Recently, Bangladesh RMG is experiencing a shortage of orders due to a higher inflation rate, especially in the traditional US and EU market. After the Covid crisis when the economy was about to be resilient, the Russo-Ukrainian conflict further complicated the situation. The easier and quicker solution could be exporting RMG to nontraditional Asian markets like India.
We all know that because of the global pandemic, approximately hundreds of factories in Bangladesh have been forced to shut down, mainly small factories because they failed to get orders, and sell garments and therefore had a huge stock load. Because of this, they had to close factories and send thousands of workers home, most of them from rural areas. About 20%-25% of the laborers had to return to their villages and therefore cut off supplies for their families for a significant period.
Meanwhile, due to the Russo-Ukrainian conflict that has escalated, the dollar has reached an all-time high and inflation is running higher all around the world. As a result, overall consumption has declined. Bangladesh saw negative growth in September after 13 consecutive months of robust growth.
Bangladesh RMG industry has received last season’s orders but not the next season’s as the dollar exchange rate moved very quickly from Tk 80 to Tk 104.55. They are not getting orders because buyers always expect profit after ordering a certain amount of product. Now, since the dollar rate has hiked up, if buyers place orders using the same prices as last season, they will cease to make a legitimate profit.
The surging dollar is affecting the RMG industry in many more ways than just fumbling orders. For example, to run a factory, a generator is required and for a generator to work, diesel is required. Diesel prices have also hiked up abnormally.
Even after all these challenges, the Bangladesh RMG industry did not fail to stand its ground and moved through these extremes graciously. Bangladesh’s RMG industry has strived harder to convert to green energy and is now the world’s leading country in terms of the number of green factories it has. Nine out of the top 10 greenest factories are located in Bangladesh.
Even now, if the factories don’t get orders after working so hard to survive in these tough conditions, it’ll be disastrous. But, of course, when there’s a problem, there’s a solution. The temporary solution can be moving towards Asian markets, Bangladesh’s neighboring countries. The promising markets are Japan, India, Korea, the Middle East and Malaysia.
To Bangladesh as of now, the nearest and biggest market is the Indian market. The population of India is massive and if Bangladesh can tap into this market and sell products, a lot of its losses will be covered. Recently, Commerce Minister Tipu Munshi also expressed optimism that exports to India will reach US$4 billion in the next three years, adding that exports to India crossed 1 billion dollars in the last financial year
However, there are a few cons to working with the Indian market. Bangladesh imports most of the raw materials and man-made fibers from India but is reluctant to work with them as they have a history of being difficult to work with and tend to go back on their words.
Arranging expos in both countries can solve this problem. Recently, Textile Sourcing Meet’ 22 took place in Dhaka at Radisson Blue hotel on 17 September were 20-24 raw materials suppliers from India came and displayed their products. Hundreds of factory owners from Bangladesh got the chance to talk face-to-face to the suppliers and opened up many business opportunities for the future.
In continuation to this, another expo should be organized immediately in India where top garment makers and owners from Bangladesh can display their products in hopes of creating new bonds and trust with Indian buyers.
If this approach succeeds, both countries will be in a win-win situation. Bangladesh will buy raw materials from India and India will buy finishing items from Bangladesh. This could be a crucial solution to the problem we are currently facing.
