Mehdi Mahbub
It is with a heavy heart that I write these words in memory of Dr. Forrest Cookson—an esteemed contributor to The Apparel Digest, a brilliant economist, and, to me, a cherished senior friend and mentor for many years. He left us all peacefully in Dhaka on April 21st, few days before his 92nd birthday. His warmth, curiosity, and quiet wisdom left a lasting impression on everyone who had the opportunity to work with him.
Born on April 26, 1934 in the United States, Forrest E. Cookson first arrived in Bangladesh in the mid-1980s to support a financial sector reform initiative, beginning a decades-long association with the country. He went on to serve as a consultant to Bangladesh Bank, the central bank, and played a central role in the financial sector reform programme of the 1990s — a landmark effort to modernise Bangladesh’s banking and capital market regulatory framework.
Dr Forrest Cookson also advised the Bangladesh Bureau of Statistics, contributing to the methodological foundations of the country’s national economic data. He also led the Foreign Investors’ Chamber of Commerce and Industry (FICCI). He served as President of AmCham in Bangladesh from 1996 to 2001, during which he worked to consolidate the chamber’s institutional footing and deepen trade and investment ties between the US and Bangladesh.
Forrest Cookson earned his graduation from Princeton and PhD in economics from Georgetown University in 1961 where he also taught for some time.
Dr. Cookson was widely respected as an American economist of exceptional caliber, yet his connection to Bangladesh was what truly defined his life’s work. He did not simply study the country’s apparel sector—he lived it, immersed himself in its realities, and developed a deep affection for its people and potential.
The Apparel Digest mourns the loss of Dr. Forrest Cookson, a valued voice whose insight, clarity, and unwavering commitment to the apparel and textile sector enriched our pages month after month. His contributions were never merely analytical—they carried a depth of understanding shaped by years of experience, a sharp intellect, and a genuine concern for the industry’s people, progress, and future.
Dr. Cookson had a rare ability to translate complex economic realities into thoughtful, accessible narratives. Whether examining market dynamics, labor challenges, or policy shifts, his writing consistently illuminated the forces shaping our industry with both precision and perspective. For The Apparel Digest readers, his articles became a trusted compass in times of uncertainty and change.
In this special remembrance, we revisit a selection of his work from recent time – not only to honour his legacy, but also to ensure that his ideas and insights continue to inform and inspire. These articles stand as a testament to his enduring impact on the apparel community and to the intellectual generosity he shared so freely with us all.
Rest in Peace, Dr Cookson!
Labor Relations in the Garment Sector
(37th edition, The Apparel Digest: September 2024)
The past month since the overthrow of the Hasina regime has seen widespread labor disturbances in the garment sector. The representatives of the industry have blamed persons outside the industry. This should surprise no one as there is little appetite for taking responsibility for labor disputes, all of which are the fault of outsiders and workers. Accelerating the growth of garment exports is the most important task for the economy. There are three approaches that present themselves. First is depreciating the Taka to make the offer price to buyers lower in dollar terms. The 40% depreciation since FY2022 has been accompanied by a decline in the dollar value of exports. While it is difficult to make estimates of cost increases, with little increases in labor costs [40% of total production costs] the condition of the garment enterprises would seem to be favorable. However, there seems to be a loss of competitiveness, yet the industry cries poor and begs for more support from the Government.
The second approach to increase exports is to reduce the supply constraints. In this area we see many problems: excessive time of customs actions; high cost, poor quality, irregular energy and electricity supply; slow, expensive air freight; failure to provide deep sea access for outgoing garments; and poor quality facilities for transport of Indian raw materials into Bangladesh. The financial system has failed to provide the support badly needed by the industry, with reliance on banks leading to defaulted loans rather than improved efficiency. The contrast between enhancing demand by reducing prices versus reducing supply side disruptions is more and more recognized, with the latter increasingly seen as the key to increasing exports. There is a third way—raise productivity through training, improved organization of production processes or use of improved technology. Ultimately it is raising productivity that will result in a more efficient, larger industry.
