Bangladesh Apparel Industry: Navigating the Turmoil
Dewan Mashuq Uz Zaman
Bangladesh’s textile and garment sector not only forms the backbone of the country’s economy, but it also plays a pivotal role in her international trade and foreign exchange revenue. Bangladesh, the second largest garment exporter in the world, is a key – essential player to many global fashion labels, brands, customers. Nevertheless, because of the sudden political turmoil since July 2024, the sector has experienced significant disruptions. These upheavals might pose a threat to Bangladesh’s economic stability as well as the global supply chain until or unless necessary initiatives are taken.
The political crisis in Bangladesh began in mid-July 2024, with widespread protests against the government. Students and members of civil society protested the suppressive autocratic governing system. The debate over the quota system, which had long been a source of contention among students, played a crucial role in the uprising. This method, which was initially intended to promote socioeconomic justice, was chastised for perceived favoritism and inefficiency, sparking major demonstrations among university students across the nation. Larger rallies calling resignation of Prime Minister Sheikh Hasina from these protests gathering steam and eventually merging with wider anti-government sentiments. The turmoil culminated on August 5, 2024 when the Prime Minister resigned and fled the country.
The textile and garment industry is inseparable foundation of Bangladesh’s economy, accounting for more than 83% of the country’s export revenue. Bangladesh is the world’s second-largest apparel exporter in 2024, with a $38.4 billion total export so far. Readymade Garment (RMG) business is not only important for foreign exchange, but it also employs millions of people, including a substantial number of women, and has helped to transform country’s socio-cultural indicators.
Political unrest beginning in July 2024 has seriously affected this critical sector. The suspension of factories’ operations during this time resulted in a sharp drop in output, with immediate implications for the country’s GDP and trade balance. The disruption was aggravated by the paralysis of important logistical centers such as the Chattogram (Chittagong) sea port and Benapole land port, which are critical for products export and import. The instability severely hampered operations at Chattogram Port, which manages more than 90% of Bangladesh’s international trade. This resulted in shipment delays, increased demurrage expenses, and significant losses for businesses that rely on prompt delivery to keep international buyer contracts, raising concerns about Bangladesh’s ability to meet international obligations and keep its reputation as a dependable textile and apparel exporter. Furthermore, internet blackouts imposed during the crisis intensified the problem by hampering communication and coordination, making it harder for enterprises to run, even if they were capable of restarting production. The failure to obtain raw materials on time created a huge bottleneck in the supply chain, forcing several industries to stop production entirely.
The political crisis has caused significant economic disruptions in Bangladesh’s textile and garment industry, which accounts for approximately 11% of the country’s GDP. Factory closures, shipment delays, and order cancellations have resulted in a revenue loss of up to $10 billion, affecting both industry growth and the country’s overall economic growth. The decline in foreign exchange revenues from textiles, a significant driver of Bangladesh’s trade balance, threatens to worsen the trade imbalance and put more strain on the country’s foreign exchange reserves. This might cause a currency devaluation and inflation, severely straining the economy and the purchasing power of the typical Bangladeshi.
International trade partners play a key role in Bangladesh’s economic recovery. The United States, Germany, and the United Kingdom are among the top importers of Bangladeshi garment products. These countries, in conjunction with global development partners such as the World Bank and the International Monetary Fund (IMF), are expected to extend financial and diplomatic assistance – needed to stabilize the situation in Bangladesh. Trade partners are particularly concerned about Bangladesh’s ability to provide a consistent supply of apparel products. The crisis exposed flaws in the global supply chain, causing these partners to consider diversifying their suppliers. However, since Noble Laureate Professor Dr Muhammad Younus has taken over the responsibility of the interim government’s Chief Advisor position, a ray of hope has been sighted. The Founder of Grameen Bank, Prof Younus has world-wide respect and personal relationships with most of the world leaders and business communities. It is expected that global stakeholders would come forward in aiding during this crisis in line to business leaders as well as interim government calls, recognizing the country’s importance in the global apparel industry.
Despite it is true that Bangladesh RMG Industry has faced substantial difficulties due to the political unrest, the sector has the resilience and ability to overcome this challenge. Recovery, however, is attainable with targeted methods that address both immediate and long-term vulnerabilities. Here are a few propositions to support Bangladesh’s economic life – apparel industry:
Stabilization of Operations:
Reopening of Factories and Ensuring Sustainability of the Smooth Operations: One of the priorities should be the protection of law and order for the sake of safe operations of the factories. These needs coordinated actions by the government, industry leaders, and law enforcing agencies to ensure that manufacturers can run without fear of violence or further disruption.
Restoring Supply Chains: Keeping the flow of raw materials is crucial. To restore complete and successful production, the government should prioritize removing the backlog at Chattogram and Benapole ports while also providing logistical help to manufacturers. Temporary tax breaks or transit subsidies could help businesses cope financially. RMG industry has demanded long, the hassles and bureaucratic complicacies as well as unabated corruptions in customs and port facilities – it should be stopped completely.
Restoring Confidence in International Trade Relations:
Reassuring Global Partners: the disruptions may have affected foreign buyers’ trust. To rebuild trust, the Bangladeshi government and other stakeholders of RMG sector should work together and engage with global partners, providing reassurance about the stability and dependability of future operations of Bangladesh Readymade Garment industry.
Flexible Contract Management: Bangladeshi apparel manufacturers should have better acceptance that would help to negotiate with its customers during unexpected delays or disruptions into consideration. This can be providing better quality guarantees, hastened delivery times for later orders, or pricing incentives.
Emergency Economic Support and Investment:
Financial Relief for Affected Businesses: The government should come forward with emergency financial programs to help companies that have experienced operation and business losses because of the disturbances. This can entail tax benefits, subsidies, or low-interest loans to aid with their recovery and return to normal business.
Attracting Foreign Direct Investment and Ensuring Confidence of the Existing Investors: Interim Government of Bangladesh should pursue more to bring quality and effective FDI (Foreign Direct Investment) to the textile and garment sector to lessen the economic damage, specially in the EPZs (Export Processing Zones). It was reported that few incidences during the movement, hampered the peaceful environment at the EPZs where many foreign companies have been in operations. Confidence building initiatives should be taken for the sake of further growth of FDI in Bangladesh.
It is expected that the RMG industry would continue to contribute the growth of Bangladesh economy further by embracing resilience, innovation, and cooperation, guaranteeing its continuous place in the world apparel market.
