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How Bangladesh’s textile and RMG faring amid a global crisis

Bangladesh has regained its positive export growth in the RMG sector after unexpected negative growth due to coronavirus. Bangladesh is still the world’s second-largest garment exporter. But when it comes to raw materials, the country is largely dependent on foreign countries.

Also, Bangladesh still has to compete with lower production costs due to backward connection dependence. Bangladesh is the fifth largest textile importer in the world with a 3.10 percent share in the global textile import market. A competitive analysis shows that the overall business structure of the textile and RMG sector in Bangladesh is unstable.

Figure 1: Main shortcomings of the spinning industry in Bangladesh are its cotton consumption and harvesting areas are better than Vietnam but lag far behind China and India.

Spinning industry

Yarn is the root of all textiles. BTMA has 450 spinning mills members. During April-October, yarn exports increased by 48 percent in Bangladesh. However, Bangladesh has lagged in demand. The total production of cotton in Bangladesh is 29.4 MT against the requirement of 1613.3 MT.

Textile traders say that India is the biggest competitor of Bangladesh’s textile yarn and other countries including China, India, and Pakistan. Due to the lockdown, the import of yarn and fabric from abroad has come down drastically. So it has been relatively easy to turn around even during Corona’s difficult times.

BTMA President Mohammad Ali said, “The textile sector has turned out very well. Although the purchase order has slowed down this November, the news of the vaccine has changed the tone of the buyers.

Purchasing orders have picked up again, adding that Corona has started pushing for better orders from August. It continues in September, October, and November. At present, there is no stock of yarn and cloth in the warehouses of export-oriented textile mills. Although there are some stocks produced for the domestic market, it is due to the change of seasons.

Bangladesh has enough spinning capacity with 257 spinning rotor machines, 11650 spindles short-staple spinning machine in (000′ units). But in long-staple spindle spinning machines, Bangladesh has only 15 (000′ units).

Parameters China India Bangladesh Vietnam Turkey
Cotton Production (1000 MT) 6041.8 6422.9 29.4 0.7 892.7
Cotton Consumption (1000 MT) 8600.1 5388.7 1613.3 1633.0 1480.5
Harvested Area (1000 Hectares) 3450 12700 44 1 560
Spinning Machines- Rotors (‘000 unit)   2850 878 257 132 800
Spinning Machines- Spindles Long Staple (‘000 unit)  3623 991.2 15 2 757.4
Spinning Machines- Spindles Short Staple Unit 1,00,000 52537.8 11650 6950 7900

The main shortcomings of the spinning industry in Bangladesh are its cotton consumption and harvesting areas are better than Vietnam but lag far behind China and India.

Fabric industry

There are 650 weaving and 160 dyeing and finishing factories that are members of BTMA. From April to October, fabric worth Tk 6407 crore were exported with an increment of 3.62%.

BTMA-providing-percent -yarn-knitwear
Figure 2: BTMA are providing 80-85 percent of the yarn required for knitwear.

Despite these exports, Bangladesh cannot meet its own needs. According to the latest figures from the World Trade Organization (WTO), Bangladesh imported US$ 9.91 billion worth of textiles in 2019, up from $11.0 billion in 2018. BTMA are providing 80-85 percent of the yarn required for knitwear and 35-40 percent of the required fabric for woven garments.

Mohammad Ali Khokon, President of the Bangladesh Textile Mills Association (BTMA), said, “Since we cannot meet the full demand, China and India can fill this gap,” adding that we need to build 20 more textile mills. Local garment exporters will be able to supply quality fabrics. ”

Bangladesh has more capacity in shuttleless looms than India and Vietnam. However, Bangladesh needs to do more in shuttle weaving.

Parameters China India Bangladesh Vietnam Turkey
Weaving machines –Shuttle Looms (‘000 units) 345 45.5 17.2 15 20
Weaving machines –Shuttle-less Looms (‘000 units) 835 22.8 33.8 6.8 49.5

RMG industry

Bangladesh’s ready-made garments (RMG) returned to negative territory in October after a 44.63 percent year-on-year growth in exports. Exporters say falling commodity prices have also hurt the industry in the face of rising production costs. However, after a decline in the previous month of October, the country’s merchandise shipments again in November this year showed a positive trend with low growth. The main reason for the change in exports is uncertainty.

“Of course we are worried – we need to monitor the situation carefully,” said Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a lobby of garment exporters.

This situation is due to the second wave of coronavirus infection hitting America and Europe. Approximately 81.20% of the total exports come from the garment sector which is the top in the world. Bangladesh can fight enough against the competitors with a lead time of 60-70 days. Also, Bangladesh has the second largest number of garment workers in the world.

Parameters China India Bangladesh Vietnam Turkey
Share in Textile in Total Exports 10.40% 11.20% 81.20% 15% 16.30
Lead Time (Days) 30-60 90-120 60-80 90-100 60
Labor Force (Textile & Apparel Industry) (million) 10 2.8 4.5 2.5 0.8

Moreover, Bangladesh needs evolution, not a revolution in the textile and RMG industry. The Bangladesh RMG sector still needs to improve its lead time and product quality. The Bangladesh textile industry has considerable potential to back up the RMG sector.

In addition to saving huge imports, the country also needs to develop the RMG sector-related backward linkage industries to create more employment opportunities for further development.

BTMA can meet the demand for 100% backward linkage for the RMG sector by investing TK 10,000 crore to build 20 new textile mills. The total investment in the textile sector is about $0.8 billion (2020) while the total investment in India and China is $1.2 billion (2020) and $6.5 billion (2018).

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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