Bangladesh’s ready-made garments (RMG) sector is the cornerstone of the country’s export economy, contributing over 80% of total export earnings. In the fiscal year 2022-23, the RMG sector exported goods worth approximately $46.99 billion, reflecting a 10% growth compared to the previous year. Despite criticisms, the sector has evolved significantly in terms of compliance, worker safety, and environmental standards.
However, challenges such as pricing pressure from buyers, potential tax impositions by wealthy countries, and global competition raise questions about the sustainability of Bangladesh’s RMG dominance.
Bangladesh ranks as the second-largest exporter of RMG globally, only behind China. The competitive advantages driving this success include cost-effective labour, as the country offers one of the world’s lowest labour costs, averaging around $100–120 per month for workers. This is significantly lower compared to countries like Vietnam, China, and Turkey.
The country has a vast, trainable workforce, with approximately 4.4 million people directly employed in the RMG sector, over 65% of whom are women. Significant investments in spinning, weaving, and dyeing industries have created a strong backward linkage for knitwear products, reducing lead time and production costs.
Bangladesh benefits from preferential trade agreements and Generalised System of Preferences (GSP) schemes in markets such as the European Union, Canada, and Japan. With over 4,000 factories, Bangladesh offers large-scale production capabilities, making it attractive to global buyers seeking cost efficiency. Post-Rana Plaza reforms and investments have made over 90% of factories compliant with international safety standards, earning global recognition for sustainable and ethical production.
RMG exporters claim that global buyers offer lower prices to Bangladesh compared to other countries. Data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) shows that the price per unit of apparel exported by Bangladesh is often 10-15% lower than Vietnam’s or China’s.
If wealthy countries impose tariffs on RMG imports, it could erode Bangladesh’s price advantage. For instance, losing duty-free access to the EU under the Everything But Arms (EBA) scheme after LDC graduation in 2026 could increase tariffs by up to 12%. Emerging competitors like Vietnam, India, and Ethiopia, which offer similar cost advantages with better infrastructure and diversified product lines, are posing a threat to Bangladesh’s dominance. Pressure to meet global sustainability standards has increased production costs. Non-compliance with green manufacturing could lead to reduced orders from environmentally conscious buyers.
The sustainability of Bangladesh’s RMG sector hinges on addressing the above challenges while leveraging its strengths. Diversifying into higher-value products, such as suits and activewear, can enhance revenue. Embracing automation and upskilling workers for Industry 4.0 technologies can improve productivity and reduce dependence on low labour costs. Bangladesh already leads in green RMG factories, with over 200 LEED-certified factories. Scaling this further can attract premium buyers and ensure compliance with stricter environmental standards. Negotiating favourable bilateral and regional trade agreements, especially with non-traditional markets like Africa and the Middle East, can mitigate the impact of losing preferential access in traditional markets.
If developed countries impose taxes on RMG imports from Bangladesh, the sector’s competitiveness will be at risk. Higher prices could make Bangladeshi garments less attractive, especially in price-sensitive markets. However, such taxes would also increase costs for consumers in those countries, raising questions about affordability and alternative sourcing options. Buyers may still rely on Bangladesh for its efficiency and capacity, albeit at lower volumes.
To strengthen and sustain the sector, Bangladeshi exporters should consider enhancing product quality and innovation by investing in research and development to create innovative designs and higher-quality garments that command premium prices. Modernising factories with advanced machinery to improve efficiency and reduce waste will ensure cost competitiveness.
Developing a strong brand identity for Bangladeshi apparel, focusing on sustainability, ethical production, and quality, is essential. Exporters should build long-term buyer relationships by negotiating better pricing and offering value-added services, such as faster lead times and customised solutions. Exploring emerging markets in Asia, Latin America, and Africa will reduce dependence on the EU and US. Collaboration with the government and trade bodies to negotiate favourable trade terms with developed countries post-LDC graduation is crucial.
The Chief Adviser of the Interim Government Professor Dr Muhammod Yunus can also use his good offices to support the RMG sector by fostering stronger diplomatic ties and negotiating trade agreements with major export destinations. His influence can be instrumental in advocating for the sector’s interests on global platforms and ensuring favourable terms for Bangladeshi exports. Additionally, by encouraging policies that promote sustainability, innovation, and workforce development, the Chief Adviser can help solidify Bangladesh’s position as a leading global RMG exporter.
Bangladesh’s RMG sector has demonstrated resilience and adaptability over the years. By leveraging its competitive advantages, addressing structural challenges, and embracing innovation, the sector can sustain its position as a global leader. Exporters, policymakers, and stakeholders must work collaboratively to ensure the long-term growth and sustainability of this vital industry.
