Bangladesh readymade garment industry is still enjoying the quantitative restriction (quota system) benefit under MFA. It allows Bangladesh greater market access to USA and EU holding to limit the exporters of many countries like China, India, Pakistan, Indonesia etc. -- the giants in garment exports.

It is needless to say that the ending of quantitative restriction will have a chain reaction across the world. Exporters who have been under quota restriction will have freedom to sell unlimited amounts of garments. The buyers of garments also will have freedom to select their preferred suppliers. They will demand greater varieties, shorter lead-times and increased product development. As a result the market will be more dynamic with greater competition between suppliers.

Naturally Bangladesh will have to face many challenges posed in terms of total globalisation and trade liberalisation. The garment industries of Bangladesh will have to face very high competition from China, Pakistan and other south-east Asian countries who are much more developed in their textile and fabric sector. The number of low price apparel producing countries will increase due to the fact that the readymade garments industry is to some extent easy, less invested industrial and also economic primer for developing economies. Countries with raw cotton origin and self sufficient backward linkage will be able to efficiently supply apparel products to the US market -- now availed of by Bangladesh.

Shorter lead-time

In the open market competition international customers will naturally prefer shorter lead-time and try to ensure it. Fabric producing countries will establish their own forward linkage garments industry to derive maximum benefit. But, because of insufficient of fabric production, poor infrastructure facilities, raw material shortage and lack of strong and competitive trade policy Bangladesh will have to face many obstacles to meet the customers' demand.

Bangladesh procures raw materials from abroad and then processes them into finished products, which is time-consuming and cause of high lead-time for local exporters. No international buyer will accept it. To compete in the market effectively the readymade garments sector needs reliable and shorter pipeline source for finished fabrics of export quality. To achieve this some new investments are required in dyeing printing and finishing plants.

Government bureaucracy

The bureaucratic procedure, particularly the slow process of our characteristic autocratic bureaucracy does many harm to our industries. Corrupt practices in the administration load to harassment and disappointment of businessmen. These are always disliked by the industrialists and are also strong negative factors deterring foreign investors and buyers. Annoying circumstances arise, many a time, with visa application of buyers, investment licences, import licences and export documents. The practice of bribery together with demand for "speed money" in order to get the papers processed is known to all concerned.

Rules and regulations pertaining to export are to some extent complicated and too much paper work is needed. Customs is another tiresome process which begets hindrances and uncertainty.

In order to enable the exporters to operate smoothly and efficiently the administrative functions should immediately be improved. Though government has already taken some steps and extended some facilities but these are not enough to ease the situation. More action to overhaul the system, formulation and amendment of rules and codes of practices in all ministries, departments, customs houses and other institutions should be taken to minimise the bureaucratic procedures.

Backward linkage and bonded warehouses

Establishment of strong independency in relationship between the Bangladesh RMG companies and their raw material suppliers is a great need today. Centrally located bonded warehouses would make a significant contribution in reducing lead-time, by having stock items available for immediate use by the primary textile sector (PTS) and RMG sector. Though centrally bonded warehouses may not be a substitute of PTS investment but they will supplement each other no doubt. Considering is utility, centrally bonded warehouses should be established in the vicinity of the areas of concentration of industries with a view to holding stock of fabrics, gray fabrics, dyed and finished woven fabrics etc.

The rates of interests for long term capital loans may be lowered down further to encourage backward linkage investments in the PTS sector. The RMG sector urgently requires it. Due to lack of sufficient backward linkage investments, particularly in the dyeing, printing and finishing processing sector, the RMG sector may not be able to sustain the present level of export in the post MFA era.

Government may initiate this bonded warehouse plan and hand it over to the private sector for implementation as a commercial project.

Effective management of ports

According to a news item published in a section of press recently, the port problems hinder 30 per cent RMG export growth. Bangladesh's garment sector can increase its earnings by 30 per cent if ports function efficiently.

Chittagong port is heavily congested and poorly managed, turn around time for a feeder vessel is 6-10 days against only 1-2 days in Singapore and Bangkok. The facilities of Chittagong port have not increased at par with the volume of export. The containers remain jammed for more than two weeks, which should be released within three days. While the cost of clearing a container at ports in our neighbouring countries is $150-300, the same costs about $600 at Chittagong port. This cost should be reduced. It is also necessary to increase the space capacity of the port considering the bulk shipment of apparel in the future.