Relations with workers are disastrous if the objective is to create a modern high productivity industry. Most factories have limited interest in treating their workers as more than expendable labor. The current system denies workers a role in determining their compensation, work conditions, or a fair way of settling conflicts. Rather than genuine negotiation, a Wage Board dictates outcomes with no real acceptance by workers. It is time to change this system of exploitation and introduce a fairer system based on unions representing workers in real negotiations with owners. Under such agreements, both sides would commit to enforceable contracts, with disputes resolved through functioning courts rather than coercion.
This approach will shift power to workers and create a more just society. Factory owners will manage higher wages through enhancing productivity, which will provide the resources for better pay and conditions. Bangladesh can only grow rapidly through expanding and diversifying manufacturing, driven by productivity and supported by proper financing and investment. The first step is to move away from a Wage Board imposing wages and instead establish real negotiations between freely chosen representatives of workers and owners. Improved financial management and genuine labor relations will support higher productivity factories, allowing higher wages and a more sustainable, equitable garment sector.
A Discussion on the Garment Sector
(40th edition, The Apparel Digest: December 2024)
This article is a discussion between Shovon Islam the owner of Sparrow Industries and Forrest Cookson. The discussion covered some of the essential issues facing the ready-made garment sector. The health and development of the sector are the key to the future of the Bangladesh economy over the next decade. Economic growth is the central objective of Bangladesh. Achievement of common aspirations of a higher living standard, a more equal distribution of income and wealth, better infrastructure, improved health and education all depend on achieving a strong growth of the economy. The growth of the economy in FY24 was very low, well below 4%. Declining exports and imports, little investment, lower government consumption expenditures all lead to GDP growth of 0-1% at best. Return to growth of the economy is dependent on export growth. Over the next decade the only way that export growth of 7-9% can be achieved is through expansion of the garment sector. Diversification of exports has been an aspiration for decades, but no progress has been made. While there are good prospects for diversification it will take many years before these can become significant; growth over the next decade depends on the RMG sector.
We began discussing the tax and subsidy position. There is a 1% tax on the earnings in the garment sector when the funds are received in Bangladesh. There is a subsidy of 0.3% received by the exporting company based on the shipment documents. The administration of these two are different. The 1% tax is simple, Bangladesh Bank takes it off the payments from the foreign buyers. The management of the subsidy is difficult. Shovon explained that it takes a long time to obtain this subsidy and there is a large amount of documentation needed. It is much simpler to combine the two and collect a tax of 0.7% on the received payments. About 10% of the costs of the garment are local on which the VAT is paid. Finally, the corporate tax must be paid 15% for regular factory and 12% for green factory. The second topic is the old issue of the large number of Sri Lankan and Indian technicians working in the industry. The Sri Lankans came when the garment industry collapsed with the civil war. Shovon observes that the garment industry is rebuilding in Sri Lanka and many working here are returning. Conditions are favorable in Sri Lanka with excellent port facilities, well-educated labor force, and law and order. I asked him why these persons cannot be replaced by Bangladeshi technicians. He was clear that skilled technicians in Bangladesh are rare. First, the basic education system is poor, and the foundation of reading and arithmetic are not present. Technical schools and universities do not produce persons interested in doing this kind of work. It is doubtful if much progress can be made quickly.
I asked about the much discussed question of shifting production from China to Bangladesh. First there is the issue of the Chinese Economic Zone on the left side of the Kharnapuli River. This we believe is not yet complete although its construction has been going on for years. I assume that there are issues of electricity and gas, a considerable demand for a major Economic Zone. As Chinese exports have decreased over the past seven years, much of the production has shifted to the domestic market, demand increases with rising income. One must differentiate between the Chinese reducing garment exports as they shift production to domestic markets and shifting part of their export production to other countries. The previous Government had lined up a substantial volume of Chinese capacity that was prepared to shift to Bangladesh. Shovon indicated that about 30% of this capacity has pulled back due to the revolution in Bangladesh and the rest is waiting to see how conditions develop. One should be aware that the United States is of course aware of Chinese industry shifting to other locations to avoid the potential rise in tariffs that Trump has threatened. There are clear issues of law and order, political stability, energy availability, and an orderly labor force that have emerged with the Interim Government. Establishment of law and order will take time, but this is clearly a precondition for FDI. Political stability comes with an election; everyone knows that there will be an election and until that is completed no one knows if the country will settle down. The same is true of the electricity supply where gas will be either imported [LNG] or new discoveries will be made to enable increased domestic production.
