Ver Further Progress Would Be Necessary to Improve and Sustain Competitiveness on a Global Scale

7/31/2019 Ver Further Progress Would Be Necessary to Improve and Sustain Competitiveness on a Global Scale

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ver further progress

would be necessary toimprove and sustain

competitiveness on a

global scale.PolicyRegime of

GovernmentGovernment

of Bangladesh has playedan active role in

designing policy support

to the RMG sector thatincludes back-to-back


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L/C, bonded warehouse,

cash incentives, exportcredit guarantee scheme,

tax holiday and related

facilities. At presentgovernment operates a

cash compensation

scheme through whichdomestic suppliers to

export-oriented RMG

units receive a cashpayment equivalent to 5


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percent of the net FOB

value of exportedgarments. At the same

time, income tax rate

fortextile manufacturerswere reduced to 15

percent from its earlier

level for theperiod up toJune 30, 2008. The

reduced tax rates and

other facilities are likelyto have a positive impact


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on the RMG

sector.InfrastructuralImpedimentsThe

existence of sound

infrastructural facilities isa prerequisite for

economicdevelopment. In

Bangladesh, continuinggrowth of the RMG

sector is dependent onthe

development of a strongbackward linkage in order


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to reduce the lead

time.However, otherfactors constraining

competitiveness of

Bangladeshs RMGexports included the

absence of adequate

physical infrastructureand utilities.Labor

ProductivityThe

productive efficiency oflabor is more important


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determinant for gaining

comparative advantagethan the physical

abundance of labor. In

Bangladesh, the garmentworkers are mostly

women with little

education and training.The employmentof an

uneven number of

unskilled labors by thegarment factories results


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in lowproductivity and

comparatively moreexpensive apparels.

Bangladesh labor

productivity is known tobe lower when it

compared with of Sri

Lanka, South Korea andHong Kong. Bangladesh

must look for ways to

improve the productivityof its laborforce if it


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wants to compete

regionally if not globally.Because of cheap laborif

our country makes the

labor productivity in theapex position, then we

thinkthe future of this

sector is highlyoptimistic.Research and

TrainingThe country has

no dedicated researchinstitute related to the


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apparel sector. RMG is

highly fashion orientedand constant market

research is necessary to

become successful in thebusiness. BGMEA has

already established an

institute which offersbachelors degree in

fashion designing and

BKMEA is planning onsetting up aresearch and


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training institute. These

and related initiativesneed encouragement

possibly intermediated by

donor-assisted technologyand knowledge transfer.

Afacilitating public sector

role can be very relevanthere.

Strategies and policyrecommendationBanglade


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shs RMG sector has

shown formidableresilience in the face of

increased competition in

the post-MFA. Micro-level data analysis shows

that Bangladeshs

RMGwill be competitivein the post-MFA era and

even after the expiration

of safeguards againstChinese products.


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However, In order to

remain competitive andconsolidate market share

and also to reap from the

free market opportunities,there are some challenges

to overcome in product

selection, backward-linkages industry

development,

encouraging FDI,infrastructure and human


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resource development and

preferential market accessnegotiation in existing

and potential

markets.Selected ItemsIna fiercely competitive

apparel market where the

competitors are the giantslike China and India,

Bangladesh might

concentrate in theselected items.


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Bangladesh can gain

competitive advantagesover them rather to

compete in whole gamut

ofthe apparelproducts.Infrastructure

Development and

Reducing the LeadTimeOne of the major

hurdles Bangladesh RMG

sector faces is theinadequate infrastructure


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and has, in consequence,

longer lead timecomparing with China

and Vietnam. Bangladesh

should further improveinfrastructures such as

electricity, gas, sea-ports

capacity and efficiencyand relocation of

garments factories from

the congested city centerslike Dhaka, the national


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capital. The proposed

garments villages anddeveloping the Dhaka-

Chittagong high-ways

belt for garmentindustriescan save it from

congestion of the

cities.Human Resourcedevelopment

Although with huge

population Bangladesh isin shortage of technically


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country) and many WTO

clauses urge thedeveloped countries to

open their market for

preferential access ofLDC products. However,

Bangladesh is among the

few LDCs which do notenjoy this access to the

USA market. Bangladesh

needs to pursue thedeveloped countries such


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as the USA

forpreferential access totheir markets as well as

diversify export markets

in theadvanced emergingcountries such as Russia,

Brazil, South Korea,

Mexico, China,India andthe GCC.Backward

linkages industry and

SAARC CumulationItsnecessary to further


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develop Bangladeshs

backward linkagesindustry (i.e. textile)

