Bangladesh is not the only one to face this situation. All World Trade Organisation (WTO) member countries are bracing themselves for the same shift in trade of textiles and apparels in a more open trade regime dawning today with the phase-out of the Multi-fibre Agreement (MFA).

The MFA, reached in 1974 as part of the General Agreement on Tariffs and Trade (Gatt) and its successor, the Agreement on Textiles and Clothing, that expired yesterday, have governed trade in textiles and clothing through a system of import quotas set on a country-by-country basis.

Even though the quota umbrella is gone, Bangladesh garment exporters are not apprehensive of a big impact, at least in the first year, as opposed to many doomsayers who fear a massive closedown of factories and a huge loss of jobs.

One reason for that is the fact that Bangladesh has been able to position itself in the global apparel market as a reliable source of cheap garments. Its labour force is 'skilled' for the low-end products that it depends so much on for the bulk of its exports.

Another reason is that China cannot immediately cash in on the open market system because of the special safeguard clause that the US has imposed on its exports. The US interagency Committee for the Implementation of Textile Agreements (Cita) has agreed to consider the US textiles industry's request for a re-application of quotas imposed in December 2003 on some categories of fabric and clothing imported from China.

Producers from 51 developing countries have backed a petition filed in October by the US textiles industry to limit US imports of Chinese textiles and apparels in nine categories including socks, cotton and synthetic trousers, woollen trousers, cotton and synthetic knit shirts, and underwear.

This at least will give Bangladesh a one-year breathing space. "This one year is vital," says Annisul Huq, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). "We have to perform during this time so that importers have full trust in us."

Although the garment industry has not been able to establish an adequate backward linkage industry vital for cutting short the lead time -- the time between order and supply -- the government has given a number of incentives that will reduce export and import processing time and thus make products competitive.

In the last 10 years, around Tk 16,000 crore has been invested in the backward linkage industries.

Growth in the garment exports has been possible because of the investments in hi-tech spinning, weaving, dyeing-printing-finishing and knitting machinery.

While 90 percent demand for fabrics for knit industries and 40 percent for cotton-based woven fabrics are met locally, synthetic fabrics are not being produced here as per the export demand.

Against 3,618 garment factories, there are 149 spinning, 302 weaving, 55 dyeing-finishing and 600 knit and knit-dyeing mills in the country.

But whatever be the past scenario, the future will depend on whether Bangladesh can stay competitive, and here the scenario is not that bleak as many are wont to think.

If wage is taken as a yardstick then Bangladeshi labour is almost three-and-a-half times cheaper than China's. If wage in Bangladesh is taken as 100 then that in China is 378, Sri Lanka 183, India 140, Pakistan 135 and Cambodia 150. Only Indonesia has a cheaper labour at 95.

In terms of hourly pay, a Bangladeshi labourer gets 21 cents while his Indian counterpart gets 27 cents and Pakistani 26 cents. A Sri Lankan gets 35 cents.

In case of lead time, Bangladeshi exporters need 105 days while Sri Lankans need 100 days and Indians 50-75 days.

Above all, unit cost of apparel in Bangladesh is the cheapest in the South Asian region. For Bangladesh, the unit cost of shirts comes to 11 cents, which is 26 cents for India, 43 cents for Pakistan and 79 cents for Sri Lanka.

However, Sri Lanka is quite different in the lot in many ways since it produces the bulk of the high-end products and is regarded as the second best to Hong Kong.

Productivity-wise, a Bangladeshi worker can produce 2,536 shirts a year while his Indian counterpart can produce 2,592 and Pakistani one 3,100 shirts.

"It is not always the lead time, nor is it the unit cost. What actually matters is performance," said Annisul Huq. "We need to take care of the port and electricity and customs. And we need to abide by the non-tariff norms such as labour standards and environment."

Whatever it is, the industry circle feels policymakers need to chart the future course of textiles very carefully, not only for the sector's sake but also for the sake of the economy as a whole. The following statements should make the point clear.

Export earnings from readymade garments were $5,686 million in the last financial year but retention was only $2,723 million, with $2,963 million spent to import fabrics and accessories and on brokers' or agents' commissions.

Income from exports using local fabrics was $2,663 million, with $1,953 million retention. But earnings from exports using imported fabrics were $2,600 million, of which only $770 million was retained.

Moreover, for Bangladesh, the share of textiles and garments in total goods traded is a huge 78 percent. This means any dip in the apparel trade would spin the balance of payment out of the orbit resulting in a widespread knock-on effect.