury while addressing the association’s Standing Committee on Customs (Bond) and Customs (Sea) not so long ago even as Faruque Hassan, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), also said the industry has been suffering from surging costs of production with the revival of business from the fallouts of COVID-19 even as he underlined that although the cost of production has increased by around 30 per cent, price per unit of garment items exported from Bangladesh has declined by 3.7 per cent over the past one year due to lower demand. He also maintained that, in many cases, the exporters have been doing business either with hope of making a profit in the future or reducing other costs of production in different ways while underlining most suppliers have been surviving through exporting higher volumes of goods, rather than through better values.
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In the given scenario, it becomes even more important to shift gears and move up the value chain, so as to bargain better price points and, MMF can play a major role in this. And as more and more garment makers are now moving towards MMF-based apparels, Bangladesh’s primary textile sector is also undergoing rapid changes with local millers taking to producing significant amounts of man-made fibres even as import of man-made fibres grew by a substantial 45.72 per cent to reach 99,597 tonnes in the first five months (January to May) of this year, according to the Bangladesh Textile Mills Association (BTMA) data.
However, even if existing mills try to augment their capacities and new ones are also being built (Korean textile company Youngone has recently invested US $ 65 million in 3 factories and announced its plan to invest another US $ 120 million for another 2 MMF factories in the Korean EPZ in Bangladesh) to cater to the increased demand for MMF, according to some reports, not many amongst the country’s 433 spinning mills produce synthetic and acrylic yarns.
Bangladesh lags far behind its competitors in making man-made fibres, said BTMA President Mohammad Ali Khokon, even as speaking to Apparel Resources (AR), BGMEA Director Abdullah Hil Rakib said, “As the worldwide demand for MMF is growing, and it is a high-value-added product, we need to take measures to strengthen this sector. The growth of MMF results from rising demand for MMF-based apparel in fashion industry and MMF has versatile use in end-use categories such as sportswear, leisurewear, women’s dresses, home textiles, carpets and other industrial sectors,” while adding, “In the spinning sector, around 430 mills are operating in Bangladesh out of which only 27 are producing man-made yarn, in particular, polyester. The production facilities for other man-made fibres like polypropylene, nylon, acrylic etc., have yet to be established in Bangladesh.”
Further, according to a report, in the year 2019, the global man-madeapparel trade stood at around US $ 179 billion with Bangladesh holding roughly 5 per cent market share, whereas its main competitor, Vietnam, had a 10 per cent share even as the 27 factories producing man-made yarns in Bangladesh meet only around 20 per cent of the national demand.
Given the ground realities, foreign investment in MMF seems to be the most feasible solution even as Abdullah Hil Rakib has underlined foreign investors are eager to set up MMF factories in Bangladesh sensing a huge untapped demand even if apparel makers in general are for FDI in backward linkage industries even as they stressed the need for local and foreign direct investments in non-cotton-based backward linkage industries to tap potential of man-made fibres on the global market.
Taking part in the business session of the International Investment Summit-2021 organised by the Bangladesh Investment Development Authority in capital city Dhaka recently, garment sector leaders said that Bangladesh needed to strengthen the backward linkage industry particularly in the woven textiles as the local mills could meet only 35-40 per cent of fabrics of total exports.
“It is high time to diversify our export basket to non-cotton areas and this is a potential area of investments,” underlined BGMEA President Faruque Hassan, who further underlined using own fabrics would be a requirement for Bangladesh to avail European GSP Plus as soon as the current Everything But Arms (EBA) scheme faces out after the graduation of the country from the least developed to a developing one.
So we need to have more investments in the textile sector, the BGMEA President said even as Mohammad Ali Khokonsought policy support for the weaving mills and man-made fibres to fill the current shortage of woven fabrics.
The BTMA President said the Government should waive taxes for the sectors for the next 10 years to grow.
Meanwhile, Head of the Bangladesh Sourcing Office for Marks & Spencer, Shawpna Bhowmick, while maintaining Bangladesh was the biggest sourcing country for the British retailer and that they were thinking of buying more from the country, stressed a strong backward linkage industry in Bangladesh saying that huge quantities of fabrics and related materials were being imported from China, Korea and Taiwan to produce lingerie, suits and activewear even as she said ease of doing business was also important for Bangladesh.
The country’s economists and trade analysts also believe Bangladesh badly needs to produce high-end products and increase production capacity in the apparel industry while underlining FDI in the sector can play an important role in this regard.
“There is no need of foreign investment in the garment sector in present context, as we have highest capability to make quantity RMG products. But the foreign investment should inspire only for manufacturing man-made fibres,” earlier claimed Md Siddiqur Rahman, Vice-President of the FBCCI even as Executive Director of Policy Research Institute Ahsan H Mansur, on his part stated FDI is very important for the RMG sector.
“Investing heavily in backward linkages should be a key priority in the post-pandemic recovery efforts. Bangladesh should strive for heavy investment in the sector,” added Ahsan H Mansur to wind up on a positive note.