Shovon explained that a large volume of woven garments made in Bangladesh were denim, a cotton-based fabric. The cutting tolerances for denim garments are quite high compared to higher value garments. A large part of Bangladesh woven exports is made from denim; orders are large so production runs are long. Bangladesh is very efficient in producing these garments. Another part of the woven production is of higher quality and is difficult to make in a timely manner. Before sewing there is considerable preproduction work and great care must be taken with the cutting as the shape of the garment must be exact; the washing must be carefully managed as shrinkage differs for each roll of cloth. Time is short as fabric has to be shipped to Bangladesh, clear customs which takes excessive time; after the arrival of the cloth, preproduction actions take place, the garment is then sewn, washed shipped to Chittagong and exported. Large container ships do not come to Bangladesh due to the shallow Bay of Bengal. Thus, goods are transshipped through Colombo or Singapore. The transport and customs take too much time squeezing the time available for production work. This is the fundamental reason why most of the woven garments produced are of the simpler type.
Shovon and I would agree that the only hope for a strong growth of exports is to shift to higher quality products with shorter production runs and of greater complexity. These are the type of products the Chinese are exporting but at a declining rate. One obtains the Chinese reduction in exports by raising the quality of the product. Owners must be prepared to invest in new machinery and equipment to raise productivity. In that way the owners can earn a higher return and repay their loans.
Trade Wars
(44th edition, The Apparel Digest: April 2025)
This article begins with a discussion of the trade war that is now rocking the world economy. There remain many uncertainties as the battlefield emerges. The World Trade situation can be summarized as follows: The United States is the country that runs current account deficits with many other countries. Normally this is discussed covering only goods, where the USA has a persistent deficit. On the other hand, the USA runs a large surplus on the service account. The emphasis by the US government on the trade account reflects a belief that making things is more important than the products of the service sector. This mythical attraction to manufacturing is hard to explain as services are usually the product of superior intellectual achievements.
Adjustments in the world economy over the past 50 years have taken place in order to create this consistent deficit in the US balance of payments. This has manifested itself in the decline of the manufacturing sector in the United States. China’s growth of its manufacturing sector is the other side of the United States’ shift to service exports. Just as most countries now run a trade surplus with the United States that is closed by purchasing US dollar denominated assets, so most countries run a trade deficit with China. Bangladesh takes the surplus of dollars it earns from garment exports and uses these to buy goods from China. This arrangement for covering the deficits of the USA with respect to everyone or the deficits of other countries with respect to China has worked quite well.
On April 2 Trump announced high tariffs against almost all countries exports to the United States, with a minimum of 10%. For China the new very high tariff levels will effectively destroy trade with the United States. This results in higher prices in the United States from shortages of goods or sourcing to countries that have higher production costs than China. In addition, the GDP growth rate will decline and the world economy will slow down due to the decline in both the American and Chinese economies. The overall results for both the USA and China are negative. For the rest of the world, equally bad as GDP growth slows everywhere and trade declines from both lower purchasing power and the higher tariffs.
Impact on Bangladesh: Prospects of diversification of exports will be reduced. The slower growth of the world economy will have a negative impact on demand for all of Bangladesh’s garment markets. However, my conclusion is that the outcome will be favorable to Bangladesh. Regardless of these matters it is essential that the RMG industry focus on reduction of costs and increased productivity. It is here that the future of the industry will be determined. Not on the tariff levels.
