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HomeNews & ViewsChallenges and Strategic Recommendations for Bangladesh's Apparel Industry Post-LDC Graduation in practical view

Challenges and Strategic Recommendations for Bangladesh’s Apparel Industry Post-LDC Graduation in practical view

After Bangladesh graduates from Least Developed Country (LDC) status in 2026, the apparel industry will face significant challenges due to the loss of preferential trade privileges, including the Generalised System of Preferences (GSP) which provides duty-free access to key markets such as the European Union and the United States. This will make Bangladeshi clothing more expensive compared to competitors, potentially reducing demand and market share. Additionally, strict compliance and quality standards will increase operational costs. The industry is heavily dependent on government policies, bank bonds, and the National Board of Revenue (NBR).

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Without these advantages, Bangladeshi clothing will become more expensive than competitors, potentially reducing demand and market share. Additionally, the industry has to meet strict compliance and quality standards, increasing operational costs.

Adapting to these changes will require significant investments in technology, skills development and infrastructure. The present situation in the garment industry is indeed challenging. Despite efforts to develop green factories and sustainable practices, the industry remains heavily reliant on government support and policies, particularly in the last 12 years. This dependence is evident when compared to other countries where the garment industry is more self-sufficient.

Key Points of Concern:

Government Support: The industry leans significantly on bank bonds and policies from the NBR and the Ministry of Commerce. This dependency has been critical for survival but is not sustainable in the long term.

Foreign Investment: To ensure the survival and growth of domestic exporting companies, it’s crucial to facilitate foreign investment. Joint ventures, FDI equity sharing, and marketing and technical support are essential strategies to mitigate risks and enhance competitiveness.

Investment Risks: Domestic exporters have already made substantial investments based on buyer demands and national interests. However, without a solid plan, these investments and the enterprises themselves are at risk. It’s vital to recognize that buyers are not bound to Bangladesh and will source products from other advantageous locations if necessary.

 while the garment industry is crucial, expecting the government to provide all benefits to this sector alone is impractical. A balanced approach, where the government supports multiple sectors while the garment industry adopts self-reliant and innovative practices, is essential for sustainable growth.

The economy heavily depends on remittances from expatriates, which have totalled about $105 billion in less than five years.

 The garment industry uses a significant portion of its export earnings to pay for import bills and foreign worker salaries, with only a small fraction remaining in the country.

The garment industry in Bangladesh has been a significant contributor to the country’s export earnings and employment. However, as you pointed out, a substantial portion of the revenue generated from exports is used to pay for imports and foreign worker salaries, leaving a smaller percentage in the country. The trend towards automation in garment manufacturing also poses a potential threat to job opportunities in the future. Here are some points to consider:

Economic Impact of the Garment Industry

Export Earnings: While the garment industry has achieved impressive export figures—$200 billion over the last five years—only about 15% of this amount remains within the country after accounting for import bills and foreign worker salaries.

Job Creation: The industry is a major source of employment. However, the shift towards automation may reduce the number of jobs available in the future, as more processes become automated and require fewer workers.

The apparel industry in Bangladesh stands at a critical juncture with the upcoming LDC graduation. While the challenges are significant, strategic investments in technology, market diversification, and fostering foreign partnerships can help the industry adapt and thrive in the new economic landscape. Collaborative efforts from industry stakeholders and supportive government policies will be essential in ensuring a sustainable and competitive future for Bangladesh’s apparel sector.

while the garment industry faces significant challenges, there are also opportunities to enhance its sustainability and competitiveness. Through strategic investments, innovation, and collaboration, the industry can continue to be a vital part of Bangladesh’s economy while adapting to future changes. I am confident that the industry’s talent and potential are well-founded. By leveraging the skills and dynamism of its workforce, investing in innovation and sustainability, and fostering strong government and industry collaboration, the garment industry in Bangladesh can continue to thrive. Strategic planning and proactive measures will ensure that the industry not only survives but also prospers in the face of future challenges.

Salauddin, Director, Reaz Garments Ltd & Head of Operation Bunon, TGMG Vlog

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