Prospects for the Textile and Garment Industry in Bangladesh

The textile and garment sector in Bangladesh fulfils a crucial role in the country’s economy. In the 2006/07 fiscal year (July 2006-June 2007), it accounted for as much as 76% of the country’s total exports. And in 2006 it provided jobs for 4.5 mn people, accounted for 10.5% of the country’s GDP, and contributed 40% of its manufacturing output.

Exports have been growing at an impressive rate in recent years. In 2006/07 alone, they increased by 18.2% to reach US$9.6 bn, a record level for the fifth consecutive year.

Looking ahead, Bangladesh has an excellent opportunity to boost exports of garments to the USA and EU countries where demand for low cost apparel is increasing. The introduction of quotas restricting EU and US imports from China in 2005 and 2006 respectively has already provided it with a breathing space in which to gain market share. So has the EU’s Generalised System of Preferences (GSP) scheme, which provides garment manufacturers in Bangladesh with duty-free access to the EU market—subject to certain conditions relating to the origin of the materials used in the manufacture of the garment.

However, there are significant obstacles to overcome if the industry’s full potential is to be reached. In the short term, the fermenting issue of employment conditions needs to be addressed. Also, economic difficulties in the USA and Western Europe, and the prospect of a recession, have already led to a slowdown in consumer spending. Unless there is a speedy recovery, exports of textiles and clothing from major suppliers such as Bangladesh could suffer as Western buyers cut back on their purchases. Over the longer term, considerable investment is required to improve, update and extend the infrastructure in Bangladesh. Meanwhile, the textile sector needs to implement its own modernisation programme in order to satisfy a greater proportion of the garment industry’s raw material requirements.