DHAKA : Experts on Tuesday said Bangladesh’s garment industry needs to improve its infrastructure and logistics in order to sustain growth.
They added that, despite significant infrastructure advancements in Bangladesh’s garment factories, including efforts to go green, workplace safety and compliance – the industry still needs to shorten lead time.
They were speaking at a panel discussion during the ongoing Made in Bangladesh Week 2022, , on “Logistics Infrastructure to Take Bangladesh to the Next Level of Economic Growth.”
Former BGMEA Senior Vice president Faisal Samad said that the RMG manufacturers dreamt of a $50 billion export only 10 years ago and today it’s a reality but without the right policy support and the infrastructure logistics in place or continued improvements, they could not have achieved same.
“However, with every positive comes new challenges and to rise above it we need continued support with the correct framework in place to reach BGMEA’s recent target of $100 billion,” he also said.
The Ministry of Industries has added logistics as one of the export diversification areas and as a thrust sector for the first time in the Industrial Policy, which was announced on September 25.
The policy includes 21 subsectors of logistics. Industry leaders argued that it is abundantly clear that the government intends to give logistics development more weight in the following years.
According to apparel manufacturers and their stakeholders, Bangladesh lags behind other nations in the ease of doing business index because it requires permission from 33 licensing agencies for export and about 15 licenses to start a formal business. This adds time and money to the process and makes Bangladesh less competitive internationally.
Moreover, in exporting goods and raw materials import, customs, bonds and many banks are harassing the apparel makers, they claimed.
Now Bangladesh is spending 25-35 days more than its major competitors such as China and Vietnam, which is creating barriers to Bangladesh’s readymade garment exporters to attract reputed buyers.
Industry insiders and other significant stakeholders claimed that if the country is able to reduce the lead time, which is created due to backward linkage shortage, and the National Board of Revenue (NBR) harassment, RMG export will boost as expected.
Navidul Huq, director of the BGMEA, said that the trade volume of Bangladesh is growing.
“When it comes to logistics, there are two main things, cost and efficiency,” he added, saying that Bangladesh is still weak here.
Bangladesh has greater logistics costs, which is also very time-consuming and inefficient.
“Moreover, our transport heavily relies on roads and highways, where railways and waterways are more cost-effective and eco-friendlier,” he added.
There are so many difficulties in customs. Where the world counts hours, Bangladesh still counts days, he added.
“There are also problems related to HS code, which is one of the main barriers impacting the lead time,” he added.
As trade volume is growing along with the economy, Bangladesh needs to focus on the future aspects, he added.
“Bangladesh’s geo location is very suitable to be a hub for global logistics, but we need proper planning in this regard,” he added.
Reaz Ahmad, the executive editor of Dhaka Tribune, moderated the session.
He said that in the last decade, Bangladesh has achieved an impressive track record of growth and development and proved itself through its performance in trade, investment and socio-economic improvements in the last 50 years.
“The RMG industry is expanding rapidly and so does the need for adequate infrastructure to support its growth. Ensuring sound infrastructure facilities is one of the prerequisites for realizing the vision. This issue will be even more important because now buyers want to source more fashionable products with shorter lead time,” he added.
The country needs to develop a strong infrastructure linking the whole country to ensure higher job opportunities.
“The government needs to quickly complete the mega infrastructure projects and improve connectivity, i.e. road, rail, sea and airport. Promoting Mongla Port for export and Chittagong for import or vice versa would be a good option or making Mongla a viable second port for both,” he added.
He also suggested that the policymakers should work together to unleash the potentials of the RMG sector as well as all other sectors,” he added.
Jessica Bazire, business development head of Dubai Global Connect, also spoke during the session on logistics infrastructure.
At the sideline of the Dhaka Apparel Summit, a concurrent event of the Made in Bangladesh Week, a manufacturer, seeking anonymity, told Dhaka Tribune that HS code is one of the main issues and they urged the NBR several times to include many items in HS Code, but they did not.
“They are regularly harassing us with the intention of taking bribes. The NBR did not return advance tax money after evaluating our final tax assessment. We have to spend three to four days extra in customs due to the harassment,” he added.
Another exporter, who also participated in the apparel expo claimed that the “Banking sector is also harassing us. Many bankers’ behaviour is not professional.”
“If the government makes the ease of doing business better, Bangladesh will easily meet the $100 billion apparel export target in 2030,” BGMEA Director Faisal Samad said.
Marius Macovei, General Manager of EPIC Group, told the Dhaka Tribune that before coming to Bangladesh, he worked in China.
“While they have taken couples of hours to transport goods from one province to another, in Bangladesh it takes at least one and half days to do it,” he added.
Moreover, the country loses alot of time due to import of backward linkage which is also one of the main barriers. However, progress in green initiative will benefit the country’s apparel industry.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh has 178 LEED-certified factories from the US Green Building Council (USGBC), and another 500 hundred plus factories are waiting for certification.
Moreover, the country has nine top scorer factories in the top ten of USGBC ranking.
At the sideline of the event, BGMEA President Faruque Hassan said: “We are planning to shift almost all factories to the green or sustainable concept as per their carbon reduction initiative. Our government is also working to develop its infrastructure, many investors are starting to invest in the manmade fibre sector.
“We believe that after a few years our lead time problem will resolve.”
“We are facing many problems from customs and bond commissions. We already informed Prime Ministers Sheikh Hasina. I hope the crisis will be solved as soon as possible.
“Besides, we are getting many recommendations from our stakeholders in the ongoing Made in Bangladesh Week 2022. We will start to solve the issue after the mega event,” he added.
BGMEA is organizing several events in partnership with the Bangladesh Apparel Exchange such as Dhaka Apparel Expo, Dhaka Apparel Summit, Bangladesh Denim Expo, Green Factory Visit, International Apparel Federation (IAF) convention, Fashion Show, etc.