The ready-made garment (RMG) accessories and packaging industry in Bangladesh is witnessing remarkable growth, largely driven by significant investments in radio frequency identification (RFID) technology. Over the past five years, the number of local factories producing RFID technology has skyrocketed from 5-6 to 30, according to the Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA).
BGAPMEA President Md Shahriar noted that his company has been supplying RFID technology to numerous buyers, and demand continues to rise. He indicated that over 100 factories are poised to invest in local RFID manufacturing, which could enhance both local and direct exports. Currently, the direct export value of the accessories and packaging sector stands at around US $ 1 billion, with deemed exports valued at approximately US $ 8 billion.
A country manager for a European Union brand highlighted the benefits of RFID, stating that it has been instrumental in simplifying inventory management for their products over the past 5-6 years. Moreover, the technology is increasingly being adopted by Bangladeshi apparel exporters at the factory level.
RFID technology utilises electromagnetic fields to automatically identify and track product tags, which can be read remotely without a direct line of sight. This innovation not only streamlines inventory management but also enhances security within retail spaces.
Md Shahriar also discussed a growing focus on sustainability in the industry. With impending EU legislative changes, manufacturers are investing in biodegradable and recycled packaging materials. He reported that about 20 per cent of Bangladesh’s exported apparel now incorporates such materials, with a mandate for 100 per cent compliance expected after 2026.
The accessories and packaging sector currently meets over 90 per cent of local demand, a significant improvement from its past dependency on imports. During the Covid-19 pandemic, the sector was able to supply all necessary accessories and packaging materials for export industries.
Despite the promising outlook, challenges remain. Small and medium-sized manufacturers are struggling with access to foreign currency for Letters of Credit (LCs), forcing them to purchase dollars at higher kerb market rates. Additionally, these smaller entities face higher interest rates, further complicating their competitive position against larger companies.
The industry features approximately 1,610 operational factories, with only 40 classified as large-scale, boasting annual turnovers exceeding US $ 30 million. While there is potential for attracting more foreign direct investments (FDIs), stagnation persists due to a challenging business environment, marked by political instability and rising utility costs.
Shahriar expressed optimism for growth in 2023 but urged the government to prioritize stable energy supplies and factory safety to foster a conducive investment climate. He also noted a concerning shift of 15 per cent-20 per cent of orders to competing countries due to law and order uncertainties, although he remains hopeful that buyers will return once stability is restored.
As the accessories and packaging industry continues to evolve with technological advancements and sustainability initiatives, maintaining competitiveness will be crucial for securing its place in the global market.
