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BD apparel industry needs to focus on attracting FDI and product diversification

Bangladesh’s economic backbone – its readymade garment (RMG) industries have been hit by the COVID-19. From an overall perspective of the economy if we reform our industrial structure we will restart. To protect the health and safety of our labors, the BGMEA has adopted a safety protocol prepared in consultation with the International Labor Organization and the Director-General of Health of the Bangladesh government.

BD-apparel-focus-attracting-FDI
Figure: Covid-19 has shaken Bangladesh’s apparel sector, and FDI will provide new investment.

Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said, “There is nothing to take from this disaster that Covid-19 has brought. Trade and business are going through a traumatic time.”

“However, we can only say that this has taught us how to cope with this type of pandemic and awaken our conscience. Covid-19 is not over yet and according to scientists, there might be a second or third wave of contractions stronger and calamitous than this,” Rubana added.

This safety instruction is regarding operational phases, social distancing, entrance protocol, sanitation and disinfecting, training and good practices. Also, after detecting the first Covid-19 patient on March 8, the Prime Minister announced an incentive package worth Tk 5,000 crore for the export-oriented industries, including the garment sector, which injected a breath of hope for the devastated exporters and business people.

“Also we have learned of several disadvantages like a lack of proper contractual protocols between buyers and suppliers, and we did not even have any backup to reply to an emergency crisis. This pandemic has also shown us our overdependence on the garment sector and the need for immediate diversification.”

Rubana Huq, President, BGMEA

In this pandemic situation, this stimulus package will help our industry. At the same time, the other steps which have helped are the apparel manufacturers die-hard engagements with the buyers who canceled orders and get them back on the negotiation table, which is why today 80% to 90% of the $3.18 billion canceled work orders have been reinstated.

Bangladesh’s economic resilience, supply chain being particularly and overwhelmingly concentrated on China, lack of a proper exit policy, insolvency topics, exhausted credit lines, lack of an emergency response mechanism, and absence of a proper contractual protocol between buyers and suppliers, dealing with bankrupted buyers and raw material suppliers, have been exposed by the Covid-19 crisis.

The Covid-19 has unleashed many truths which were never uncovered, some of those are about the country’s internal deficiencies which need to be overwhelmed, and some of those are about how the manufacturers deal with their shareholders with proper policy measures.

“Also we have learned of several disadvantages like a lack of proper contractual protocols between buyers and suppliers, and we did not even have any backup to reply to an emergency crisis. This pandemic has also shown us our overdependence on the garment sector and the need for immediate diversification,” emphasized Rubana.

Ending the point, she suggested finding new opportunities that COVID has opened up like the marketplace of personal protective equipment and also how more funds can be drawn in Bangladesh, and how the industry can diversify its product basket.

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