RMG industry must address decarbonisation, LDC transition, automation to sustain: Stakeholders

The country’s readymade garment (RMG) industry must address decarbonisation, transition from the list of least developed countries, and the impact of automation for sustainable development and to thrive in the current competitive market, industry stakeholders have said.

They said decarbonisation involves reducing carbon emissions across the RMG value chain, while the impending fourth industrial revolution poses a threat to jobs due to automation and artificial intelligence.

Therefore, there is an urgent need to re-skill and upskill workers to mitigate job displacement, said Zahedul Amin, co-founder and director of LightCastle Partners, at a roundtable discussion titled “Bunon 2030: Policy discussion” in Dhaka today.

The meeting aimed at highlighting actions and recommendations for addressing the multifaceted challenges in the RMG industry during the LDC transition and to thrive in the competitive market.

Md Selim Hossen, deputy secretary, Ministry of Commerce, said free trade agreements necessitate diversification of the export basket. Bangladesh could adopt a product-based business model and invest in sector-specific initiatives to facilitate the transition away from reliance on the RMG sector.

In his address, Md Ariful Hoque, director general, Bangladesh Investment Development Authority, said policymakers can engage in consultations with pertinent stakeholders to craft effective export-oriented policies tailored to the needs of the apparel sector in Bangladesh.

Abdur Rahim Khan, inspector general, Department of Inspection for Factories and Establishments, said emulating successful models like the Product Linked Incentive (PLI) scheme in India, tailored mechanisms could be devised to support and incentivise Bangladesh’s apparel export market.

Mohammad Hatem, executive president, Bangladesh Knitwear Manufacturers and Exporters Association, said to facilitate the diversification in fibre production, there can be duty-free access on importing raw materials for the production of Man-Made Fibres.

According to the keynote paper, the biggest crisis will arise after the transition from the list of Least Developed Countries (LDCs) status in 2026. 

This crisis is likely to be worsened by the loss of other trade benefits, including the Generalised Scheme of Preferences due to LDC status, rising wages of workers, concerns about international buyers and importers shifting to countries with lower garment production costs than Bangladesh, and non-compliance by some garment industry owners.

The keynote also mentioned that, according to data from the Export Promotion Bureau in 2023, Bangladesh currently ranks as the second-largest exporter of ready-made garments globally. The same source indicates that Bangladesh exported garments worth $47 billion till February FY24. 

According to the Bangladesh Bank, the contribution of this sector to GDP in the fiscal year 2023 was 10.35%, employing over 4.1 million garment workers, 60% of whom are women. 

Consequently, if these issues are not addressed promptly, they may negatively impact both the industry and the overall economy.

LightCastle Partners, a global prominent business consultancy firm, and Policy Exchange Bangladesh, jointly organised the event. The event was moderated by M Masrur Reaz, chairman of Policy Exchange Bangladesh. Ainee Islam, director of the Program Development Department at the Asia Foundation, delivered the opening remarks.