Golden prospect for Bangladesh economy

by Salah Uddin Shoaib Choudhury

(July 21, Dhaka, Sri Lanka Guardian) Textile and readymade garment sector in Bangladesh are already at the focal point of international media. Just in 3 days, The New York Times, International Herald Tribune and few more western newspapers have published editorial comments or reports on Bangladesh, saying, China’s ongoing rise in labor cost will very soon turn the attention of huge buyers towards Bangladesh.

Bangladeshi readymade garment industries are already supplying T-shirts and other denim products for Wall Mart, H&M, Zara and various famous international brands. There is high reputation of production quality of products made in Bangladesh.

Li & Feng, a Hong Kong based company that handles sourcing and apparel manufacturing for companies like Wal Mart and Liz Claiborne, reported that its production in Bangladesh jumped 20 per cent in 2009, white China, its biggest supplier, slid 5 per cent.



“Bangladesh is getting very competitive,” William Fung, managing director of Li&Fung Group told reporters.


As costs have risen in China, long the world’s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia – at least for cheaper, labor-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids.



Bangladeshi readymade garment manufacturer’s are trying to convince the government that, if they will increase the labor cost as per ongoing demand of the garment workers, it will have negative impact on the country from getting higher orders in coming years.



But, on investigation it was found that, while Bangladeshi workers are demanding US$ 71, the minimum labor cost in China is US$ 117-147. In Cambodia and Vietnam, minimum wage of garment workers is between US$ 75-90. So, if the Bangladeshi entrepreneurs will at least set the minimum wages of the garment workers to US$ 60 [Bangladesh Taka 3,500], it will not have any negative impact on Bangladesh is receiving larger orders in future, when buyers will shift their faces from China. Some of the large buyers are even suggesting Bangladeshi government to increase the labor pay, while they [the buyers] are ready to increase their buying price.



Bangladeshi entrepreneurs will have series of serious problems due to other reasons. For example, China’s combination of a vast population of migrant workers, many with at least elementary school educations, along with modern roads, railways and power grids in its industrial provinces, has bestowed it with manufacturing capabilities that countries like Bangladesh cannot offer. Beijing also provides low-cost loans and other incentives to its industries that other countries have trouble matching for theirs.



Most of Bangladesh, meanwhile, suffers blackouts six to seven hours a day because it has not invested enough in power plants and natural gas fields — deficiencies that the government is working on but that will not be eliminated in near future. Bangladeshi politicians and officials in charge of the energy ministry are rather busy in giving lectures, instead of taking proper decision in resolving the existing power crisis in the country.



Bangladesh has a literacy rate of only 55 percent — compared with more than 92 percent in China. As a result, workers in Bangladesh are only one-fourth as productive as the Chinese in making shirts, jackets and other woven clothes, according to a report by the Center for Policy Dialogue.



Despite its handicaps, Bangladesh nearly doubled garment exports from 2004 to 2009. And the industry now employs about three million people, more than any other industrial segment in this largely agrarian country of 160 million. From June through November 2009, garment exports accounted for more than 80 percent of Bangladesh’s total exports of $7.1 billion.


According to World Trade Organization [WTO], amongst developing countries, Bangladesh stands at the third largest position as exporter of textile products, which exported goods worth US$ 120 billion in 2008. Bangladesh currently has approximately 70 million people in working age, which can easily takeover the orders, which had been handled by China’s 20 million working people working in the readymade garment industries.



Bangladeshi textile product exporters will have another challenge if Chinese currency will become stronger. It will affect the import cost of fabric and other textile accessories Bangladesh is importing from China. For Bangladesh, the next destination of buying textile accessories and fabric could be countries like India. But, according to experts, it will take at least a couple of years for India to further expand its fabric and accessory production facilities to meet the hugely grown demand, once Chinese products become expensive.



While new prospect for Bangladeshi textile products are already opening, owners of readymade garment industries in the country are reluctant in making any reasonable increase in the labor cost. They even are threatening the government of closing factories, if the wages are increased as per demand of the workers.

It is high time for the Bangladeshi Prime Minister to take up this matter for the sake of national interest. She [the Prime Minister] should no longer depend of Communists like Dilip Barua, who holds the portfolio of Industries Minister in Bangladesh.

Textile industries in Bangladesh are now seeing the infinite prospect. And, Communists like Dilip Barua, who are long-time friends of China, may even sabotage the entire prospect just for the sake of making their friends in Beijing delighted. On the other hand, leaders of trade unions as well as entrepreneurs needs to show tolerance and patriotism while resolving the existing crisis related to labor wages, for the sake of snatching highest benefit from Bangladesh under the current global scenario.