RMG export earnings may cross $40b by 2020
The export earnings of the country’s garment sector are likely to cross $40 billion mark by 2020, if few challenges the industry is facing are addressed in the coming years, exporters and global market monitors said on Thursday.
The challenges being faced by Bangladesh garment industry are poor port performance, weak road network, slower transportation, inadequate supply of utilities including electricity, gas and fuel oil and rising labour cost, garment manufacturers and exporters said.
“For next 10 years Bangladesh garment sector is likely to grow by 9.0 percent and by 2020 the export value is likely to touch $42 billion,” said global online business journal McKinsey Quarterly.
According to the Export Promotion Bureau, garments exports rose by 43 percent to more than $17.9 billion in Fiscal Year 2010-11 and in the current FY the export target for garments has been fixed at some $20.29 billion.
“To rapidly increase the export earnings we need further improvement of infrastructure, ports efficiency, road-network and supply of utilities including electricity, natural gas and water,” Syed Nurul Islam, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told the FE.
Despite improvement of the situation in the last few years, the authorities concerned should continue the development efforts further, he added.
“With present level of power supply and constraints in other relevant fields we are earning some $20 billion a year. The export can touch $50 billion if facilities are improved,” said Nurul Islam who has been elected President of Bangladesh-Malaysia Chamber of Commerce and Industry recently.
Due to lack of proper port efficiency and wider highways exports are often delayed, other exporters said.
However, the authorities concerned have started upgrading a national highway connecting the country’s main Chittagong port with the capital Dhaka and the project is expected to be completed by early 2014, officials of Roads and Highways Department said.
The power situation also improved but the shortfall still remains at around 2,000 mega watt (mw) as the peak-hour demand rose over 7,000 mw, officials of Bangladesh Power Development Board said.
Authorities concerned are still struggling to augment gas supply through new exploration.
“In the coming years the (garment) industry is likely to face a 30 per cent hike in labour cost, in addition to expenses to be required to increase capability of workers,” McKinsey Quarterly said.
According to BGMEA officials, currently a new entrant earns around taka 3,500 per month. There are more than 5,000 garment factories employing some 4.0 million workers comprising more than 80 per cent female workers.
Prime Minister Sheikh Hasina and the opposition leader Begum Khaleda Zia separately advised the Bangladesh Garment Manufacturers and Exporters Association to look after the needs of workers.
Their advice came when the two leaders attended separate sessions of BGMEA during its recently three-day international exposition in Dhaka.
In addition to the rising labour cost, the garment sector in the country will have to continue to face additional cost for inputs as the country has no base of raw materials.
Moreover the industry is also likely to be adversely affected by political instability as the major parties continue to pursue a confrontational politics, traders said.
However the prospects for the country’s garment sector increased further after India allowed duty-free and quota-free access of Bangladeshi garment products to its market.
Recent closer of many garment factories and shift in investment from garment to other sector in China due to improved socio-economic status and higher labour cost, Bangladesh is getting wider scope to replace China, the world’s largest garment supplier, in the coming days, industry sources said.