Tariffs and the RMG Industry
(45th edition, The Apparel Digest: May 2025)
Mr. Trump’s tariff policies have introduced great confusion in the market for ready-made garments (RMG) creating great uncertainty as to how trade will take place in the next few years. The garment industry is going through three different transitions other than the trump tariffs: 1. The resistance by the United states for imports of garments from China has grown steadily resulting in the need for sourcing of garments to the more significant amount of the American market from countries other than China. 2. Changes in technology are rapidly increasing the degree of automation and reducing the labor inputs required. 3. There is much emphasis the EU and in the United States on environmental issues such as water conservation and reduced energy consumption. It is on top of all of these factors that the Trump tariffs are creating great uncertainty as to how this market will evolve.
Bangladesh consequently faces major problems in remaining competitive and growing its exports of RMG products to the USA. On April 2, 2025, the United States raised tariffs by an additional 37% leading to tariffs of 50%. This gave a period of 90 days when governments could discuss with the United States the level of these tariffs and what might be done to lower them. There is just tremendous confusion brought about by the United States, probably deliberately. There is no clarity yet as to the level of tariffs that the United States is imposing on other countries nor is it completely clear that there is going to be violation of the M F N condition.
The implementation of regimes of high tariffs will reduce international trade and reduce or slow down growth of world GDP. The low tariff world that has been in place leads to appropriate allocations of capital to different countries and maximizes world output. Any interference in the free flow of goods and services reduces the total output and allocates labor and capital improperly. The high tariffs will then reduce incomes in the advanced economies and reduce the demand for clothing. What we do know is that the management of these tariff changes by the United states is creating vast uncertainties as to what prices will be and what one should order for the future markets.
The best policy for Bangladesh is to focus on non-US markets, to work with the US buyers to try to stay competitive, and to broaden the range of garments to produce. Everyone should stay calm about the tariff position and concentrate on the real issues of improving productivity. At the beginning of the article three major changes in the industry were noted. These are far more important than the nonsense Trump had introduced to the world. The shift of the Chinese out of the garment sector continues to present opportunities for increased Bangladesh production. The second point dealt with the automation. The third revolution in the industry is in the environmental demands. We are fascinated with the Trump tariff show but the real challenges are in the three points noted above.
Uncertainty
(49th Edition, The Apparel Digest: September 2025)
This article takes an overview of the developments in the garment sector and the impact on the Bangladesh economy. The single most important point is the uncertainty that is generated by the various actions that are underway throughout the world with respect to the production of wearing apparel. The President of the United States, Donald Trump, is a major proponent of the use of tariffs to reshape the American economy. In doing so, he has discovered that threats of tariff changes are powerful instruments in causing other countries to adjust their policies. President Trump seems to relish his ability to use his power as president to force other countries to bend to his will.
But for Bangladesh, this situation is remarkably dangerous. Bangladesh benefits from conflict between India and China. An improved relationship of China with the United States and a disgruntled Indian population put Bangladesh in a very difficult position. All of this, of course, will take time, and during this period, foreign trade will be confused. In particular, in the wearing apparel world, the ultimate outcome will be mysterious, and it may take several years before the sector stabilizes. No matter what happens, there is one fundamental idea: that Bangladesh is a highly competitive producer of wearing apparel and should succeed in retaining and perhaps improving its important position as a world leader.
The implementation of regimes of high tariffs will reduce international trade and reduce or slow down growth of world GDP. The high tariffs will then reduce incomes in the advanced economies and reduce the demand for clothing. There are great uncertainties as to how the RMG market will redistribute itself as the American tariffs rise. In the end, there is too much speculation about the way the world markets for clothing will evolve. It is really too complicated to understand how this will play out. It is much more important to think about the development of the domestic RMG market in Bangladesh.
The only thing that really matters is raising the productivity of the RMG factories, enabling them to lower their prices to the buyers and remain competitive against other companies around the world. There are two obvious solutions: raising productivity, which is the point of the section herein, and finding a new way to finance the industry. The new way to finance the industry is very clear: one must go to the capital market. The third area of concern is the electricity and gas situation. Next, we come to the old problem of port facilities. Closely associated with the port is the inefficiency of the customs service. In summary, there are five actions that seem to me difficult and urgent.