specially in the woven

sector in order to fulfillthe current and increasing

demand of the RMG

industry. Bangladesh canalso encourage relocation

of textile industries from

the high cost developedcountries. In the mean


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time, Bangladesh can

fully avail the opportunityof DFQF access to the

EU market in woven

products by using fabricsfrom the SAARC

countries . In quota era,

however, in ordertoimprove local textile

sector, Bangladesh did

not fully use the DFQFexport facilities with


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fabric from the SAARC

countries. In a changedfiercely

competitivemarket era,

Bangladesh can easilyincrease its exports in

woven with imported

fabrics where it lackslocal inputs. Only 40% of

Bangladeshs woven

garment meet RoOrequirements for DFQF


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access to the EU38 and

have fared less well.Currently,Bangladesh

enjoys DFQF access to

the EU for 95% of itsknitwear as this sector

can procure locally most

of the inputs, therebycontributing to the very

rapid growth of

Bangladeshs exports ofknitwear to the


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EU.Encourage FDI and

Cooperation in appareland Textile

sectorBangladesh kept the

quota advantages forlocal entrepreneurs during

the quota era and did not

encourage FDI in apparel.But in current quota free

trade regime,Bangladesh

can encourage FDI inapparel sector along with


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the textile sector. The

FDI can also bring newtechnology, know-how

and enhance productivity.

Bangladesh needs towork on image building

and publicize the

advantages of investmentopportunities in apparel

(and also in textiles).

Bangladesh must joinhands with leading textile


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as well as apparel makers

in China, Hongkong,South Korea and Turkey

to encourage them to

relocate the part of theirproduction to

Bangladesh. The latter

should also improvecooperation with the

leading consumer goods

retailers such as WalMart,Costco, GAP and


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Carrefour. The RMG

entrepreneurs fromBangladesh should make

their strategies and

policies in terms of theValue chain rather than

the final products as the

strategy of the coopetition(cooperation+competition

) among the leading

players are moresustainable than the blind


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competition.ConclusionB

angladesh has been ableto maintain its current

growth momentum,

driven by rapid exportexpansion, in spite of

MFA phase out and other

shocks. Its very clearthat the predicted decline

of RMG industry in

Bangladesh did not takeplace and instead, The


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RMG industry has

improvedcompetitiveness and

raised exports value.

Though the completelyphasing out of safeguards

against the Chinese

products at the end of2008 and the accelerated

competition are yet to

come. If The recent dataof the beginning of 2008


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and quota-free-

safeguards-less Canadianmarket are any example

of market trends in 2009

and beyond, thenBangladesh can expect to

become the second

largest net garmentsexporter in apparel. In

order to reach to that

point, It requires alsocontinuous development


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of the sector such as the

transportation facilities,telecommunication

network, and power

supply, managementofseaport, utility services

and in the law and order

situation. Thegovernmentand the RMG

sector would have to

jointly work together tomaintain competitiveness


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in the global RMG

market.REFERENCES:1.Bhatta

charya, Debapriya; and

Mustafizur Rahman[2001], Globalization

andMacroImplication of

the Growth of GarmentIndustry in Bangladesh,

in Pratima Paul-

Majumderand BinayakSen, eds., Growth of


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Garment Industry in

Bangladesh: Economicand SocialDimensions,

Dhaka: Bangladesh

Institute of DevelopmentStudies, pp. 2-

26.2.Murayama,

Mayumi [2006]Globalisation and

Female Employment in

Bangladesh:ReadymadeGarment Workers in


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Post-MFA Era, in

Mayumi Murayama ed.,Employmentin

Readymade Garment

Industry in Post-MFAEra: The Case of India,

Bangladesh andSriLanka,

Chiba: Institute ofDeveloping Economies,

pp. 53-101.3.Zohir,

Salma Chaudhuri andPratima Paul-


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GarmentIndustry in

Developing Countries:What Has Happened

Since the MFA Phase-

Out?5.Mlachila,Montfort and

Yongzheng Yang,

2004, The End ofTextiles Quotas:A Case

Study of the Impact on

Bangladesh, IMFWorking Paper No.


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04/108, (Washington:

International MonetaryFund).6.Bhattacharya,

D and M. Rahman,

1999, FemaleEmployment Under

Export-Propelled

Industrialization:Prospects for

Internalizing Global

Opportunities inBangladesh


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s Apparel Sector,

UNRISD OccasionalPaper.7.Azim, M.

Tahlil, and Nasir

Uddin, 2003,Challenges for

Garments Sector

inBangladesh After 2004:Avenues for Survival and

Growth Bangladesh

Institute of Internationaland Strategic Studies


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Journal, Vol. 24, No. 1,

Page 49-82.8.JonathanDunn, 2006, The

RMG Industry in

BANGLADESH: AnUpdate,

IMF.9.Mlachila,

Montfort andYongzheng Yang,

2004, The End of

Textiles Quotas:A CaseStudy of the Impact on


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Bangladesh, IMF

Working Paper No.04/108, (Washington:

International Monetary

Fund).10.World TradeOrganization, 2006,

Trade Policy Review:

Bangladesh, WTO(Geneva).11.http://www

.bgmea.com/data.htm,

Bangladesh Garment


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Manufacturers and

Exporters Association.

Ver Further Progress Would Be Necessary to Improve and Sustain Competitiveness on a Global Scale

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