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The Financial Express

Skill shortage hampers RMG sector’s climb up the value chain

Economists tell SANEM seminar


| Updated: October 30, 2018 16:57:03


Reuters photo used for representational purpose Reuters photo used for representational purpose

Bangladesh's garment industry needs to move up the value chain to remain competitive in the global market, experts have said.

They also underlined the need for enhancing negotiation capacity of entrepreneurs.

The suggestions came at a seminar on Monday organised by private think tank South Asian Network for Economic Modeling (SANEM) in Dhaka.

"We need to focus not only on price competitiveness but also on quality," said Dr. Selim Raihan, executive director of SANEM.

He was presenting a keynote paper on the future of RMG industry in Bangladesh.

"We need to move up the value chain. From traditional products, we need to move to branded products," he added.

Dr. Raihan noted that the ongoing trade war between the United States (US) and China was already posing some uncertainties to the global trade regime.

"We are going to enter an era where lead time is going to matter, distance is going to matter," he said.

"In the future, the US may tend to ship much more of its imports from Mexico or Europe will ship much more of its imports from Turkey due to lower lead time and geographical proximity," he added.

The SANEM executive director noted Bangladesh's apparel industry is seriously lacking skilled labour force, which is hurting the scope of moving up the value chain.

"In near future, Vietnam is going to pose a threat to our RMG market and that threat would come not in terms of price competitiveness but in terms of quality," Dr Raihan said.

"Already, a good portion of manufacturing jobs is shifting from China to countries like Vietnam and Cambodia but Bangladesh is yet to take benefit of that," he added.

Dr. Raihan noted managing the labour regime is an issue of serious concern for the local garment industry.

"Apart from ensuring adequate wage for the garment workers, workplace safety and compliance issues need to be addressed to remain competitive in the global apparel market," he said.

Quoting an ongoing international study, chairman of SANEM Dr. Bazlul Haque Khondker said apparel workers in Bangladesh work for 60 hours per week while it is 47 hours in Cambodia and 46 hours in India.

"At the same time, 54 per cent of garment workers are living below the minimum wage," he said, quoting the study.

Former governor of Bangladesh Bank Dr. Atiur Rahman, who chaired the event, called for introducing a pension scheme for the garments workers.

"Government, garment factory owners and workers need to work together to introduce this pension scheme in the apparel industry," Atiur said.

The former central bank governor also called for establishing a green transformation fund to encourage the industries to go green.

"We need to have a dedicated green transformation fund not only in Bangladesh Bank but also from the government," he said.

"We need to brand Bangladesh as a source of green textiles," Atiur added.

Experts at the seminar also emphasised incentivising other potential sectors to diversify the export basket.

"Bangladesh is struggling with its policy regime," said Dr. Zaidi Sattar, chairman of the Policy Research Institute of Bangladesh (PRI).

"We have hundreds of exportable items but we are not giving them the same incentives and policy regimes that we gave to the garment sector back in the early 80s", he added.

Speakers at the seminar also called for better integration with regional and international market to expand the export market.

"We need to integrate our economy regionally through platforms like the SAARC and the BIMSTEC," said member of the Planning Commission Professor Dr. Shamsul Alam.

"This, in turn, would help us expand our market within the region," he added.

Professor Alam noted Bangladesh's lack of Free Trade Agreements with countries around the world.

"While Vietnam has free trade agreements with around 20 countries, we have none", he said.

"There is a serious lack of marketing and negotiation capacity from Bangladesh side," said Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Chief executive officer of Bangladesh Foreign Trade Institute Ali Ahmed also spoke at the event.

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