The textiles items that are used to decorate inside of a house are called home textiles. We, in Bangladesh, have become habituated in identifying export potentials of textiles with ready-made garments (RMG). It is not surprising, given the fact that RMG has been the main propeller of our exports and formal sector employment, especially for women. Although RMG shares only 5 per cent of GDP, it plays a key role in employment and in the provision of income to the poor -- directly employing about 1.8 million people or about 40 per cent of manufacturing sector employment.

Sunset
But the sun is said to be setting after the phasing out of quotas on textiles exports in line with the removal of MFA by 2005. Various empirical evidence points to a perilous state as far as exports of RMG are concerned. Quite obviously, Bangladesh would have to compete with India, China,

and other more competitive counterparts in the world. Our exporters would have to capitalise on efficiency rather than on quota rents. The fact that our RMG sector continues to be an "infant" till now requiring spoon feeding and so far failed to attain its "adulthood" during the last few decades, is a "success story" of "bad economics" where quota and rent seeking paid no substantial dividends. By "dividends" we would mean an industry with forward and

backward linkages sufficient to be sustainable to face competitive environment in a globalized world.

It would be a sad state of affairs, of course, if Bangladesh is deprived of its due share from the upcoming boom in textiles markets that is set to triple to $856 billion over the next decade following the phase out. For the moment, however, we postpone the line of argument as to why and how doomsday awaited us as far as RMG is concerned and search for a new way out.

Sunrise
Available evidence indicates that one segment with huge potential is the $70 billion global market for home textiles. The US market alone is estimated to be worth $15 billion and is expected to grow at 5 per cent over the next five years. The same applies for the EU with almost the same value of consumption of home textiles. India and China are

reported to be poised to reap home the major chunk of the harvests of home textiles.

Bangladesh has been performing quite well in recent years in this business of home textiles. It is interesting to note that exports of home textiles surged from $26 million in 1999 to about $76 million in 2002 -- a three-fold increase within a span of only 5 years! Side by side, local sales also shot up from a meager $0.01 million to $1. 4 million during the same period of time. Reportedly, more than two-thirds of the home textiles produced are destined for EU markets and one-fifth to US market.

Like India and China, Bangladesh should set to seize upon the opportunities opened up. That would mean, inter alia, adoption of appropriate policies so that the sector grows as competitive. For example, the fob price of a single quilt cover is

estimated to be roughly $4 per piece compared to $3.5 or $3.75 per piece for the same from Pakistan or China. And needless to mention, perhaps, that yarn constitutes the largest chunk of the costs component. Since cotton has to be imported, the cost component invariably goes up. What Bangladesh needs at the moment is a focus on home textiles and treat it as another important segment like RMG.

Problems and policies
The constraints to home textiles are

not different to those prevailing for RMG. In fact things have been, and will continue to be, tougher for home textiles than for RMG. Home textiles do not fall under quota regime to reap handsome rents. It has to be as competitive as possible, and both private and public sector have roles to play in seeing that the sector seizes upon a portion of the world market for home textiles.

The most important areas of intervention would be, for example, lowering the lead time --the time taken from conception of a product to the arrival in customers' premises. Bangladesh has one of the highest lead times in textiles. We need to chalk out plans and programmes to reduce the lag. We must also do something positive on the side of utility services. Admittedly, high import dependence commodity like RMG and home textiles could gain very little from changes here and there. But in the world market of today, competitiveness is counted by few coins or cents here and there.

We tend to argue that home textiles is a quota-free growing industry with excellent working conditions in factories. Visits to some of the factories reveal that use of modern machinery and management already got into operations of home textiles. In the presence of inexpensive labour and absence of child labour, the sector could be highly productive with forward and backward linkages. Introducing our home textiles to different markets and devising appropriate incentive schemes for the sector could bring long lasting benefits to the economy.

Abdul Bayes is a Professor of Economics at Jahangirnagar University.