We are depending only on Chittagong port. If we are unable to find out an alternative solution to this problem it would jeopardise country's total economy. If the raw materials remain idle in container at Chittagong port the apparel industry would definitely face a serious negative impact.

Foreign Direct Investment (FDI)

Foreign direct investment (FDI) in the readymade garment sector is not encouraged widely in Bangladesh. But FDI has been of benefit to many countries like Cambodia, China Indonesia, India, Madagascar, Mexico, Lao PDR, Sri-Lanka, Vietnam and a few sub-Saharan African countries. It cannot be denied that RMG sector has created a captive market for textile sector. Presently 80 per cent of total demand of woven fabrics and 25 per cent of knit fabrics are being met by imports from foreign countries. Like RMG companies of many developing countries, we may also find it advantageous to join up with foreign companies.

FDI is needed for Bangladesh in order to enjoy shared investments, to gain technical know-how, to get up the learning curves most quickly and to achieve immediate market access.

Human resource development

There is a serious shortage of skilled manpower throughout the readymade garment industry in the country. In the top management, mid-level management, shop-floor management, machine operatives -- everywhere there is a shortage of skilled manpower which obviously reflect on the industry reputation.

Continuous innovation in the garments and textile technology is suppose to reduce the cost of production. Where the question of survival arises, the company can reduce the cost of business by increasing productivity, ensure quality production and quick shipment through well trained skilled manpower.

Vocational training centers/institutions should be set-up immediately to provide proper training to the trainers who will then go to the respective companies and train the operatives on site. Workshops and management courses in various disciplines including administration, management, sales, productivity, incentive payment, quality control, information management, production-planning, human motivation, new product development, sampling etc should be conducted throughout the year so that more and more skilled and qualified officers and staff are produced.

Marketing support and trade promotion

Our embassies and high commissions abroad are sometimes called "sleeping giants". It is not sure that they will be able to make any commendable attempt during post MFA era. The role of the commercial departments of concerned embassies and high commissions is very important. If the commercial attaches of our embassies are given proper idea and, if necessary, training they will be able to achieve the annual targets suitably earmarked for them.

The Board of Investment (BIO) can also play an important role in the field of marketing support. Private sector companies generally generate the wealth and the BIO can help achieve this wealth by providing services. The BIO and the high commission/embassies may work closely together in the field of promotion.

Product and market diversification

Varieties of quality products can help survive our industries. At present our RMG production is concentrated in limited range of products such as shirts, shorts, trousers and T-shirts. To meet the post MFA challenges our garment industries are required to expand their product range and to start producing high value added items and fashion wear.

Though Bangladesh is presently exporting apparels to more than sixty countries, but actually exports are concentrated only in two large markets -- the USA and the EU. About 45 per cent of total apparel exports go to US markets and 50 per cent to EU. Diversification of market is necessary to maintain its share and competitive edge. Steps should be taken to penetrate into new and potentially rich markets like Russia, Japan, India, ASEAN countries and other regions outside EU and North America.

Once Bangladesh had a monopoly in the export of jute and jute goods, but now it has lost that large scale international trading. Tea and handicrafts show negative growth. The position of export of hides and leather products is also not hopeful. Export of sea foods has not shown any envisaged result for last few years. The recent trade opportunity is information technology. It has become a high potential sector for developing countries like ours, but it is really pitiful to say that yet we have not been prepared to respond properly to the worldwide demand.

So what are we left with? Only and the only major item -- export of readymade garments. Now it is our only economic lifeline. Bangladesh readymade garment sector employs more than 1.4 million workers 80 per cent of whom are women. It contributes 76 per cent of the total export earnings. This sector promotes the development of other key economy sectors in the country like banking, insurance, hotel, shipping, tourism road transportation, railway container services etc. With the growth of readymade garment sector many other supporting industries producing cartons, buttons, bags, gum tape and many other allied items have come up.

Saving our readymade garments industry is a top priority now. If we fail to take immediate necessary steps to make this industry competitive in the post MFA world market, the whole economy of the country will suffer.

Sheikh Rezaul Karim formerly headed the National Savings Organisation as Director (In-charge).