Internal threats may jolt RMG sector: business leaders

Four major challenges, including erratic gas and electricity supply and political instability, are likely to take their toll on the country’s readymade garments (RMG) sector, one of the key drivers of the economy, according to business leaders.

They said the two other challenges that stood in the way of further growth of the export-oriented sector are high bank interest rate and poor rail and road communication systems.

The business leaders find the internal challenges as bigger threats than the one they are facing because of tough competition with China, Vietnam, Cambodia and Sri Lanka.

The industry players think if these challenges are not overcome shortly, Bangladesh will lose the competitiveness which may cast a damper on the overall economy.

“If we can get over the internal challenges, we don’t think countries like China and Cambodia can appear as big threats,” BGMEA first vice president Nasir Uddin Chowdhury told.

He said the total global RMG market is about US$ 400 billion and Bangladesh’s export size is below 4 percent. “If we can add one percent market share, it’ll be a big achievement.”

“We’re losing the competitiveness. Our production cost is going up. We need to ensure timely shipments and keeping the commitments,” said Chowdhury, also the Managing Director of Eastern Apparels Ltd.

He finds irregular gas and electricity supply, pitiable rail and road communication systems, political instability, and high bank interest as the stumbling blocks to the sector’s further growth.

Replying to a query, he said India will be a wonderful market if it removes all the non-tariff barriers. “But, it’s early to comment. We want to observe the situation for a year, at least. If we don’t face any barriers, India will become a wonderful destination,” he said.

Talking to this correspondent, president of Exporters Association of Bangladesh Abdus Salam Murshedy said China, India, Vietnam and Pakistan are the big competitors of Bangladesh. “If we want to beat them, we need to create skilled manpower, we need quality training centers,” he said.

Murshedy, also a former BGMEA president, said political stability, infrastructure development, lower bank interest and sufficient facilities for the workers are essential to see further growth in the RMG sector.

He also demanded that all the RMG workers be brought under a rationing system apart from setting up dormitories for them.

Murshedy said Chittagong and Mongla seaports’ efficiencies will have to be enhanced for better outcomes.

On duty-free access of 46 Bangladeshi products to the Indian market, he said Bangladesh will get two advantages in exporting products to the neighbouring country.

“We can ship any quantity [of goods] to India within seven days, but it takes 40 days in the case of American market,” he said adding that India can be the third major market for Bangladesh.

India recently gave Bangladesh an opportunity to reduce the trade deficit of more than $4.5 billion by allowing 46 Bangladeshi apparel items duty-free entry to the Indian market. The decision came during Indian Prime Minister Dr Manmohan Singh’s recent Dhaka visit.

After the announcement, Commerce Minister Faruk Khan hoped Bangladesh’s export to India will double in a few years, if it resolves the issue of non-tariff barriers.

Bangladesh, which presently enjoys duty-free access for exporting 10 million pieces of garments to India a year, had sought duty-free entry of 61 items, including 47 apparel products, from India.

With this, India’s negative list of products will come down to 434 from 480.

Bangladesh is a major apparel exporter in the world and apparel exports accounted for nearly $18 billion or more than 80 percent of the country’s total export of $22.92 billion in fiscal 2010-11.