Bangladeshi Garment Exporters Embraces Challenges 

The USITC carried out the confidential study upon request from the United States Trade Representative (USTR). The report assesses the textile and apparel industries of more than 40 countries as of June 2003.

According to the report, low labour cost, a near self-sufficiency in knit fabrics, duty-free access to major world import markets including the EU, Canada and Norway and mass production in basic garments are the major competitive factors for Bangladesh.

Some US firms consider that Bangladesh could emerge as competitive alternative to China for mass-produced and low-end apparel. World's leading chain stores are opening their offices in Bangladesh.

The garment industry is the country’s largest foreign currency earner and employs two million skilled workers, 85 percent of whom are women.

Pursuing Preferential Market Access

Travis and Andrew Samet, a former US assistant secretary of Labour visited Bangladesh recently. They are holding talks with the government officials and garment exporters ahead of lobbying for preferential treatment of Bangladeshi products in the US market during the quota-free regime.

Travis said Bangladesh government and the industry people should jointly work quickly and aggressively to pursue the preferential market access issue to the US government. 

The two consultants are representing Sandler, Travis & Rosenberg, a US company which is the advisor of Wal-Mart, JC Penny, Vanity Fair and many other large US retailers. These companies buy readymade garments from Bangladesh.

Duty free access to the Canadian market had helped increase export volume to this particular market by 135 percent in a single year. Besides, there is need to simplify rules of origin with EU.

Efficient Port and Customs

International buyers now want quick and efficient delivery. Making Chittagong Port and customs efficient, reducing lead-time, simplifying Customs formalities and cutting cost of business will be major challenges for Bangladeshi garment exporters to survive in the quota-free trade regime. The industry needed improvements in the areas like shipping costs and goods handling at the ports to attain competitiveness.

Time is now main factor to the international buyers. They used to give 120 days shipment time earlier but now it has come down to 30 to 35 days.

In order to solve the problem and reduce delivery time, BGMEA had long ago proposed setting up of a central bonded warehouse. Improvement in utility services including gas and electricity are also major issues that need government support and initiative

Capacity Building

Bangladesh has still chance to sustain in the readymade garment market in the post-MFA  era, but the sector urgently needs capacity building and setting up adequate backward linkage industries for enhancing export competitiveness.

Training

A government-sponsored project titled 'Quality and Skill Development Project (SQDP)' will cover three major areas -- productivity management, quality management and compliance norms.  10,000 garment sector employees will be trained in the next two years to help them face the post-MFA challenges.

In the first phase of the two-year training programme, a total of five different organisations will conduct 26 courses, each will consist 25-30 students, in four months. Later, the number of courses will increase as per demand.

The training co-ordinated by the Export Promotion Bureau (EPB) formally began with the launching of two short courses on 'Managing Quality in Garment Industry' and 'Productivity Calculation in Knitwear Industry'. 

Supports from Bank

The Industry sought supports from bank including continuing the cash assistance, reduction of the bank interest rates, access to the Equity and Entrepreneurship Fund (EEF) of Bangladesh Bank, an allocation of Tk 200 crore for BMRE of small and medium RMG units and rescheduling of forced loans of small and medium factories.

India has allocated 25,000 crore rupees to disburse among the entrepreneurs at only 5 percent interest,

Seeks Import Duty and VAT Exemption

The industry stakeholders demanded the waiver of Customs duty and VAT on the import of spare parts of industrial sewing machines, knitting machines, various types of needles and machine tables.

The industry leaders also demanded reduction of income tax from 10 per cent to 5 per cent, exemption from paying VAT on RMG-related services, although refundable, and extension of bonding period to three years from one year.

Political Environment

The industry raised the issue of political unrest and urged the political leaders to give up negative politics for the greater interest of economy.

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